Stewart-Peterson Market Commentary

Closing Commentary - September 21, 2017

Top Farmer Closing Commentary 9-21-17

CORN HIGHLIGHTS:Corn futures had a quiet session with range-bound trade activity of near 3 cents, before futures finally crawled into the positive territory, gaining anywhere from 1/4 to 1/2 cent. Mar led today's small gains closing at 3.63, and nearby Dec closed at 3.50-1/4. The commodity complex appeared to be asleep today with very range-bound trade not only in corn, but also in the wheat complex and soybeans. Harvest is beginning to pick up steam, and with good weather in the forecast, there's not much to provide traders a reason to aggressively buy. On the other hand, corn is of good value to end-users, and the lack of farmer selling will continue to provide near-term support. As harvest conditions go, so likely will prices. The crop has struggled throughout the season, and will likely have variable yield results as combines move farther and farther north into the central regions of the Midwest. Export sales at 20.7 million bushels were viewed as non-supportive. Our bias is that end-users are simply buying as needed. Weekly export sales will be a variable from week to week, and not on a strong uptrend. The stronger uptrend in sales will likely occur once harvest is more than 50% complete.

SOYBEAN HIGHLIGHTS:Bean futures edged higher, finishing with small gains of 1/2 to 3/4 cent on a relatively quiet session in which the range of prices was near 10 cents. An excellent export sales figure at 85.9 million bushels was unable to give the market much of a boost. Most of these sales are already factored into the price, as they were announced on individual basis over the last week. Nonetheless, this is an outstanding number and continues to suggest strong world demand. Year-to-date sales are at 710 million bushels versus 897 million a year ago. Bear in mind, a year ago importers, in particular China, were front loading beans in summer due to smaller carry-out, and uncertainty to last year's crop size.

WHEAT HIGHLIGHTS:Wheat futures gained 1-3/4 to 2-3/4 cents in Chi, as Dec led today's gains closing at 4.52-1/2, its highest close since August 16. The 40-day moving average held prices in check. In KC gains of 1 to 1-1/2 were noted, and Mpls 1/2 to 2-3/4. Expectations for tightening world supplies due to less-than-ideal crop conditions in some parts of the world are providing support, as is a weaker dollar over the last year versus the European currency, which is reaching yearly highs. Today's export sales at 11.3 million bushels were termed neutral to slightly negative. Without much new news affecting wheat, other than export sales today, the market may likely take its cue from elsewhere. We like the technical picture that's starting to form, but it's imperative that Dec Chi reach the 40-day moving average, something that has not occurred since mid-July.

CATTLE HIGHLIGHTS:Cattle futures ended the session with mixed finishes on lack of confirmation of higher cash trade. The nearby Oct contract closed 85 cents lower to 110.10, Dec closed a nickel lower to 116.20, and Feb closed 20 cents higher to 119.25. Bids in the country today were unchanged at 104, leaving feedlots unwilling to sell. Weekly U.S. beef export sales for the week ending 9/14, were reported at 12,400 metric tons versus the previous 4-week average of 15,625 metric tons. This leaves 2017 cumulative sales at 621,200 metric tons, 9.4% ahead of last year's pace. Boxed beef values continued their slide, with choice cuts closing 7 cents lower yesterday afternoon to 192.04, and select cuts closing 31 cents lower to 188.52. Choice was down another quarter at mid-session to 191.79, and select was down 21 cents to 188.31. Near-month selling and deferred-month buying today may have been due to projections of lower production come next year. Trading ranges were very tight today, as cash trade never materialized. Even in the contracts with negative closes, no technical damage was done. The Oct contract still held its 50-day moving average, and the Dec contract sill closed well above the channel-trend-line broken yesterday. All-in-all, a very quiet day.

LEAN HOG HIGHLIGHTS:Hog futures continued their washout today under further pressure from cash and pork values. The nearby Oct contract closed 1.32 lower at a new low of 57.52, Dec closed 2.12 lower to 57.80, and Feb closed 1.62 lower to 62.87. The CME Lean Hog Index was down 96 cents to 60.92, bringing the Dec discount to cash to 3.12 versus the normal seasonal discount of almost 17.00, signaling that export demand needs to strengthen quickly. U.S. weekly pork export sales for the week ending last Thursday were released this morning at 20,100 metric tons versus the previous 4-week average of 21,700 metric tons. Cumulative sales for 2017 are now at 917,700 metric tons, 7.2% ahead of last year's pace. Carcass cutouts were down 2.19 at midday to 74.13. Loins were down 1.71 to 78.05, butts were down 46 cents to 86.82, picnics were down 4.09 to 53.78, ribs were down 8.81 to 117.98, hams were down 2.72 to 61.78, and bellies were down 92 cents to 96.26. Hopefully, these drastic slides can spur some demand sooner rather than later. The Oct contract closed below its lowest trade price ever on October 3, 2016. The Dec and Feb contracts both closed below their recent support levels at 10 and 20-day moving averages. Prices are beginning to reach oversold levels, but this is no guarantee of a bounce tomorrow.

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