Stewart-Peterson Market Commentary

Closing Commentary - November 12, 2019

Top Farmer Closing Commentary 11-12-19

CORN HIGHLIGHTS: Corn futures gained back yesterday’s losses, finishing on a strong note, gaining 4-1/2 Dec and closing at 3.77-3/4. Dec of next year closed 1-3/4 higher at 4.00. Today’s turn was impressive and encouraging; yet, corn futures are still sideways to lower in the bigger picture. Strength in wheat with double digit gains provided spillover support to corn, as did a lack of farmer selling. Snowy conditions are providing some support, and next week’s forecast for above normal temperatures but also above normal precipitation for most of the Midwest is suggesting a sloppy and wet week for harvest. Our bias is that farmers don’t have an appetite to sell corn at 20 cents cheaper than it was a few weeks ago. Corn coming off the field will also likely head into storage. LP is a problem as far as logistics are concerned with this week’s cold snap. Some elevators will be unable to dry corn for up to a week.

SOYBEAN HIGHLIGHTS: Soybean futures finished quietly with Nov gaining 3/4 cent, closing at 9.05-3/4. Deferred contracts were mostly unchanged. The technical picture was bruised this week, with yesterday’s sell-off and today’s inability to recover; this is somewhat concerning. Traders seemed more interested in buying wheat and selling beans or buying corn and potentially selling beans. President Trump, in a speech to the New York Economic Club today, indicated that relations with China are upbeat and that a deal is close. However, details were lacking, and the failure of any concrete announcement seemed to leave beans somewhat lifeless.

WHEAT HIGHLIGHTS: Wheat futures had a banner day with strong gains across the board on all three exchanges. Mpls finished 5 to 6-1/2 higher, and Chi 9-3/4 to 11-1/4 higher. Dec led today’s charge, closing at 5.17. More importantly, KC kicked into gear, closing 16 higher on Dec at 4.38-3/4. The spread between Chi and KC also tightened today, perhaps signaling that this spread is much too wide, and there is plenty of room for KC to pick up on Chi. Expectations that KC crop is declining in inventory due to more feed usage was supportive. More importantly, the market closed above the 100-day moving average for the first time since mid July. Today’s technical strength has Dec KC closing at its highest level since August 5. Lack of farmer selling and technical buying once prices bounced off support were said to be primary reasons for today’s rally. Dry weather on the international front is the backdrop to supportive price activity. On a less encouraging note, the dollar traded to its highest level today since mid October.

CATTLE HIGHLIGHTS: Cattle markets posted mixed finishes today, with Dec lives down 12 cents to 119.75. Feb lives were down 10 cents to 125.57, and Apr lives were up 10 cents to 127.05. Nov feeders were up 22 cents to 147.80, and Jan feeders were steady at 147.12. Choice beef values were down 53 cents at yesterday’s close to 238.59, their first down day in some time. Beef prices jumped 1.46 to 240.05. Select cuts were up 3.12 to 216.81. The premium of Dec live cattle to the cash market may be encouraging producers to feed cattle to a higher weight, already at their highest levels since December 2016. This could add to short term production if slaughter picks up. Most seem to think that placements were very high in October and will likely be strong in November as well. Despite a somewhat bearish tilt to the coming months, cattle markets cannot seem to break lower. The best traded Dec live cattle contract back tested its 10-day moving average support level for the third session in a row and closed within the upper third of the day’s range. Feb lives also closed just off the day’s highs, and Apr lives made new contract highs. Jan feeders recovered from some early session losses to post a neutral close.

LEAN HOG HIGHLIGHTS: Hog markets posted triple-digit gains today, with Dec up 1.42 to 64.72. Feb hogs were up 1.82 to 75.55, and Apr hogs were up 1.37 to 82.02. The CME lean hog index was down 85 cents to 59.44. China spot pig prices were down 1.9% overnight and are now down almost 8% for the week. Carcass cutout values were up 3.67 at yesterday’s close to 86.34 and were up another 2.73 this morning to 89.07. The surge in pork values is likely due to more active export sales, and this should encourage packers to keep the chain speed running extremely quickly. Packers are making deep profits with pork values so high and the cash market relatively low. Mixed feelings persist about U.S. / China trade negotiations, but the sharp premium of deferred futures seems to suggest that a deal should be done at some point. The best traded Dec contract tested its overhead 20 and 10-day moving average levels today but was unable to close above either in a relatively disappointing close. Feb hogs made their first close above the 20-day moving average since October 21 and briefly tested their 200-day moving average resistance level. Apr hogs made their first close above the 20-day moving average since October 21 and have broken out of recent consolidation.

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