Stewart-Peterson Market Commentary

Closing Commentary - December 06, 2019

Top Farmer Closing Commentary 12-6-19

CORN HIGHLIGHTS: Corn futures finished quietly mixed. Dec gained 1 cent, closing at 3.66-1/2. Mar was unchanged at 3.76-3/4, and Dec 20 was down 1/4 at 3.90-1/4. Today’s trading ranges were subdued with most futures trading in a 3-cent range. Prices tried to recover early in the session on the heels of firmer soybeans, but a strengthening dollar throughout the session may have been enough to keep traders too excited from buying. For the week, Mar futures lost 4-1/2 cents, a disappointing weekly session after last week’s hook reversal higher. A lack of follow through continues to plague the corn market. Strong basis levels are indicating tight supplies, strong demand or both. Yet, futures continue to reflect more of a generalized thought process that exports are too slow, and despite tight near term supplies, overall inventory is considered ample. This could be magnified next week when the USDA releases the Dec Supply and Demand report. As a reminder, yield projections are not on this report but will be on the January report. Expectations are for carryout to remain near unchanged at 1.910 billion.

SOYBEAN HIGHLIGHTS: Soybean futures firmed for the fourth consecutive session, finishing the week with a gain of 12-3/4 cents on nearby Jan, closing at 8.89-1/2. This week’s hook reversal on weekly charts suggests that prices are bouncing and may be in a corrective mode, which could drive futures another 23 cents higher, close to overhead resistance at the 21-day moving average of near 9.10, as well as the 40-day moving average near 9.13. Traders were buying bean oil and selling meal, as oil gained 70 cents or more on the front two contracts, while meal was a couple dollars lower. Meal also finished the week with a hook reversal higher, and soybean oil the same. The technical picture in soybeans looks much brighter than it did a week ago. In particular, we like the Mar bean oil contract that posted a bullish key reversal on weekly charts. We can’t help but think that, on the Jan Supply and Demand report, a yield reduction will occur in soybeans, as this will be more reflective of a large number of acres that were covered with snow and likely had reduced yield, as well as beans that may never be harvested due to wet conditions and river bottom flooding. Export sales were solid as well at 25 million bushels, bringing year-to-date totals to 953 million, which is running well ahead of last year’s pace of 881 million.

WHEAT HIGHLIGHTS: Wheat futures ended the week on a soft note in KC, losing 2-1/4 to 5-1/4 cents. After trading lower most of the session, Chi wheat finished 1/4 cent lower in May to 3/4 cent higher Mar, closing at 5.24. Mpls wheat closed down 1-2. Weekly charts indicated that Mar Chi had a sour week, losing 17-1/4 cents, while Mar KC lost 16 cents. The spread between Chi and KC remains historically wide, and this could be the case for some time, as expectations that SRW wheat supplies will continue to be tight and, due to too much moisture in key growing areas, producers were unable to get as much fall planting progress done as first thought. HRW wheat, however, appears to be in better shape, as farmers aggressively pushed acres into the western Wheat Belt. That being said, wheat acres as a whole will likely be down, and this will probably show up in the winter on surveyed wheat acres. A weaker dollar this week was seen as supportive, however, prices failed to muster much strength, and this is a less than ideal sign.

CATTLE HIGHLIGHTS: Cattle markets finished the week slightly positive, though made losses for the week. Dec lives closed 27 cents higher to 120.20. Feb lives were up 37 cents to 124.97, and Apr lives were up 20 cents to 125.35. Jan feeders were up 1.00 to 141.55, and Mar feeders were up 52 cents to 141.67. Choice beef values made their lowest close yesterday since October 25, down 1.35 to 225.60. Choice cuts were down another 42 cents this morning to 225.18. Cash cattle trade is quiet today, with only a handful of live bids published in Nebraska at 1.18. This is mostly steady with last week and a dollar lower than yesterday’s trade. Beef production for the week ending November 23 came in at 557.3 million pounds, up 17% from the same week last year and the highest single week production since September 2003. The slightly higher closes today were impressive, considering the lower trend in beef values. Dec lives made an inside session today, though were unable to break through nearby resistance at the 10 and 20-day moving average levels. Sellers also defended overhead resistance in the Apr contract. Jan feeders closed directly on their 10-day moving average level after testing their overhead 50 and 200-day moving average levels. As of last Tuesday, speculative funds were long nearly 82,000 contracts, and it will be interesting to see where speculators were positioned by the close of this past Tuesday.

LEAN HOG HIGHLIGHTS: Hog markets finished mixed, with Dec down 45 cents to 61.12. Feb hogs were down 2 cents to 67.55, and Apr hogs were up 20 cents to 73.70. The CME lean hog index was up 14 cents to 58.34. China’s national average spot pig price finished the week up 8.86%. Carcass cutout values were up 36 cents by yesterday’s close to 81.36 and were up another 1.06 this morning to 82.42. Major news out of China this morning that China would continue to allow tariff-free U.S. pork shipments was not able to excite the hog markets very much. Prices opened sharply higher, but without a document signed, hog traders still seemed reluctant to buy headlines. The best traded Feb contract traded above its 20-day moving average resistance level today for the first time since November 13 but quickly found sellers to push prices back below the 20-day as well as the 10-day moving average level. Apr futures saw similar price action, though neither contract month made bearish outside days.




Market Commentary provided by:

Stewart-Peterson
137 South Main Street, West Bend, WI 53095
Phone: 800-334-9779
E-mail: rmainville@stewart-peterson.com
Web: www.stewart-peterson.com