Stewart-Peterson Market Commentary

Closing Commentary - April 23, 2018

Top Farmer Closing Commentary 4-23-18

CORN HIGHLIGHTS: Corn futures finished with gains of 1-3/4 to 2 cents as May led today's recovery, closing at 3.78-1/2. Dec closed 1-3/4 at 4.04-1/4, continuing to hold above 4.00. Friday's low in Dec corn was 4.02-1/4, and today's low is also 4.02-1/4. Export inspections were considered supportive at just under 68 million bushels. Inspections and sales still trail a year ago and this has some concerned, but as we indicated last fall expect export sales and inspections to start slow and finish strong. Buyers will usually buy only as needed when supplies are plentiful and priced cheap. As we focus toward the year ahead and look at another year of declining acres, it'll take a strong yield to keep carryout from declining. With 2 million acres expected less, and yield likely down by 1 to 3 bushels an acre, the world supply, as well as domestic supply, gradually tightens. Talk of drier weather in Brazil for part of their second crop corn is viewed as generally supportive. Good weather on tap for the upcoming week suggests planting will pick up steam. This is no surprise as spring has arrived, but as a whole look for planting to be behind schedule due to last week's cold and wet pattern.

SOYBEAN HIGHLIGHTS: Soybean futures softened again today losing 6-3/4 to 8 cents as bear spreading was noted with front month sliding more than new crop. Weakness in both soybean meal and oil, along with a lack of new friendly news and now a shaky looking technical picture, all weighed on prices today. May beans closed at 10.20-3/4, their lowest close since April 4. May did test the 100-day moving average, and this level held. New crop continues to sag as well, closing underneath the 50-day moving average for the first time since April 4, and only the third time since February 2. As we indicated last week, the market looks somewhat tired, and it didn't disappoint today. Recent friendly news in the form of strong export sales, has failed to provide support. Weekly Export Inspections at 17.3 million were termed neutral to negative.

WHEAT HIGHLIGHTS: Wheat futures finished mixed, with Chi losing 1 to 2-1/2, KC finishing down 1/2 to up 3/4, and Mpls losing anywhere from 9 to 12 cents. Mpls lost ground on ideas of better planting conditions, as well as technical weaknesses, prices slipped with losses the last two sessions and finished at or near the day's low. Concerns of 1-2 weeks ago when cold weather, as well as snow could delay or have some farmers switching out of wheat, seems to be less of a concern and the market has now reflected that with Sep Mpls wheat losing near 45 cents in recent sessions. Weekly export inspections at just under 23 million bushels were considered neutral. Chances of better rain in parts of the southern Plains have been negative wheat prices as of late. We do question how much rain will help some of the hard red winter wheat belt, which is beyond repair.

CATTLE HIGHLIGHTS: Cattle futures closed sharply higher today, buying interest off of Friday's neutral Cattle on Feed report and strengthening beef values. The nearby Apr live cattle contract closed 2.37 higher to 121.72, Jun closed 1.15 higher to 104.87, and Aug closed 1.27 to 105.07. Feeder cattle contracts were up as well, with the best traded Aug futures up 2.62 to 147.12. Jun futures are currently trading at a discount of about 20.00 to the cash market, which is wetter than normal for this time of year. Though inventory looks more than sufficient given current demand levels, Friday's Cattle on Feed numbers suggest that Jun futures shouldn't be trading at such a steep discount. Retail beef values were a major source of support for today's session. Friday afternoon, choice cuts closed 64 cents higher to 211.98, and select cuts closed 1.65 higher to 200.13. By midday today, choice cuts jumped another 2.71 to 214.69, and select cuts were 1.70 higher to 201.83. Technical price action today was very impressive. All live cattle contracts out to October posted gap-higher sessions today. The jump in prices is confirming a new trend higher as the 10-day moving average has curled up and crosses over the 20-day moving average.

LEAN HOG HIGHLIGHTS: Hog futures recorded triple-digit losses today, under intense selling pressure from bearish fundamentals. Nearby May futures closed 1.95 lower to 68.00, Jun closed 1.17 lower to 76.37, and Jul closed 1.12 lower to 78.90. Keeping with the recent theme, sluggish demand and heavy short term supply are the main bearish factors at the moment. The CME Lean Hog Index was 83 cents higher today to 56.80. Weather forecasts point to improving retail demand, but in the meantime, the Jun contract is holding much too steep a premium to cash. Dressed weights last week were 0.7% greater than the same week last year, and production was up 2.81% from the previous week, and 3.6% from the same week last year. Carcass cutouts were down 51 cents on Friday afternoon to 67.91, and down another 6 cents this morning to 67.85. Price action today was very negative looking. May, Jun, Jul, and Oct futures all put in gap lower sessions. The bounce in recent weeks has left hog futures in overbought territory, giving today's selloff some technical justification as well.




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