Stewart-Peterson Market Commentary

Closing Commentary - November 22, 2019

Top Farmer Closing Commentary 11-22-19

CORN HIGHLIGHTS: Corn futures saw choppy trade this afternoon as prices finished mixed to mostly lower. Front-month Dec corn was up 1/4 cent to 3.68-3/4, while Mar corn lost 1/2 cent to 3.78-1/2. This finished a relatively quiet week, as Dec corn futures lost 2-1/2 cents on the week, in a week that featured a 7-1/4 cent trading range from high to low. Mar corn futures also were softer, down 2-1/4 cents on the week. While overall news in the marketplace stayed relatively quiet today, the biggest movement in determining trade may have been Dec options expiring on Friday afternoon. The markets have a tendency to gravitate towards areas of large open interest, which Dec corn was near the 3.70 level. With overall bullish news still lacking, the corn market has been staying in a sideways to lower fashion for the entire week, and with this week’s drop posted three consecutive lower closes on a week over week basis. South American weather continues to see improvement as the development of their crop seems to be on pace, while U.S. harvest has stayed relatively choppy in its pace, which has helped cash basis levels hold up, bringing some support underneath the corn market.

SOYBEAN HIGHLIGHTS: Soybean futures continued their negative selling trend as contracts were 1 to 4 cents lower. Front-month Jan beans lost 4 cents to 8.97, while Mar was down 4 cents to 9.11-1/4. Friday ended a difficult week for front-month bean futures as the Jan contract lost 21-1/4 cents and Mar was down 19-1/2. Long liquidation has stayed the main factor in the soybean market as prices have continued to break through technical support levels. Jan beans closing under the psychological 9.00 level is discouraging, could bring additional follow through into next week’s trade. In addition, weakness seen in the Brazilian real currency was adding selling pressure into the bean market as Brazilian producers are taking advantage of strong cash markets and hedging next year’s crop. Since the tone changed in the U.S./Chinese trade negotiations and as we’re moving into a window of seasonal weakness, speculative funds holding long positions have liquidated bringing this turn off of bean futures since the October highs. At this stage, other than strong demand news, improved South American weather and general negative sentiment has outweighed any potential positive gains.

WHEAT HIGHLIGHTS: Wheat futures were the strength in the grain markets today as the Dec Chi contract finished 6-1/4 cents higher to 5.15-1/4, while Mar Chi was up 6-3/4 to 5.18-3/4. Dec KC winter wheat finished 3 cents higher to 4.24 but sellers held out in spring wheat with the Dec contract down 2-1/2 cents to 4.92. For the week, the Dec Chi contract posted an outside week reversal gaining 12-1/2 cents, closing near the top of the trading session for the week. Dec KC also finished 7 cents higher. After early-week gains faded, wheat futures rallied back to establish a strong week. Export business has stayed in the focus and has improved dramatically for U.S. wheat, but is still overall struggling against global supplies. The focus will stay on the U.S. dollar and its current trends, helping to develop additional U.S. export business. The extended forecast indicating some potential moisture moving to drier areas of the western Plains, which could help aid the struggling crop at emergence for KC hard red winter wheat. Weekly winter wheat crop ratings have slipped in past weeks, which has helped provide support into that wheat class.

CATTLE HIGHLIGHTS: Cattle markets had a negative session to cap the week off, with Dec lives down 65 cents to 118.67, Feb lives were down 1.20 to 123.85, and Apr lives were down 1.60 to 124.17. Jan feeders were down 3.32 to 139.27 and Mar feeders were down 3.20 to 139.60. Choice beef values were down 3.35 yesterday afternoon to 234.86 and were down another 1.03 this morning to 233.83. Yesterday’s close was the lowest since November 4, and beef cutouts are down 6.12 since peaking in mid-November but are still 21.00 higher than a year ago and 26.00 higher than two years ago. Dressed steer weights are at their highest levels since November 2016. The premium of the futures market to the cash market has incentivized feedlots to hold cattle back and add weight. U.S. beef export sales for the week ending November 14 were solid, coming in just below 18,000 tons for 2019 delivery and 3,200 tons for 2020 delivery. Today’s Cattle on Feed report showed heavy supplies as expected, though a bit lighter than most were expecting. Marketings were seen at 99%, placements at 110%, and on feed was seen at 101%. Marketings were expected to come in at 99.5%, placements at 111.4%, and on feed at 101.2%. Dec cattle made their first close below the 20-day moving average since September 11 and Feb cattle made their first close below their 20-day moving average since September 10. Jan feeders were down sharply, making their first close below the 50-day moving average level since September 20.

LEAN HOG HIGHLIGHTS: Hog markets made mixed to higher closes today, with Dec up 57 cents to 61.22, Feb was up 20 cents to 67.65, and Apr was down 40 cents to 73.70. The CME Lean Hog Index was down 4 cents to 59.54. Carcass cutout values closed 5.11 lower yesterday afternoon to 81.47 but bounced 2.46 this morning to 83.93. Yesterday’s pork close was the lowest since November 7. Export sales for this week totaled over 54,000 tons. This was the largest weekly total since October 3. China’s national average spot pig price was down 6.53% for the week, 19.54% for the month, and is still up 146.22% year to date. The Dec lean hog contract made an inside session and positive close though lost 1.97 on the week. Feb hogs lost 4.35 on the week and Apr lost 5.27 on the week. Deferred months took especially hard hits this week as talk that the Phase 1 trade deal between the U.S. and China may not be signed until 2020.

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