Stewart-Peterson Market Commentary

Closing Commentary - August 21, 2019

Top Farmer Midday Update 8-21-19

CORN: Corn futures are trading lower this morning with Sep down 1-1/4 cents to 3.58-1/4, Dec is down 1-1/4 cents to 3.67-1/2, and Mar corn is down 1-1/4 to 3.80. Pro Farmer continued their tour yesterday, predictably finding lower corn yields than last year in NE and IN. IN's corn yields were over 21 bu an acre lower than last year's estimate, and NE's yield was said to be about 6 bu an acre lower than last year. Markets are still on the defensive though due to non-threatening weather and poor demand. Poet announced yesterday that they are closing their Cloverdale Indiana ethanol plant indefinitely, and put half of their buyer refineries at reduced production rates. The Dec corn contract has traded within a relative tight range today, only trading at high as 3.71. Prices are making a new low for the move and the contract low made on May 13 is within range at 3.63-3/4. Speculative funds were thought to have sold 18,000 contracts of corn yesterday.

SOYBEANS: Soybean markets are trading slightly higher today with Sep up 3-1/4 cents to 8.59, Nov is up 3-1/4 cents to 8.71-1/2, and Jan beans are up 3-1/2 cents to 8.85-1/2. The Pro Farmer crop tour has found lower pod counts in all of their surveyed states so far. Given the lateness in the crop, this is falling in line with expectations though we will not see a Pro Farmer yield estimate until the end of the week. Weather looks mostly non-threatening in the near term, but soybean yields are still highly uncertain. The Nov contract has made three unsuccessful tests of its 10-day moving average resistance level over the last three sessions. Yesterday's close was well off the highs and prices have already backed off of today's highs after an unsuccessful test of resistance. Momentum indicators are pointing sideways. Speculative funds are thought to have bought about 1,000 contracts of beans yesterday.

WHEAT: Wheat markets are drifting lower again today with Sep Chi wheat down 2 cents to 4.58, Sep KC wheat is down 2 cents to 3.84-3/4, and Sep spring wheat is down 1-1/4 cents to 5.02-3/4. U.S. wheat futures are finding pressure from the European wheat weakness. The Russian ruble is at its lowest levels in six months, which makes Russian wheat cheap on export markets and also pressures foreign wheat as well. There is also talk that British farmers may be rushing to sell their wheat stocks ahead of potential market chaos if a no deal decision is reached on Brexit in October. Both winter wheat markets are oversold with the Sep Chi contract making new lows for the move today. KC wheat contracts are retesting recent lows made on August 14. Spring wheat futures are grinding sid3eways to lower in a consolidation range started a week ago. Speculative funds were thought to have sold 6,000 contracts of Chi wheat yesterday.

CATTLE: Cattle markets are higher this morning with Aug lives up 1.02 to 102.82, Oct lives are up 62 cents to 100.62, and Dec lives are up 90 cents to 105.72. Aug feeders are up 40 cents to 136.70, and Sep feeders are up 1.65 to 135.37. Retail beef values have been a major supportive factor lately, not only due to the perceived shortness after the Tyson plant burned down, but also due to a seasonal increase in retail demand ahead of Labor Day. Since packers can keep production moving at a good clip even with the plant offline, the perceived shortness in product is probably not very realistic, at least at this time. Cash trade should begin to make up much of the losses from last week as the market now knows there is ample demand for slaughter supplies. Oct lives are retesting their 10-day moving average resistance level for the first time since August 9 and are trading at their highest value since August 12. A close above that level should spur some follow through buying and begin to close gaps made early last week. Sep feeders are retesting some trendline resistance this morning that was failed last Thursday and again yesterday.

HOGS: Hog markets are soft this morning with Oct down 1.72 to 63.25, Dec hogs are down 65 cents to 63.52, and Feb hogs are down 50 cents to 70.30. Oct's inability to close above its 10-day moving average resistance yesterday was a sign of technical weakness, and traders are following through on that today. Not only is Oct down, but Dec and Feb have fallen back below their 10-day moving average levels. Domestic oversupply has been a major weight on prices lately and inventories are expected to increase into the fall. The China pork situation is not getting any better, but we need to see signs of increased import activity.

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