Stewart-Peterson Market Commentary

Closing Commentary - November 13, 2018

Top Farmer Midday Update 11-13-18

Corn: Corn futures are trading moderately lower this morning, finding some pressure on spillover selling from the wheat markets, as well as a higher U.S. dollar and favorable South American weather. Dec futures are down 3-3/4 cents to 3.67-1/2, Mar is down 3-1/2 cents to 3.78-3/4, and May is down 3-1/2 to 3.86-1/2. All three nearby contracts have held onto their 50-day moving average support levels and have since found a little buying above. For the week ending 11/8, 1.137 million tons of corn were reported shipped, versus 1.284 million tons the previous week and 407,000 tons the previous year. The U.S. has shipped about 11.1 million tons of corn so far this marketing year, versus just 5.9 million tons the same week last year. During yesterday's session, funds bought 5,000 contracts of corn, leaving their net position long about 25,000 contracts.

Soybeans: Soybean futures are slightly higher this morning, with the Nov contract up 2-3/4 cents to 8.74-1/2, Jan up 2-3/4 cents to 8.86 and Mar up 2-1/4 cents to 8.99. Price action has been very quiet this morning, with futures briefly trading down to their 10-day moving average support level but then rallying back up. This morning, exporters sold 277,000 metric tons of soybeans to unknown destinations for new crop delivery. This, plus reports that Steve Mnuchin and China's Vice President had a phone conversation last Friday. Though no major breakthroughs were made, this was seen as progress. For the week ending 11/8, 1.301 million tons of soybeans were reported shipped, versus 1.244 million tons last week and 2.185 million tons a year ago. U.S. soybean shipments are running about 7 million metric tons behind last year's pace. During yesterday's session, funds sold 4,000 contracts of soybeans, leaving their net position short about 5,000 contracts.

Wheat: Wheat futures are sharply lower this morning, falling back from yesterday's strength. Dec Chi wheat is down 10-1/4 cents to 5.09-1/2, Dec KC wheat is down 8-1/4 cents to 4.85-1/4, and Dec Mpls wheat is down 4-1/2 to 5.78. News that Russia and China are currently in talks about more Russian regions being approved to export wheat to China is a major bearish factor this morning. Wheat planting is expected to show solid progress on this afternoon's Crop Progress report, but Kansas has its insurance date on Thursday, which may limit the incentive to keep planting. The Dec Chi contract is within the middle of its recent range, while the Dec KC contract is near the very lows. Chi/KC spreads have stayed wide so far this morning, while the Dec/Mar Chi calendar spread has fallen off yesterday's short squeeze highs. For the week ending 11/8, 342,000 tons of wheat were reported shipped, versus 341,000 tons the previous week and 309,000 tons the same week last year. Total wheat shipments are still running 2.5 million tons behind last year's pace. During yesterday's session, funds bought 7,000 contracts of wheat, leaving their net position short about 45,000 contracts.

Cattle: Cattle markets are mixed this morning, with Dec lives down 40 cents to 115.52, Feb lives down 7 cents to 117.92, Nov feeders down 12 cents to 148.25 and Jan feeders up 35 cents to 144.07. Weak beef demand and high production are still holding the live cattle contracts lower, but a move into oversold territory has sparked a somewhat technical bounce in the late morning today. Speculative length remains very vulnerable to technical support levels being broken. That said, the sharp recent drops have likely squeezed out at least a solid portion of much of that length.

Hogs: Hog markets are mixed this morning, with Dec down 22 cents to 56.32 and Feb up 55 cents to 62.07. News that the China feed maker that was thought to be infected with ASF was actually not infected was a pressure point this morning, but it does still highlight the uncertainty of how quickly ASF can spread in China. Pork demand should begin to increase over the next week into Thanksgiving, but record production pace will keep a lid on any major bounces. So far, both Dec and Feb contracts are trading in very tight ranges compared to recent volatility, as futures attempt to consolidate.

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