Stewart-Peterson Market Commentary

Closing Commentary - March 15, 2019

Top Farmer Closing Commentary 3-15-19

CORN HIGHLIGHTS: Corn futures finished 2 to 3 cents higher in today's trade with the May contract up 3 cents to 3.73-1/4, while Jul corn was 2-3/4 cents higher to 3.82-1/4. Today ended a solid week for corn futures as the May contract finished 9 cents higher and ended on a 4-day higher streak. Overall strength in the ag commodity markets, and spillover strength from continued short covering in soybean and wheat markets helped provide buyer support under the corn futures again in today's trade. Managed money, which built a relatively large short position over the past couple of weeks, is likely moving to the sidelines with the overall strength in the grain markets. News was relatively quiet in today's trade, and the corn market may be needing additional bullish news to move higher in the weeks ahead unless the technical picture is enough to bring additional short covering. On today's close, May futures closed at the 20-day moving average, which prices have traded below since the end of February. New crop Dec corn has posted a double bottom on weekly charts and finished above the 20-day moving average with its close at 3.96 in today's trade, which may bring some additional follow-through buying next week.

SOYBEAN HIGHLIGHTS: Soybean futures finished with strong gains as contracts were 7 to 10 cents higher in today's trade. Front month May beans gained 10-3/4 cents to 9.09-1/4, Jul beans were up 10-3/4 cents to 9.23, and new crop Nov beans finished 9-3/4 cents higher to 9.42. For the week, the May contract gained 13-1/2 cents on the week, while Nov beans finished with a 12-cent gain. Strength seen in the soybean meal market caused short covering into the bean market as prices firmed throughout today's trade. Soybean meal futures may be picking up a bit with the prospects of more demand from U.S. soymilk crushers as news broke regarding African swine fever's impact in China. With a strong reduction in the Chinese hog herd, U.S. expansion would be likely, bringing more demand for meal from U.S. end users. Both soybean and soybean meal prices have held key support levels this week and finished with strong turns on the weekly charts which may likely bring some additional short covering on a change of trend. NOPA released February crush numbers today at 154.5 million bushels of soybeans, below expectations, but a record for the month of February. This is the sixteenth consecutive new monthly record. In addition, soybean meal exports were up 4% in February at 785,000 metric tonnes. While global demand for U.S. beans may be a concern, strength has stayed active in the meal market, which again provides spillover strength into soybean futures.

WHEAT HIGHLIGHTS: Wheat futures finished a strong week of recovery off of multi-month lows as Chi wheat futures were 7 to 9 cents higher. The front month May contract was up 9-1/2 to 4.62-1/4, while Jul wheat gained 8-1/2 cents to 4.68-1/4. For the week, May wheat futures posted a 22-3/4 cent gain, while Jul futures finished 20-3/4 cents higher. Buying strength also was seen in the other classes of wheat as KC hard red winter wheat in May was up 6-1/2 cents to 4.43, and hard red spring wheat in May was up 2-1/4 cents to 5.54-3/4. With the action in this week's charts, May wheat futures had tested long-term trend line support at the 4.30 level and have now rallied aggressively off that low. This posted a hook reversal on weekly charts and may set the market stage for more additional short covering in sessions ahead. As we move closer into the spring window, the market will be focused on the condition of U.S. winter wheat crops, as well as spring planting. The cooler-than-normal weather, as well as excessive wetness, may keep wheat developments low on the Plains and likely limit the start of spring planting. Regardless, in the short term, wheat futures may be trading more on the technical side of the equation and keeping a close eye focused on the demand needed for U.S. wheat bushels.

CATTLE HIGHLIGHTS: Cattle markets ended the week on a very positive note, with some of the deferred live cattle contracts even making new highs. Apr lives closed 1.70 higher to 129.10, Jun lives closed 1.57 higher to 121.92, and Aug lives closed 1.27 to 117.72. Apr feeders were up 2.27 to 146.92 and May feeders were up 2.10 to 148.45. Choice beef closed 54 cents higher yesterday afternoon to 227.70 but was up 5 cents this morning to 227.75. Cash bids in the country are so far quiet but trade this week has been mostly seen at $127, $1-$1.50 below last week's cash trade. Extremely stressful feed lot conditions have been a major source of support recently, with high winds and high rain, sleet, and snow totals. Dressed weights have been light and will stay light until weather clears up. There was also likely a good amount of spillover buying from the hog markets. The nearby Apr futures contract closed back above its 10, 20, and 50-day moving average levels for the first time since last Friday. Today's jump limited the weekly losses to just 57 cents. Both the Jun and Jul contracts found underlying support at the 10-day moving average levels and rallied to new contract highs.

LEAN HOG HIGHLIGHTS: Hog markets put in an extraordinary session today, with every contract out to Apr 2020 showing limit-up finishes. Apr hogs closed at 68.80, Jun closed at 86.52, and Jul closed at 89.37. The CME Lean Hog Index was up 1.01 to 54.13, its highest value since February 21 and its highest daily gain since October 1. Carcass cutout values closed 95 cents higher yesterday afternoon to 68.80, their highest value since January 22, but carcass values were off 75 cents to 68.05. China's hog herd was down 16.6% in February and their sow herd was down 19.1% in February. The market is beginning to believe more and more that China will begin to import huge amounts of foreign pork products to meet demand. China's purchase of 23,800 tons of U.S. pork last week was the third largest purchase since 2013, and this was done despite a 62% tariff on U.S. pork products. Technically, today was as bullish as it gets. Apr futures closed at their highest value since December 17, Jun closed at new contract highs, as did Jul. Limits will be expanded on Monday to 4.50.




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