Stewart-Peterson Market Commentary

Closing Commentary - June 20, 2019

Top Farmer Closing Commentary 6-20-19

CORN HIGHLIGHTS: corn futures finished with strong gains as contracts were 7 to 9 cents higher in today's trade. Front month Jul futures finished 9 cents higher to 4.50, while Dec corn finished 7-3/4 cents higher to 4.61. Yesterday and last night's trade corn futures held key support near the 10-day moving average, and today prices rebounded off of that technical factor beings supported by strength in the bean and wheat markets. Today's move came despite disappointing weekly export sales, which were announced this morning as the USDA said 1.5 mil bu of corn were sold for last week. Shipments totaled 25.2 mil bu, below the needed pace to meet the USDA's most recently adjusted export goal. On the bright side, the USDA did announce a flash sale of 4.8 mil bu of corn sold to Mexico with the majority of that for the 18/19 crop year. A combination of importers stepping into the corn market, as well as wet weather forecasts and strong rain totals across the Plains this week helped bring buying strength back into the corn market today. The upcoming 7-day forecast remains wet for most of the Corn Belt, which will likely limit any potential progress on those last remaining acres, and may continue to stress crop in the ground at such an immature level.

SOYBEAN HIGHLIGHTS: Soybean futures followed the wheat and corn markets lower with losses of 8-1/4 to 11-1/2 cents as Nov led today's slide, closing at 9.28-3/4. Nearby Jul closed 10-1/4 lower at 9.03-1/4. After reaching their highest point yesterday in several months, prices seemed to take a breather today but certainly did not lead the way down. Beans appeared to be more of a follower of corn and wheat. Surprisingly, the market has held its ground well -- not due to concerns over excess inventory, but on continued concerns that forecasts for rain this week will likely put the final nail in the coffin for prevent acres in parts of Missouri, Illinois, Indiana and Ohio. The prevent plant date for these states, including the southern two thirds of Illinois, is June 20. Beans are at a critical crossroad from a pricing perspective. They have a good looking uptrend with pennant formations and gaps. These gaps can quickly be filled if prices move lower. Therefore, if you are behind on sales, get current with recommendations. World inventories, along with U.S. supplies, almost regardless of a shortfall in U.S. crop this year, could remain historically large. The market will focus on the trend of carryout, which presently is narrowing inward, as projected inventory numbers are likely on the decline due to expectations for lower yield and fewer planted acres.

WHEAT HIGHLIGHTS: Wheat futures finished with modest gains as contracts in Chi were 4 to 6 cents higher. Front month Jul was up 4-1/4 to 5.26-1/2, while Dec wheat was 5-1/2 cents higher to 5.41-1/2. KC hard red winter wheat in the Jul contract was up 3 cents to 4.60-1/2, but spring wheat was down 3-1/4 cents to 5.38-1/4. Weakness in the spring wheat was noted due to forecasted across the Canadian prairies, which may aide that stress to crop and with strong U.S. conditions overall weighed on that market. Wet forecasts for the next 7 days, including forecasts for a broad coverage of moderate to heavy rainfalls across the southern Plains may limit an already delayed harvest for this year's winter wheat crop. This helped bring some elevation into the wheat market, as well as the potential for some crop quality concerns due to the excessive wetness. Otherwise grain markets were supported by the strength in other grains as Chi futures posted an inside trade today, but did hold the 200-day moving average as support.

CATTLE HIGHLIGHTS: Cattle markets were soft today after futures unsuccessfully tested nearby overhead resistance levels. Jun lives closed 32 cents lower to 108.17, Aug lives closed 60 cents lower to 103.95, and Oct lives closed 52 cents lower to 105.57. Aug feeders were down 1.82 to 134.70, and Sep feeders were down 1.62 to 135.37. Cash trade today was steady to weaker than last week, with trade in CO, TX, NE, and KS at 110. Choice beef closed 1.06 higher yesterday afternoon to 221.59 and was up another 27 cents this morning to 221.86. Rallying corn futures today kept pressure on the feeder markets which also spilled over to the live markets. U.S. beef export sales for the week ending June 13 were reported this morning at 18,000 tons vs the previous 4-week average of 19,775 tons. Cumulative sales for 2019 have now reached 534,700 tons, .5% ahead of last year's pace. The best traded Aug live cattle contract briefly tested its 20-day moving average resistance level this morning. Prices failed to close above that yesterday and also were unable to push through today. Today's close is the lowest since June 7. Aug feeders posted their lowest close since June 3, after an unsuccessful test of the overhead 10-day moving average level

LEAN HOG HIGHLIGHTS: Hog markets closed sharply lower today, making bearish outside days in continuing the recent downtrend. Jul hogs were down 2.37 to 79.25, Aug hogs were down 2.10 to 80.90, and Oct hogs were down 1.72 to 75.72. The CME lean hog index was up 23 cents today to 79.49. Carcass cutout values closed 3.46 lower yesterday afternoon to 77.69. This is its lowest value since March 21. Cutout values did bounce this morning, up 38 cents to 78.52. Rallying China hog prices helped support futures early on. U.S. pork export sales for the week ending June 13 were reported this morning at 19,700 tons vs a previous 4-week average of 39,450 tons. Cumulative sales for 2019 are up 27.7% from last year's pace, currently at 871,000 tons. China sales for the week were a negative 75 tons. Shipments for the w3eek were 5,791 tons, the highest weekly total since July 2014. Jul hogs made their lowest close today since March 7. Aug and Oct hogs both made bearish outside days, but did not post new lows for the move. Both contracts traded above their 10-day moving average resistance levels early in the day, but sold off into the afternoon to close just off the lows for the session. The bearish price action has rejected yesterday's positive closes above nearby resistance..

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