Stewart-Peterson Market Commentary

Closing Commentary - September 20, 2017

Top Farmer Closing Commentary 9-20-17

CORN HIGHLIGHTS:Corn futures moved higher today gaining 1-1/2 to 1-3/4 cents, as Dec led today's gains closing at 3.50. It was a rather quiet day, as prices traded within yesterday's trading range. Support came from firmer wheat and bean prices, as well as a softer dollar earlier in the session. The dollar rallied late in the session, and this may limit upside potential tomorrow. Lack of strong farmer selling of new crop is helping provide underlying support. Yet, we're continuing to hear stories of farmers cleaning out old crop bins, and this may keep some pressure on prices in the near-term, as will farmers who need to sell crop out of the field. That being said, world supplies will continue to narrow in the year ahead, as we expect world demand to grow. This provides a long-term catalyst and expectation that prices are close to finding a bottom. In fact, we feel that the market has very limited downside potential, yet, it still has potential. Considering harvest will be running full-steam in just a few weeks, we're going to stay with our defensive bias in the short-term. End-users, however, should be picking up long-term inventories due to good value and lack of expectation for significantly lower price.

SOYBEAN HIGHLIGHTS:Soybean futures received news of an export sale to an unknown destination of over a million metric tons, along with 130,000 tons announced for sale to China. This helped move prices higher today gaining 3-1/2 to 4-1/2 cents, with Nov closing at 9.70. The bottom line, exports are picking up. Harvest is drawing closer on a daily basis, and early feedback is too scattered to provide much of a bias. Some producers we've talked to have said the yields have been as, or better than, expected, while others were somewhat disappointed.

WHEAT HIGHLIGHTS:Wheat futures finished 5-1/4 to 6-3/4 higher in Chi, while Mpls gained 3 to 4 and KC 6 cents. Good strength after yesterday's prices clawed back late in the session to finish close to steady, and then follow-through buying this morning. Support comes from generally dry conditions in Australia, as well as the idea that harvest pressure is behind the market and farmer selling is next to zero. There's also some thought that wheat prices could rally in an attempt to encourage additional farmer selling. In addition, we don't expect farmers to be aggressive planting winter wheat, or for that matter, planning to increase spring wheat acres. The technical picture continues to provide good signal as well. Prices bottomed on August 29 and posted a hook-reversal, rallied for 3 sessions, then dropped back for several sessions before posting a bullish key-reversal, and now following through to the topside with today's prices trading at their highest level in over a month.

CATTLE HIGHLIGHTS:Cattle futures closed sharply higher today on continued optimism of higher cash trade. The nearby Oct live cattle contract closed 2.97 higher to 110.95, Dec closed 2.85 higher to 116.25, and Feb closed 1.87 higher to 119.05. Feeder cattle futures closed 2.40 to 4.47 higher. On this morning's Online Fed Cattle Exchange, a total of 1,450 head were offered for sale. Of that, 636 head were sold for delivery in 1-9 days at a weighted average price of 106.67. This is 1.00 to 2.00 higher than last week's cash trade, and will lead feedlots to hold tight in the face of current bid prices of just 104. Boxed beef prices were mostly softer for today's session. Choice cuts closed 51 cents lower yesterday afternoon to 192.11, and select cuts were 1.13 higher to 183.83. At midday today, choice cuts were down 13 cents to 191.98, and select cuts were down 20 cents to 188.63. With the recent slide in beef values and very strong packer profits, retail beef specials should begin soon, sparking additional demand. Today's rally moved prices out of the trading range that started at the beginning of August. Prices closed above the 10, 20, and 50-day moving averages in the Oct contract for the first time since July 21. Though short-term momentum studies are approaching overbought levels, longer term indicators are showing an upward trend.

LEAN HOG HIGHLIGHTS:Hog futures finished today's session with mixed results. The nearby Oct contract closed 1.47 lower to 58.65, Dec closed 20 cents higher to 59.92, and Feb closed 12 cents higher to 64.50. The CME Lean Hog Index continued its free fall, 94 cents lower today to 61.88. Carcass cutouts closed 1.77 lower yesterday afternoon to 76.32, but were back up 85 cents by mid-session today to 77.17. Loins, butts, and especially ribs led the carcass higher today in spite of bellies down 1.53 to 97.00. Many traders are hopeful that cash bellies depreciation from 227.54 in July will be sufficient to spark bacon demand soon. Low pork prices, in general, should be able to keep export strong in the near-term. On the technical front today, the Oct contract's gap-down session looks anything but friendly. Nearby support for Oct lies at the contract low of 58.25. The Dec and Feb contracts, however, showed good resilience today, trading down to nearby support, attracting buyer interest to close with green numbers on the day.

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