Stewart-Peterson Market Commentary

Closing Commentary - August 19, 2019

Top Farmer Closing Commentary 8-19-19

CORN HIGHLIGHTS: Corn futures failed to follow through on Friday's strength as contracts were 4 to 6 cents lower. Front month Sep corn lost 6 cents to 3.65, while Dec corn lost 6-1/4 cents to 3.74-1/2. Despite today's weakness, Dec corn futures traded within Friday's trading range as prices stayed in a consolidation manner. Pressure in the grain markets overall was likely triggered by rains that moved across portions of the Corn Belt over the weekend which provided some beneficial moisture to those regions that had been lacking. While some areas still missed out, what little rainfall was received was a welcomed improvement. Demand tone stays soft in the corn market with weekly export inspections at 20.1 mil bu. This is currently running 16% behind last year's pace, as well as still short of the USDA's target as the marketing year ends at the end of the month. The market is closely watching the start of this week's Pro Farmer crop tour, which began its first lags of field samples today. Social media was active with pictures and comments of what is being seen on the tour, but early numbers haven't been established. Initial reactions are what was expected to see a high amount of variability within the corn crop in those first states was a wide range of maturities. This will be an ongoing tour that works through Wednesday with final results announced on Thursday.

SOYBEAN HIGHLIGHTS: Soybean futures were the weakness in the grain markets today as contracts were 11 to 13 cents lower. Sep beans were down 13-1/4 to 8.54, while Nov beans lost 13-1/4 cents to 8.66-1/2. Like corn, beneficial rains across some key areas of the Grain Belt were likely to trigger in the soybean market in today's trade. As prices pushed through Thursday/Friday lows, it opened the door for additional technical selling as bean futures traded to their lowest level since August 8. Demand still stays in the forefront of the bean market, while production is still up I the air overall at this stage. Weekly export inspections saw 42.6 mil bu of beans loaded for shipment, which is ahead of the USDA target and overall 20% under last year. Export numbers continue to stay as a bearish force in the bean market. While overall weather has not been supportive of price, the trend is still lower in the bean market, and with rain on the radar in August, it usually makes it difficult for beans to rally.

WHEAT HIGHLIGHTS: Wheat futures saw selling pressure s Chi contracts were 4 to 5 cents lower. Front month Chi Sep wheat was down 5-1/4 to 4.65-1/2, while Dec wheat was down 5 to 4.72-1/2. Weakness was also seen in other classes as front month Sep KC winter wheat contract was down 3 cents to 3.91-1/4, and Mpls spring wheat was down 3/4 of a cent in Sep to 5.05-1/2. Weakness in the other grain markets made it difficult for wheat futures to find much attraction today as the overall trend continues softer in the wheat market. While KC winter wheat harvest should be winding down, a ramp of spring wheat harvest, as well as European spring wheat harvest may make it difficult for prices to rally with anticipated crops. Weekly export inspections were a bright spot at 18 mil bu inspected and has this marketing year off to a good start as current shipments are running 25% year over year. Wheat futures are lacking overall fundamental news to be supportive, and may be more at the mercy of the trend in the grain markets, as well as harvest pressure here in the short term.

CATTLE HIGHLIGHTS: Cattle markets closed slightly higher today with Aug lives up 27 cents to 100.20, Oct lives were up 17 cents to 98.22, and Dec lives were up 20 cents to 103.72. Aug feeders closed 1.10 higher to 135.67, and Sep feeders closed 45 cents higher to 132.82. Choice beef values closed 2.57 higher on Friday afternoon to 238.69, their highest value since June 23 2017. Choice beef was down 16 cents this morning to 238.53. Slaughter last week reached 651,000 head, up from 642,000 head the previous week despite the Tyson KS plant being offline. This plant killed roughly 6,000 head per day and was responsible for about 6% of the U.S. slaughter capacity. However, with such strong margins, other packers stepped up their Saturday kill to 74,000 head, 23,000 head above the previous week. The increase in beef production was likely the reason for the setback in beef prices today and the increase in slaughter prove that there will be demand for cash cattle in the country. This also should keep cattle from backing up in the country and gaining too much weight. Despite the positive tilts of fundamentals, live cattle finished just off of their lows for the day. Prices are still sharply oversold and wide gaps on the charts are still targets for a balance. Feeder markets also had a technically disappointing day, failing yet another test of their overhead 10-day moving average resistance level.

LEAN HOG HIGHLIGHTS: Hog markets made triple digit gains today finding support from rallying China pig prices and valued buying near recent lows. Oct hogs closed 2.02 higher to 64.02, Dec hogs closed 2.07 higher to 62.85, and Feb hogs closed 1.70 higher to 69.72. The CME lean hog index was down 84 cents to 79.02. Carcass cutout values closed 1.97 lower on Friday afternoon to 86.26, but bounced 38 cents this morning to 86.64. China's spot pig prices were up 2.6% overnight and now up 26% for the month and 81% year to date. This should be a positive force for the longer term as China needs to import more and more pork from other countries. At this time, the U.S. will not be able to take advantage of this directly, but should be able to fill inventories of those shipping to China. Still, hog prices are relatively low as the market is fearful that heavy inventories in the fall may overwhelm domestic demand, especially if exports cannot pick up. Oct hogs found buyer support near Friday's lows at 62.00, Dec hogs tested and closed just below their 10-day moving average resistance level, and the Feb contract pushed through and closed above its 10-day moving average resistance level. This should attract some more buyers and is consistent with the longer term outlook for higher pork exports.




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