Top Farmer Closing Commentary 12-7-17
SPC - Thu Dec 07, 3:53PM CST

CORN HIGHLIGHTS: It was another ho-hum day in the corn market, as a very tight trading range, along with general weakness in soybeans and wheat, weighed on corn futures. By days-end Dec corn finished 1/2 lower at 3.38-3/4, Mar lost 1-1/4, and new crop Dec lost 1-1/4 closing at 3.84. For most futures contracts, today's trading range was very small. As an example, Mar had a 2 cent range. This is not untypical during late December, but a little disappointing for early to mid-December. In other words, the market almost has taken on a holiday-type trade atmosphere. News is lacking one way or the other to provide direction. Near-term dryness in northern Argentina and Brazil is providing support, but forecasters are suggesting that 2 weeks out, rain chances increase. Export sales were released today with corn at 34.5 million. This puts total year-to-date at 901.5 million, well below last year's pace of 1.243 billion.

SOYBEAN HIGHLIGHTS: Soybean futures lost ground today with futures declining 9-1/4 to 10-3/4 cents on what appears to be a better chance for rain in the longer range forecast that is more than 10 days out in Argentina and Brazil. The near-term forecast continues to suggest mostly below-normal precipitation with mostly above-normal temperatures. That being said, the market factored these variables in early in the week, and since has come under pressure. Jan beans closed 10-3/4 cents lower at 9.92, while new crop Nov closed 9-1/4 lower at 10.05-1/4. We'll continue to view rallies as opportunities to sell. Export sales were released today, with beans at 74.1 million, a supportive number and yet prices still fell to find support. In part, it's because year-to-date export sales continue to lag a year ago and that is somewhat concerning, considering the USDA is anticipating more beans to be sold this year than last. Year-to-date total is 1.335 billion vs 1.583 at the same time a year ago this week.

WHEAT HIGHLIGHTS: Wheat continued its downtrend with new lows scored again today as prices factored in a slow export pace, along with little new news to provide underlying support. Both intermediate and long-term forecasts indicate little chance of heavy cold temperatures pushing into the Midwest and creating havoc for winter wheat. The short-term forecast does appear to be on the colder side, but not damaging. Export sales activity showed all wheat sales at 11.8 million bushels, which, in general, should be termed as neutral or negative. There just isn't much news for wheat to grab onto, and consequently the trade is seeing Fund money continue to add to short positions. Our bias is neither bullish nor bearish, but the market is drifting, and as such we'll stay with our short position until the market dictates otherwise. We feel wheat may be an undervalued commodity, but there's no rush from end-users at this time to pick up inventory. Bottom line, looks like buying as needed.

CATTLE HIGHLIGHTS: Cattle futures drifted further today under the weight of disappointing cash trade. The nearby Dec live cattle futures closed 27 cents lower to 115.62, Feb closed 60 cents lower to 118.67, and Apr closed 52 cents lower to 120.10. Feeder cattle contracts were up just slightly. Cash trade today in Kansas and Texas at 117.00 was significantly lower than last week's activity between 119.00 and 121.00. Beef values were soft for today's session. Choice cuts were down 2.68 yesterday afternoon to 206.40, and select cuts were down 2.52 to 184.11. By mid-session today, choice cuts fell another 1.24 to 205.16, and select cuts rebounded 14 cents to 184.25. Export sales for the week ending November 30 were the lowest this year, though keep in mind that was the week of the Thanksgiving holiday. Weekly beef export sales were reported at 2,700 metric tons vs the previous 4-week average of 12,275 metric tons. This leaves cumulative sales for 2017 8.2% ahead of last year's pace. Poor export sales numbers were mostly ignored due to the short week, but the confirmation of lower cash trade and softer beef values was fuel for more long liquidation. The best traded Feb contract did fall and close below its 100-day moving average, though the Dec and Apr contracts were able to hold on. Prices are technically oversold, but long liquidation has the potential to push prices lower in the coming sessions despite the oversold conditions.

LEAN HOG HIGHLIGHTS: Hog futures broke major support levels today, as the market continues to anticipate a surge in production at some point. The nearby Dec contract closed 25 cents lower to 63.57, Feb closed 47 cents lower to 68.47, and Apr closed 57 cents lower to 72.40. Pork Export Sales data released this morning was very strong, especially considering the short week of November 30. U.S. pork export sales were reported at 22,600 metric tons vs the previous 4-week average of 13,175 metric tons. Cumulative sales for 2017 have now reached over 1.1 million metric tons, 5.8% ahead of last year's pace. Carcass cutouts were down 2.03 yesterday afternoon to 82.75, and were only able to rebound 79 cents today to 83.54. Strength in retail pork values has been a major supportive factor recently, so the weakness late yesterday and today was likely a major source of pressure for prices. The best traded Feb contract was unable to break above its 20-day moving average level today. It then fell back and closed below its 50-day moving average level for the first time since November 21. The next source of support lies at the 100-day moving average at 66.87. Even with the recent losses, prices are not oversold and probably have some room to fall if pork values do not rebound.

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