Stewart-Peterson Market Commentary

Closing Commentary - November 17, 2017

Top Farmer Closing Commentary 11-17-17

CORN HIGHLIGHTS: Corn futures had one of their strongest days in recent trading sessions, as prices finished 5-6 cents higher. Dec corn was up 6-1/2 cents to 3.43, while Mar finished 6 cents higher to 3.55. This week saw a lot of pressure in the corn markets, as prices pushed to new contract lows. With today's surge, prices finished down 1/2 cent on the week in the Dec contract. Mar futures lost 1-3/4 cents for the week. Today's close in the Mar contract was still the lowest weekly close on Mar futures. News in the corn market overall was quiet this morning. Corn futures were the direct beneficiary of strength seen in soybean futures, which finished with double-digit gains. With the corn market hearing a near record short managed money position for this time of year, today's overall market strength helped fuel short covering before Thanksgiving. With today's price surge, prices are likely developed at the top end of a new trading range, as speculators may have stepped into the market today looking for some bottom feeding and cheap price-picking strategies. With a large short position in the marketplace, price volatility can erupt quickly to the upside if the shorts look to liquidate. Fundamentals in the corn market will remain bearish, as producers wrap up this year's harvest of nearly 14-1/2 billion bushels with a record yield of 175.4 bushels per acre.

SOYBEAN HIGHLIGHTS: Soybean futures were the strength of grain markets today as contracts surged 15-18 cents higher. Front month Jan beans were up 18-1/2 cents to 9.90-1/2, while Mar beans were up 18-1/4 to 10.01-1/2. For the week, Jan beans rallied off of weekly lows to establish a 3-1/2 cent gain, while Mar beans finished 3-1/2 cents higher as well. It is difficult to find strong reasons for today's bullish turn in soybean futures, other than traders may be focusing on South American weather. The latest forecasts for Brazil were predicting broad coverage of rain across the country, but rainfall totals have been below expectations. Drier forecasts for Argentina may be more of a trading hotspot, but at this stage, weather forecasts may be relatively supportive until the key development months of December and January. Today's trade action may be more technical, as prices bounced off support lines, failing to break through after three consecutive days of higher highs. As prices moved higher, stops were triggered above the market, and any short sellers were taking profits going into Thanksgiving week. Regardless, demand will stay as a main focus of support underneath bean futures in the near term, while South American weather will be a barometer.

WHEAT HIGHLIGHTS: Chi wheat futures finished 3-5 cents higher with Dec futures up 5-3/4 to 4.27-1/4. Mar was 5-1/2 cents higher to 4.43-1/2. Like corn, wheat futures saw a round of short covering off of a large managed money short position, as overall strength in grain trade helped provide support. Overall bullish news is still lacking in wheat markets, but traders are watching increased areas on this week's drought condition map in the southern Plains, which has not gotten much rain the past 30 days. At this stage, it has only slightly bullish potential since it is early in the season and likely not to affect the burdensome wheat supplies at this stage. Weather will likely become more focused next spring as winter wheat breaks dormancy and we start developing spring wheat crops. Outside markets may have also provided support, as the US dollar index continued its short term downtrend, but are testing key support levels on the weekly charts this afternoon. When looking at US wheat, it is currently all about the demand side of the equation, as we are competing with a flush global wheat supply and the prospects that Russia may become the world's number one wheat exporter this year.

CATTLE HIGHLIGHTS: Cattle futures finished the week lower, further extending the downtrend. The nearby Dec contract lost 70 cents on the day and 1.72 on the week to 118.85. Feb lost 45 cents on the day and 2.07 on the week to 124.67. Apr closed 50 cents lower on the day and 2.22 lower on the week to 124.87. Traders are still nervous about the ideal weather in the central and southern Plains until at least the beginning of December. Average weights will increase quickly with such widespread friendly weather. Position taking was also a major theme today ahead of this afternoon's Cattle on Feed report. Marketings came in at 106% vs the average estimate of 105%, placements were a very heavy 110% vs the average estimate of 107.5%, and on feed was reported at 106% vs the average estimate of 105.5%. Yesterday's closes were likely the source of some long liquidation today and risk off mentality before shortened trade week over Thanksgiving that normally brings very low trade volume. With today's Cattle on Feed numbers and existing bearish trend, price direction still looks negative.

LEAN HOG HIGHLIGHTS: Hog futures finished slightly higher in wide trading ranges. The nearby Dec contract closed 55 cents higher on the day and 1.82 lower on the week to 60.65. Feb closed 50 cents higher on the day and 3.17 lower on the week to 67.07. Apr closed 27 cents higher on the day and 2.90 lower on the week to 71.15. Carcass cutouts closed 8 cents lower yesterday afternoon to 80.55 and were down another 7 by midsession today to 80.48. Traders feel that slipping pork values could soon impact packer demand, causing hogs to back up in the country and add weight. As of now, though, retail pork demand is very strong and keeping product moving counter seasonally. The CME lean hog index closed 40 cents lower today to 65.97. Though the discount of futures to cash did tighten slightly today, it remains much wider than is normal for this time of year. This should support futures in the near term. Technical price chart, though showing positive closes, were not all that impressive today. Prices in all three near month contracts traded up to their strong points of resistance and fell hard to close with moderate gains. The lack of determination in the price action today likely signaled some short covering before the weekend and Thanksgiving week.

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