Stewart-Peterson Market Commentary

Closing Commentary - January 22, 2018

Top Farmer Closing Commentary 01-22-18

CORN HIGHLIGHTS: Corn futures ended quietly and mixed, with Mar losing 1/2 cent at 3.52, while Sep gained 1/4 at 3.76-3/4. News of consequence was lacking, which allowed prices to drift after overnight gains. Strength came from support due to higher wheat and bean prices, and yet corn futures, after reaching 3.54-1/2 in Mar, failed to muster a new buying interest. The technical trend remains in a sideways pattern with prices closing at or above the 50-day moving average today for the fourth consecutive day for most futures contracts. Our point, the 50-day is now acting as support. Weekly export inspections at 26.3 million were termed neutral to negative. Light farmer selling is offering support to the market as well. But as time moves on, farmer selling will likely increase as the need to generate cash flow, as well as reduce risk, becomes more important. However, with uncertainty in the Southern Hemisphere weather prices may find additional near term support, as general net-drying is noted in Argentina and parts of Brazil.

SOYBEAN HIGHLIGHTS: A continued mostly dry pattern developing in northern Argentina, as well as parts of Brazil, was viewed as supportive today helping push prices higher. Futures gained 4-1/2 to 7-1/2 cents, as Jul led today's gains closing at 10.05-3/4. Today was the highest close on most bean futures contracts since mid-December. Perhaps as important, is prices managed to close above the 40, 50, and 100-day moving averages, something that has not occurred since the beginning of the second week of December. Strength in meal led today's charge gaining anywhere from 5.00 to 7.00 a ton on good demand, as well as strong export activity of late. While technicals continue to look stronger, the market has yet to breach more than a 50% retracement. If Argentine weather remains on the dry side, look for support to continue to pour in from short covering, as well as new buying interests. Export inspections at 52.2 million were also considered supportive.

WHEAT HIGHLIGHTS: Wheat futures gained value today, with Chi closing 3 to 3-1/2 cents higher, KC gaining 1 to 1-3/4, and Mpls losing near 1 cent. A winter storm system pushing through the Midwest is viewed as somewhat negative for the wheat prices, as moisture is needed throughout much of the Midwest. However, snow cover is lacking, and while today's weather might be viewed as beneficial from a moisture perspective, if snow doesn't fall throughout portions of the Midwest soon, the market will once again view wheat as vulnerable to freeze damage. This has been a challenging year to maintain snow cover. Temperatures are expected to warm into the weekend again, followed by another bout of cold weather. Export inspections at 12.4 million were again considered neutral to disappointing. Yet, wheat prices managed to hold together and technically are beginning to build an argument that a low may be in place. For now, the key is for new crop Chi, with Jul futures trading at 4.52, to push back above the 50-day moving average at 4.55-1/2.

CATTLE HIGHLIGHTS: Cattle futures closed sharply higher today as news of a jump in cash trade on Friday afternoon drew speculative buying interest. The nearby Feb contract closed 1.65 higher to 123.55, Apr closed 1.25 higher to 123.97, and Jun closed 82 cents higher to 115.55. The main story for today's session was actually carried over from last week. By Friday's session close, the highest cash trade of the week was reported on Wednesday, and only at 119.25. After Friday's close, there were many reports of cash cattle sold in the country at 123.00 to 123.50. This was a jump of 3.00 from the previous week, and attracted lots of new long positions on today's open. In addition, a snowstorm in the northern Plains may slow marketing this week, limiting supply. Beef prices for today's session were fundamental limiting gains. On Friday, choice cuts closed 83 cents lower to 204.86, and select cuts closed 71 cents lower to 200.16. This was the lowest choice cut value since December 29. By midday today, choice cuts lost another quarter to 204.61, and select cuts were down another 54 cents to 199.62. Technical price indicators showed good strength today. The nearby Feb contract posted a gap-up session above its 50-day moving average. Today's close was a first above that moving average since November 30. Short term indicators may be approaching overbought levels.

LEAN HOG HIGHLIGHTS: Hog futures fell to moderate losses in tight trading ranges with minimal fundamental market developments. The nearby Feb contract closed 27 cents lower to 71.80, Apr closed 37 cents lower to 75.12, and May closed 27 cents lower to 79.65. Carcass cutout values closed 77 cents higher Friday afternoon to 81.44. This was the highest carcass cutout value since December 12. At mid-session, pork prices fell 11 cents to 81.33. Belly prices were up a whopping 4.55 at mid-session to 142.10, but this strength was offset by declines in loins, butts, ribs, and hams. A large snowstorm in southern MN today could limit marketings this week, and temporarily support futures prices due to diminished hog supply. Technicals were fairly quiet today. The Feb contract was able to hold its 20-day moving average support level, while the Apr contract fell below that support level. However, the tight trading ranges and low volume was representative of the lack of significant fundamental direction today.

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