Stewart-Peterson Market Commentary

Closing Commentary - January 19, 2018

Top Farmer Closing Commentary 01-19-18

CORN HIGHLIGHTS: Corn futures closed higher today gaining 1 to 1-1/4 cents on old crop, as May led today's gains closing at 3.60-3/4. New crop Dec closed 3/4 higher at 3.85-3/4, reaching a high today of 3.87. Strength in beans and soymeal, along with a good looking technical week, may have led to short covering today. Export sales were also viewed as supportive at 74.3 million bushels, one of the strongest numbers in weeks. While exports are still running behind USDA's projections, we're not surprised to see numbers like today, as we feel there will be more of this to come. On an interesting note, despite increases in yield on the September, October, November, and January Supply/Demand reports, the National Cash Index price for corn is trading at its highest level since mid-August. Continued solid demand, a lack of farmer selling, and basis improvements are being reflected in the market that continues to more-or-less trend in a sideways pattern. We view this as supportive. Today's futures close in positive territory and above the 50-day moving average looks supportive.

SOYBEAN HIGHLIGHTS: Soybean futures ended the day with gains of 1-3/4 in new crop Nov closing at 9.96, and 4-1/4 higher on nearby Mar closing at 9.77-1/4. Mar futures had its highest close since the second week of December. New crop Nov reached a high of 10.01-1/2, a mark that has not been breached since the second week of December as well. Last week's bleak start ended on a firm note, as did this week's steady start ending on a firm note. Our point, buyers are beginning to step up to the plate finding value. Cold weather may have been a catalyst to provide underlying support for meal, which has also seen a surge in recent weeks, with a gain of nearly 20.00 per ton. Soybean oil is perhaps the wild card, it had a rough week this week, as well as last, as traders are buying meal-selling oil. However, with the La Nina weather pattern developing, all attention will be focused on Malaysian palm oil production, as it is the most widely produced cooking oil in the world. The most recent La Nina pattern created a net-drying pattern and reduction of palm oil production. Lastly, export sales of 56.1 million bushels was termed as supportive. Today's strong number was encouraging after last week's low numbers. However, remember last week reflected a holiday week when the numbers were gathered.

WHEAT HIGHLIGHTS: Wheat futures finished 1 to 2-3/4 cents lower on all three exchanges in a rather quiet non-eventful day. Trading volume was termed light, as well as today's range considered small with the most futures contracts trading 5 to 6 cent ranges. For the week, Mar Chi wheat gained 2-3/4 cents, while KC Mar wheat gained 4-1/2 cents. The continued dry weather in the Plain states is supportive, yet there doesn't appear to be any significant harsh weather in the forecast for late January. World supplies are ample, but just like corn, we continue to see a stronger demand base building and ultimately this will help to pull wheat prices higher. Any weather adversity, either domestically or elsewhere in the world, could also provide underlying support. Export sales at 7.4 million were considered disappointing and not friendly for prices today, and perhaps the reason why they drifted lower by days end.

CATTLE HIGHLIGHTS: Cattle futures gave back some of yesterday's gains, closing slightly negative on the session, but positive on the week. The nearby Feb contract closed 4.52 higher this week, and a nickel lower today to 121.90. Apr closed 3.27 higher on the week, and 75 cents lower today to 122.72. Jun closed 3.10 higher on the week, and 62 cents lower today to 114.72. Trade today was back and forth all session long. The stock market was lower for most of the session bringing pressure, but news that average weights for the week ending 1/6 dropped 2 pounds from the previous week was supportive. Before the end of the session, the only notable cash trade for the week was on Wednesday afternoon at 119.25 in Texas. However, bids were seen at 122 late Friday afternoon post-close. Yesterday afternoon, choice cuts closed 39 cents higher to 205.69, but gave back 58 cents at mid-session to 205.11. Select cuts closed 1.26 higher yesterday to 200.87, but were down 48 cents by mid-session to 200.39. Weekly U.S. beef export sales for the week ending 1/11 were reported this morning at 15,000 metric tons vs the previous 4-week average of 18,200 metric tons. Cumulative sales for 2018 are running 20.2% ahead of last year's pace, currently at 138,600 metric tons. Despite the lower finishes today, the Feb contract was able to close above its 50-day moving average for the first time since 11/30. This is a supportive factor. However, today's session could be seen as a Doji Star formation, indicating a reversal lower next week, especially if we do not see friendly cash trade this afternoon.

LEAN HOG HIGHLIGHTS: Hog futures put in negative closes today, capping off a very volatile week of trade. The nearby Feb contract closed 50 cents higher on the week, and 97 cents lower on the day to 72.07. Apr closed 1.17 higher on the week, and 40 cents lower in the session to 75.50. May closed 92 cents higher on the week, and 20 cents lower on the day to 79.92. U.S. pork production for the week ending 1/6 was reported this morning at 454.1 million pounds vs 445.7 million pounds the previous week. This was 2% higher than a year ago. The cash tone was negative today despite the CME Lean Hog Index gaining 5.09 this week to 73.55. Carcass cutouts closed 28 cents lower yesterday afternoon to 80.67, but were back up 19 cents to 80.86 by mid-session today. Forecasts for more mild temperatures for the second half of January also brought fundamental selling interest as marketings, and therefore pork supply, will likely increase. Weekly U.S. pork export sales for the week ending 1/11 came in at 26,400 metric tons vs the previous 4-week average of 35,725 metric tons. Cumulative sales for 2018 are running 2% behind last year, currently at 215,100 metric tons. Technicals were relatively quiet today, though the Feb contract did close below its 10-day moving average support level. Stochastics and RSI are still running at the higher end of their ranges, but not giving overbought readings.




Market Commentary provided by:

Stewart-Peterson
137 South Main Street, West Bend, WI 53095
Phone: 800-334-9779
E-mail: rmainville@stewart-peterson.com
Web: www.stewart-peterson.com