Stewart-Peterson Market Commentary

Closing Commentary - December 11, 2019

Top Farmer Closing Commentary 12-11-19

CORN HIGHLIGHTS: Corn futures had a difficult day finishing with losses of 2-3/4 to 5-3/4 cents as prices closed at their lowest levels in four months. Mar futures broke underneath the low established on November 27th, the Wednesday before Thanksgiving when futures touched 3.73. Today’s low was 3.71 with a close at 3.71-1/4. The next objective for corn is the contract low established on September 9th of 3.65-3/4. With funds continuously selling the market and futures unable to break above the 10-day moving average the last four sessions, the 21-day moving average since late October, and above a channel line resistance, which is a downward sloping line, futures need a quick turnaround or else the contract low is likely to be tested. News in general has been viewed as supportive as of late with a weaker U.S. dollar, a USMCAS agreement, in general the net drying conditions in Argentina. Yet, prices continue to falter and today looked more like a technical session which sell stops were triggering helping to accelerate prices down. Wheat prices were also weaker as were soybeans which didn’t help the cause for corn.

SOYBEAN HIGHLIGHTS: Despite good news this morning on export sales to China, soybeans took a breather after several sessions higher finishing with losses of 5-3/4 in Nov 2020 to 7-3/4 on the Jan contract. A close below the 21-day moving average may have also triggered some additional selling. The overall trend for soybeans in the very short term remains up with today’s market perhaps buy the rumor sell the fact as sales to China were viewed as supportive, but not necessarily unexpected. Nonetheless, today is one of those days one might have accepted a breakout to the topside after the USDA reported 585,000 tons of soybeans sold to China, as well as another 140,000 tons sold to unknown destinations. Weaker meal and oil prices were also noted today with soybean meal trading closer to contract lows than not. Bean oil prices continue to remain in a longer term uptrend with futures consolidating the last three sessions. Today’s losses were uneventful both fundamentally and from a technical perspective.

WHEAT HIGHLIGHTS: Wheat futures finished mixed with Mpls gaining 1/2 to 3-1/2 cents as Dec led today’s gains closing at 5.00-1/2. Dec KC wheat closed down 1/2 at 4.15-1/2 and Dec Chi down 4 at 5.30-3/4. Like the corn and soybean markets, wheat prices just couldn’t get out of the starting block today and were under pressure for most of the session. Today is Wednesday which means this week’s summary so far has a USDA report indicating slightly supportive for U.S. stocks, yet neutral on world stocks. Weather in Australia remains challenging and dry for many producers and could create another downgrade to the Australian crop. The western Plains and parts of Argentina remain on a dryer pattern. That being said, this week also, again, indicated ample world inventories.

CATTLE HIGHLIGHTS: Cattle markets put together a solid session today with Dec lives up 70 cents to 120.57, Feb lives were up 75 cents to 125.32, and Apr lives were up 82 cents to 125.87. Jan feeders were up 1.12 to 142.77 and Mar feeders were up 1.15 to 143.67. Choice beef values made their lowest closes yesterday since October 22nd, down 2.15 to 221.49. Choice beef was down another 1.77 this morning to 219.72. Choice beef values have fallen over 20.00 since making their recent peak on November 13th. On yesterday’s USDA Supply and Demand report, the 4th quarter of 2019 U.S. beef production was increased by 100 mil pounds, while 1st quarter 2020 production was lower by 5 mil pounds and 2nd quarter by 30 mil pounds. The jump in production for 2020 should be considered a bearish force for the Apr cattle futures. Cash cattle traded in a decent volume yesterday at 118.00, down from 119.00 on Monday, an average price of 118.84last week. Without any sales in today’s Feb cattle exchange, it seemed that the live cattle would have drifted lower, but instead, futures pushed through nearby resistance levels. Feb lives closed above their 10 and 20-day moving average levels for the first time since December 3rd in some impressive price action. Jan feeders closed above nearby resistance at the 20-day moving average level for the first time since November 18th.

LEAN HOG HIGHLIGHTS: Hog markets made mixed and very quiet closes today, with Dec up 22 cents to 60.70, Feb hogs were down 25 cents to 67.72, and Apr hogs were up 5 cents to 74.25. The CME lean hog index was up 35 cents to 58.47. Carcass cutout values closed 1.14 higher yesterday afternoon to 83.12 and were up another 51 cents this morning to 83.63. Yesterday’s USDA report showed that pork production declined from quarter 4 to quarter 1 as expected at 355 mil pounds vs last year’s decline of 193 mil pounds. This is the biggest drop since 2014, then the drop from quarter 1 production to quarter 2 is the largest since 2008. The best traded Feb contract briefly tested its 10-day moving average support levels this morning, but was able to close above it. Prices also tested overhead resistance at the 20-day, but could not push through. Apr hogs were also trapped between their 10 and 20-day moving average levels in two-way trade.

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