Stewart-Peterson Market Commentary

Closing Commentary - October 20, 2017

Top Farmer Closing Commentary 10-20-17

CORN HIGHLIGHTS:Corn futures fell 3-4 cents as buyers failed to find any traction today. Dec corn lost 4-1/2 cents to 3.44-1/2, and Mar corn lost 4-1/4 cents to 3.58-1/2. With today's close, Dec corn posted its lowest close, pushing below the 8/30 last trade of 3.45-1/2. Prices are still holding above inter-day lows, which was established on 10/12 with a low of 3.42-1/2. For the week, Dec corn struggled, losing 8-1/4 cents on the week. Corn futures look to be testing the lower end of the most recent trading range as a negative tone in the grain markets provide spillover pressure in corn markets as well. As harvest weather improved dramatically across the majority of the grain belt this week, harvest pressure likely forced prices lower, as the market was lacking bullish news. With reports that yield numbers have been running stronger than expected, the market is cautious of this last month's USDA raise in yield, causing larger than expected supply. As we move toward further crop production numbers, there is fear of big crop getting bigger. Demand will be needed to provide support under prices.

SOYBEAN HIGHLIGHTS:Soybean futures posted a reversal off of morning highs, as contracts finished 5-7 cents lower. Front month Nov beans are down 7-3/4 to 9.78-3/4, and Jan was down 7-3/4 to 9.89-1/4. For the week, Nov beans finished significantly weaker, dropping 21-1/4 cents off of last Friday's close. Despite positive demand news and a strong open to the day's trade, selling picked up across the market as harvest pressure and profit taking continues to weigh. Early this morning, the USDA announced a sale of 7.3 million bushels of soybeans to China for the 17/18 crop year. This, as well as yesterday's strong 14 million bushel sale helped bring support to the marketplace as demand has stayed strong following yesterday's aggressive sales and export shipments. Despite that, favorable weather across the Plains ramped up harvest pressure, and prices pushing higher in early session likely brought forth selling of beans. Forecasters are watching South America, as concerns of planting delays may be fading as areas needing moisture are picking up forecasted rainfall, and wetter areas are drying out, which should boost planting progress over the next week. Today, Nov soybean futures posted a reversal outside day, taking out the previous day's high and then closing well below yesterday's lows.

WHEAT HIGHLIGHTS:Wheat futures were under pressure today. Chi wheat contracts lost 5-6 cents. Front month Dec was down 6-3/4 to 4.26, while Mar was 6-3/4 lower to 4.44-1/2. For the week, Dec wheat futures dropped an aggressive 13-1/2 cents. With today's close, the Dec contract posted its lowest close but is still trading above the August intraday low of 4.22-1/2. Besides weakness in the overall grain complex making it easier for wheat prices to move lower, the U.S. dollar surged higher in afternoon trade, which seems to have more of an impact on wheat prices. U.S. exports have been slow lately as the Black Sea region has been dominating global exports despite better than expected weekly export sales posted by the USDA. Planting progress across the winter wheat belt should improve this week as warmer weather should help support early emergence. Wheat, like corn with today's weak close, looks to challenge the contract low of 4.22-1/2 established in August intraday trade. This will be a key support point, or prices will continue to work lower.

CATTLE HIGHLIGHTS:Cattle futures traded choppy and two-sided as the market was preparing for today's Cattle on Feed report. The front month Oct contract gained 47-1/2 cents to 116.675, while Dec futures gained 45 cents to 116.60. Gains continued throughout all deferred contracts, as prices were 20 to 62-1/2 cents higher. For the week, Dec cattle lost 52-1/2 cents. The market looked for direction during the course of the day despite favorable retail values the past 2 days. Retail values closed aggressively firmer yesterday afternoon and continued a strong pace at midday trade. Cash trade has stayed relatively undeveloped. Oct cattle on feed numbers will likely provide selling pressure on Monday's open, as total cattle on feed was up 5% from last year, slightly above expectations. Cattle marketed for the month of September was at 103% of last year, in line with expectations. Placements surged 13% above 2016 with September placement in feedlots totaling 2.15 million head. This was above the trade expectations at 107.5% of last year, but still within the range of estimates. Despite that, the large placement number will likely keep pressure on deferred contracts as we move into the end of 2017.

LEAN HOG HIGHLIGHTS:Hog futures finished with modest gains as contracts closed 20 to 62-1/2 cents higher. Front month Dec hogs were up 60 cents to 64.85, while Feb hogs were 62-1/2 cents higher to 69.10. With today's trade, Feb hogs broke through upside resistance and finished with a contract high. For the week, Dec hogs had a strong week, finishing 2.65 higher. Strength in front end contracts was supported by continued rise in the lean hog cash index as well as supportive news from carcass values. At midday, carcass values were sharply higher to 76.15, supported by better demand for belly, ham and picnic cuts. This was added to yesterday's close of 44 cents higher in carcass value. The cash lean hog index has been trending higher since turning the corner in the first part of October. This moderate strength in cash, despite large slaughter supplies, has helped stay supportive of the market, which may now see growth on the technical side with Dec prices pushing through recent highs and looking to challenge contract highs near the 65.50 level. Slaughter today was 460,000, which is 2,000 more than a week ago and 25,000 more than a year ago. Overall demand is supportive in recent weeks despite large available supply.

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