Stewart-Peterson Market Commentary

Closing Commentary - September 25, 2017

Top Farmer Closing Commentary 9-25-17

CORN HIGHLIGHTS:Corn futures edged higher with small gains of 1/4 to 1/2 cent in a range-bound quiet trade day. Dec futures finally gained 1/4 cent, closing at 3.53-3/4. Today's range of most contracts was less than 4 cents. A firmer dollar and weakness in soybeans may have kept rally potential for corn in check today, as prices tried to close above the 21-day moving average, and may have squeaked through this level. Yet, it's not a strong enough to suggest prices are ready to maneuver upward. It looks like more consolidation, as the news to provide direction remains rather scarce. Harvest pressure will continue to pick up steam. So far today, we'd argue most producers have told us yields are about as expected, or better than expected. Yet, we also expect to hear continued volatility with this year's yield numbers. Particularly, in areas that struggled with weather. Nonetheless, it looks like this year's crop will be closer to USDA projections, at least at this point. Export inspections at 29.1 million were considered less than positive. Yet, the prices hung in there.

SOYBEAN HIGHLIGHTS:Friendly export inspections at 37.8 million bushels wasn't enough to hold prices, as they slipped, giving back most of Friday's gains. By day's end, Nov beans closed 13 lower at 9.71-1/4, while deferred Jul closed down 11-3/4 at 10.06. While one day doesn't make a market, today was very disappointing for bulls. They were hoping for follow-through after strong gains on Friday once prices pushed through the 50% correction, as well as above the previous highs in August and September, to reach their highest level since August 10. Yet, prices were off to a poor start this morning, as traders were willing to buy wheat and corn, and sell beans. Friday's rally brought additional farmer selling, and may have weighed on prices today. Today was considered an inside day with futures contracts trading within the range of prices Friday. So, today's activity doesn't necessarily mean much technically, other than it was not a very impressive close.

WHEAT HIGHLIGHTS:Wheat futures finished with solid gains of 3-1/4 to 4-1/2 in Chi, with Dec leading today's gains closing at 4.54. KC wheat closed 3 to 4 higher, and Mpls, the big winner, closed 9 to 14-3/4 higher, as Mar led today's rally. Expectations are that the Small Grains report and the Quarterly Stocks will shed light on tightening inventory of spring wheat, as well as fewer acres. Prices have been entrenched in the downtrend since peaking in the very early part of July. After retracing more than 62% on the Sep Mpls wheat contract, it is now poised to make a run to 6.70, the 40-day moving average, and then to near 6.90 (Dec), a 50% retracement of this year's low from April to the high on July 5.

CATTLE HIGHLIGHTS:Cattle futures closed sharply lower today on reaction to bearish Cattle on Feed and Cold Storage reports Friday afternoon. The nearby Oct live cattle contract closed 2.35 lower to 109.20, Dec closed limit down, 3.00 lower, to 114.42, and Feb closed 2.80 lower to 117.25. Sep feeder cattle closed 2.92 lower to 150.47, while Oct through Jan contracts all closed limit down, 4.50 lower, for the day. Placements reported on Friday at 103% vs estimates of just 97%, were the main source of selling pressure today, especially considering the major jump in heavier weight feeder cattle placed in August. Dec futures are trading at such a large discount to cash that feedlots are now incentivized to market heavier weight cattle, also a bearish setup. On Friday afternoon, choice cuts closed 9 cents higher to 191.60 and select cuts closed 32 cents higher to 188.73. At mid-session today, choice cuts were up another 1.78 to 193.38, and select cuts were up another 1.56 to 190.29. If boxed beef values can continue to stabilize, then we may have found a near-term low in beef values which could attract a large amount of demand. Technicals were no friendlier today than fundamentals. Live cattle contracts from Dec 2017 to Dec 2018 all had gap-down sessions, along with all feeder contracts out to May 2018. Some contracts were beginning to approach overbought levels, and Friday's reports provided fundamental justification for a correction.

LEAN HOG HIGHLIGHTS:Hog futures were able to find some technical buying support today in spite of a relatively bearish Cold Storage report on Friday. The nearby Oct contract closed 62 cents higher to 56.32, Dec closed 80 cents higher to 57.42, and Feb closed 70 cents higher to 62.60. Carcass cutout prices closed 34 cents lower on Friday afternoon to 72.70, their lowest value since November 17, 2016. By midday today, pork bellies were up 5.67 to 97.98, pulling carcass cutout values 2.10 higher to 74.10. While not confirmed, such a jump in pork values could signal sweeping demand due to very low prices. Light volume was also seen today in hog markets, as most the livestock focus was drawn to sharply lower live end-feeder cattle futures. On the technical front, prices were firmly oversold, attracting buying interest today. Prices put in a bullish outside day, with the Dec contract filling all of the gap created last Friday. Nearby resistance is at the 10-day moving average, over 2.00 away from the Oct close, 40 cents away from the Dec close, and 50 cents away from the Feb close.




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