Top Farmer Closing Commentary 2-13-18

CORN HIGHLIGHTS: Mar futures ended 1/4 cent lower, closing at 3.66-3/4, after reaching a new near-term high of 3.68-1/2. New crop Dec closed 1 lower at 3.96, after reaching a high today of 3.97-3/4, a level that has not been reached since late-October. Strength in soybeans, along with a weaker U.S. dollar, helped provide underlying support. Yet, farmer selling has likely picked up and will cap rally potential, at least for now. Weather conditions in the Southern Hemisphere continue to raise doubts as to the crop potential out of Argentina, due to dry conditions, and in Brazil due to some concerns with late planting of second crop. Open interest continues to indicate that funds have been exiting short positions with last week's Commitment of Traders report, as well as daily reports of fund liquidation suggesting funds are near 50,000 contracts short, well below the over 200,000 short just a month ago.

SOYBEAN HIGHLIGHTS: Fund liquidation, weather concerns out of the Southern Hemisphere, as well as end-users covering soymeal all help provide underlying support for the bean market today, as it continued its trek higher gaining anywhere from 5 to 10 cents. Nearby Mar led today's gains, closing at 10.11-3/4, its highest close since early-December. New crop Nov closed at 10.19-1/4, up 5 cents and its highest close since the contract high close from 7/12 at 10.27. Meal was once again the leader, as it pushed anywhere from 3.40 to 7.40 higher, finishing with strong gains and in the upper half of its trading range. Some profit-taking and/or hedge pressure was noted late in the session, as prices slid from highs. Mar meal had a high of 371.60/ton, before closing at 365.20. This is the highest price for soybean meal since 7/2016. Forecasters are suggesting more rain for the week in Argentina, just as has been forecasted the last two weeks, yet totals have been disappointing. We're not seeing forecasts for soaking rain, just more chances for rain. Consequently, we believe the market is going to be well supported for now, as temperatures rise toward the end of the week. On the one hand, we see bullish fundamentals developing from a weather perspective, and perhaps speculative interest, not to mention end-user buying. On the other hand, prices have rallied on the beginning of a weather event that could quickly change. In addition, we still have concerns that once the Brazilian crop matures in a greater quantity in the weeks ahead, China may have some concerns over U.S. political issues, which may suggest they could slap tariffs in place. Again, this is just our opinion and concern.

WHEAT HIGHLIGHTS: Wheat futures finished quietly, losing near 3 cents in both Chi and KC, while spring wheat lost anywhere from 5 to 8-1/4 cents, as Mar led today's drop in that market at 6.01-3/4. New crop Mpls finished down 4-3/4 at 6.32 and continues to trade in a sideways pattern. Both Chi and KC, however, are winter wheats and reflecting concerns in dry weather, helping to propel prices higher in recent weeks with most futures gaining near 30 cents. The speculative interest was very short the wheat market into mid-January, and since the USDA report released on 1/12 prices have moved upward. From a larger picture perspective, however, the world is still bountiful in its wheat supplies and a continuation of an uptrend would have to be weather related. Drought maps do indicate a small decline in drought areas in the Midwest from last week, but the overall picture remains critically dry for many. Snow cover is also lacking.

CATTLE HIGHLIGHTS: Cattle futures closed just a hair lower today, unable to drum up much sustained buying interest. The nearby Feb contract closed 30 cents lower to 126.82, Apr closed 22 cents lower to 124.77, and Jun closed 7 cents lower to 116.65. Cash bids in the country are still undeveloped. While last week's trade at 126 was not significantly higher than the previous week, many believe that packers are currently short-bought and may be more willing to pay up for privately fed cattle this week. The stock market may be trying to stabilize, which would bring more confidence and perspective beef demand. Actual boxed beef prices were mixed to positive for today's session. Yesterday afternoon, choice cuts closed 1.72 higher to 208.24, and select cuts were up 1.23 to 203.97. By mid-session today, choice cuts were up another 58 cents to 208.82, but select cuts drifted 24 cents lower to 203.73. Forecasts this week point to friendly weather for marketings, but the 6-10 day forecast have greater chances of below normal temperatures and above normal precipitation, which could hinder weight gain. On the technical price charts, no real significant damage was done with the lower closes today. All three nearby live cattle contracts held their 10-day moving average support levels. Momentum indicators are neutral, reflecting current market indecision.

LEAN HOG HIGHLIGHTS: Hog futures closed moderately lower, appearing to start a consolidation range near these most recent lows. The nearby Feb contract closed 27 cents higher to 73.35, Apr closed 1.10 lower to 69.42, and May closed 92 cents lower to 75.12. Warmer weather in the Midwest for this week was a pressure point today, as feedlots may be able to bring extra hog to market. Carcass cutout values closed 2.27 higher yesterday afternoon to 76.71, and were up another 42 cents by mid-session today to 77.13. Ribs and loins led the way higher, up 1.94 and 2.52, respectively. Bellies were down 16 cents to 122.69. Yesterday's bullish key-reversals brought some much needed stability to hog markets. Not only were lows established for the move, but there was likely a fair amount of short covering. Prices are still below major moving average levels, but prices made an inside session today, possibly suggesting a new consolidation range.




Market Commentary provided by:

Stewart-Peterson
137 South Main Street, West Bend, WI 53095
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