Top Farmer Closing Commentary 1-11-19

CORN HIGHLIGHTS: Corn futures finished 1-2 cents higher with the Mar contract up 2 cents to 3.78-1/4, Dec corn up 2-1/2 to 4.01-1/2. Today's close brought Dec corn back over the psychological 4.00 barrier and Mar corn above 3.75 as the market saw some profit taking after yesterday's push lower. With this week's weakness, the Mar corn contract lost 4-3/4 cents, while Dec corn was down 2-1/2 cents. Yesterday, technicals looked weak as corn futures pushed and closed below the 100-day moving average, as prices moved toward the bottom of the trading range. Today was an inside day; prices challenged over top resistance only to fail and push back above but finished with a positive close. News was relatively quiet on a day in which the USDA was supposed to release the Jan Grain Stocks report. Grain stocks report as well as crop production numbers and the lack of information overall has put weight on grain markets. South American weather has stayed closely in focus, as forecasts in grain growing regions are staying below average in precipitation and above average in temperatures. Today, private analysts Safras lowered their projected Brazilian crop to 93.4 million metric tons, while the USDA is still holding at 94.5 million metric ton estimate. Weather conditions continue to be difficult; further reductions will likely occur in the Brazilian corn crop.

SOYBEAN HIGHLIGHTS: Soybean futures posted gains of 3-4 cents. Front month Mar was up 3-1/2 cents to 9.10-12, while new crop Nov gained 4 cents to 9.52. For the week, Mar beans lost 11-1/2 cents, while new crop Nov beans dropped 5 cents. Today's action may be more technical or a bounce off of yesterday's strong sell-off, as short covering was noted in today's trade. Prices did hold key support level above the 50-day moving average in the Mar contract, but bearish fundamentals will make advancement difficult. South American weather has been at the forefront in the development of their bean crop, and with forecasts remaining drier and warmer than normal, reductions in the Brazilian bean crop have stayed supportive. Today, another private analyst, Safras, lowered their projection for this year's Brazilian bean crop to 115.7 million metric tons. This was lower than yesterday's disappointing number from Conab at 118.5 million metric tons but still well below the current USDA level at 122 million metric tons. Soybeans also saw buying support on further potential meetings between Chinese and U.S. trade representatives, as confirmed this afternoon that the Chinese Vice Premier will meet with U.S. trade representatives in Washington D.C. on 1/30 and 1/ the end of this month.

WHEAT HIGHLIGHTS: Wheat futures finished with modest gains as contracts were 4-5 cents higher with front month Mar Chi wheat contract holding a 5-3/4 cent gain to 5.19-1/2, followed by May up 5-1/4 to 5.25. Mar KC was up 5-3/4 cents to 5.04-1/2, while the Mpls spring wheat contract was up 6 cents in Mar to 5.70. For the week, Chi Mar lost 2 cents, while Mar KC was down 1-1/2. With information limited, today's wheat price action was likely technically based off of yesterday's strong sell-off and the anticipation of U.S. demand for exporting wheat. Potential sales may have come together, but nothing can be confirmed. In recent weeks, U.S. prices have become competitive globally, and a rise in U.S. wheat exports has been noticed. With global wheat prices climbing and making the U.S. more competitive, a softening of the U.S. dollar over recent weeks has helped aid in the potential for more U.S. supplies moved overseas. This will be the key going into the spring months in determining price or any rally potential. Next year's crop may be limited in acreage, and quality is unsure given the difficult planting and germination window for winter wheat crops.

CATTLE HIGHLIGHTS: Cattle futures finished mixed without much definitive cash trade to push prices higher or lower. The nearby Feb live cattle contract closed 10 cents higher to 124.97, Apr closed 45 cents higher to 126.37 and Jun closed 17 cents lower to 117.20. Jan feeders were down 62 cents to 146.12, and Mar feeders were down 17 cents to 144.90. Choice beef values closed 12 cents higher yesterday afternoon to 213.96. Choice beef was down 1.14 this morning to 212.82. Light cash trade yesterday afternoon at 120 was not supportive, as trade last week was mainly around 123. Given the advances in the futures market this week, feedlots were holding out for more. At the time of this writing, cash bids were published between 120 and 122. The negative start for beef markets today may make it difficult for cash to trade much higher. Some parts of the central Plains could see 1 to 3" of snow later today, but forecasts look dry for next week. Price action for today's session was mixed. The best traded Feb live cattle contract closed well off its highs and even below the opening trades. However, both the Feb and Jun live cattle contracts made bullish key reversals this week. Traders were clearly expecting a solid week on the cash front. Feeder markets were mixed this week, and prices remain trapped between moving average support and resistance levels.

LEAN HOG HIGHLIGHTS: Hog markets faced selling pressure today despite positive market action in the cash hog and pork markets. The nearby Feb contract closed 1.42 lower to 62.65, Apr closed 50 cents lower to 67.35 and Jun was down 1.02 to 72.87. The CME lean hog index was up 89 cents today to 55.99. Carcass cutout values closed 79 cents higher yesterday afternoon to 70.46 and were up another 2.59 today to 73.05. The improving cash hog prices are especially impressive considering heavy weights. Average weights for the week ending 1/5 were reported at 286.6 pounds, versus 285 pounds a week ago, 285.5 pounds a year ago and the all-time record high for the same week at 286.9 pounds. With the strong cash indicators, traders are likely growing impatient at the prospects of China purchases of U.S. pork products. While trade talks this week went well, There was no mention of pork purchases. Without export sales data from the USDA, we do not have any indication of Chinese purchases. The lack of information is likely causing some stagnant long positions to pull out of the market. The nearby Feb contract held all major support today at the 10, 20 and 200-day m moving average levels. Apr futures showed similar price action, but the Jun contract fell below its 100-day moving average level and closed outside of its lower Bollinger band support level. The current premium of futures prices to the cash market is wider than normal and may not be justified without confirmed sales to China.

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