Stewart-Peterson Market Commentary

Closing Commentary - October 16, 2018

Top Farmer Closing Commentary 10-16-18

CORN HIGHLIGHTS: After moderate to strong gains the last three sessions, corn prices took a breather today losing 3 cents on nearly all futures contracts with nearby Dec closing at 3.75-1/4. Today's trading range was 4 cents, with prices closing near the middle of the range. Today was termed an inside day, which means today's high and low prices were within yesterday's high and low. In other words, not much activity from a pricing perspective. Yet, farmer selling is likely to pick up and clear weather, as well as expectations for less-than-normal rainfall in the 6-10 day forecast, suggests that harvest progress could speed up quite rapidly. 39% of the crop was harvested as of Sunday according to the USDA progress report. This is actually ahead of the 5-year average of 35%. Nonetheless, there will be a lot of corn that potentially can be pushed into the pipeline in the short term, and the recent recovery of more than 10% would suggest farmer selling will likely pick up. Dec corn bottomed at 3.42-1/2 on September 18 and at a high yesterday of 3.78-1/2 (or an increase of 36 cents).

SOYBEAN HIGHLIGHTS: After sharp gains yesterday in which most futures closed more than 20 cents, today's market saw losses of 6-1/2 to 6-3/4 with Nov leading today's slide closing at 8.84-3/4. However, prices closed more than a nickel off their low and this would suggest that selling interest will still be somewhat minimal. The markets have had a good surge as of late, with the recent bottom at 8.12-1/4 on Nov futures and the recent high, yesterday, at 8.92 or a rally of near 80 cents. We would expect farmer selling to pick up when prices have gained nearly 10% in value. In addition, the 100-day moving average on Nov beans acts as overhead resistance. An upward slanting inverted head-and-shoulders formation would suggest a potential move to the most recent high of July 31, which is 9.22-1/4. Yet, it might take some additional new news to provide support. It probably will not come in the form of a near-term weather forecast, as most of the Midwest is expected to see dry conditions over the next 5-10 days, which should allow harvest to pick up full steam. Temperatures will remain on the cooler side but, in general, it looks like good harvest weather. Soybean meal lost 3.90 to 4.70 and bean oil lost 10 cents. Bean oil continues to hold in a nice near-term uptrend, but may have double topped yesterday. On the other hand, bean meal had a strong surge yesterday, but failure to follow through today and prices just below the 100-day moving average both yesterday and this morning would suggest selling interest may be stronger at this time, especially with harvest expected to kick into full gear.

WHEAT HIGHLIGHTS: Wheat futures finished quietly and with small losses. Chi lost anywhere from 1/4 to 1-1/2 cents, KC 3 to 4-1/2, and Mpls 3 to 4-1/4. A lack of fresh positive news, weakness in beans and corn, and a recovery in the stock market likely weighed on wheat prices today. Dollars could very well be flowing back toward equities on ideas the recent harsh downturn in a very short window of time may be overdone and providing good value. Whatever the case, wheat prices continue to consolidate and for now that could be construed as a victory. We fully expect the export market to pick up steam.

CATTLE HIGHLIGHTS: Cattle futures put in negative closes today, again finding sellers on the longer-term ideas of heavy supply. The nearby Oct live cattle contract closed 72 cents lower to 112.65 and Dec closed 20 cents lower to 117.77. Oct feeders were down 1.07 to 154.02 and Nov feeders were down 1.00 to 154.22. With forecasts clearing up, and feed lot conditions improving, weight gain should resume keeping weights high. The current premium of Dec futures to the cash market is also a selling point. However, beef values have shown some impressive strength this week. Choice cuts closed 2.09 higher yesterday afternoon to 204.80. This is their highest value since October 2. Choice beef was up another 52 cents this morning to 205.32. Cattle markets put in inside sessions today. The Dec live cattle contract closed just below its opening trades, a decidedly mixed session technically. Nov feeders closed outside of their Bollinger Band range, leaving prices nearly oversold.

LEAN HOG HIGHLIGHTS: Hog futures made positive closes today, but considering the early price action, today's session was ended on a sour note. The nearby Dec futures contract closed 12 cents higher to 56.87, Feb closed 35 cents higher to 64.25, and Apr closed 62 cents higher to 69.47. The CME Lean Hog Index was down 24 cents to 68.75. Carcass cutout values closed 1.46 higher yesterday afternoon to 81.50. This was their highest pork value since July 20. Pork cutouts were up another 45 cents this morning to 81.95. Slaughter is running behind pace, and during a time when pork values are so strong, this has provided some solid support. The best traded Dec contract traded as high this morning as 58.32, putting in an unsuccessful test of its 200-day moving average resistance level. Prices were trading over 1.00 higher throughout most of the session, but sellers swept in late in the session to push prices to very modest gains. While this does not necessarily mean anything for tomorrow's session, the wave of selling late in the day does not give traders with long positions the best feeling going into tomorrow's session.

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