Stewart-Peterson Market Commentary

Closing Commentary - April 25, 2019

Top Farmer Closing Commentary 4-25-19

CORN HIGHLIGHTS: Corn futures saw their first positive close of the week as prices finished with mild gains. Front month May was 3/4 of a cent higher to 3.47-1/2, while Jul was up 1-1/2 to 3.57-1/4. New crop Dec was also up 1-1/2 to 3.77-1/4. Short covering was the order of the afternoon as prices rallied off of early session lows as contracts pushed to new contract lows again today before the Jul contract rallied 5-3/4 cents off the low. For the week, Jul corn futures have seen heavy selling pressure, and despite today's slight turnaround, they're still down 10 cents on the week for the Jul contract, a combination of options expiration for the May options tomorrow brings additional volatility into the market, as well as potentially rolling May futures positions with first notice day next week. Regardless, today's trade action did post a technical signal with a hook reversal on the daily charts, but we'll need additional follow through short covering in tomorrow's trade. News front was relatively quiet today, with the exception of weekly export sales, which stayed relatively neutral for the corn market. For the week ending April 18, the USDA reported sales of 30.7 mil bu of corn, within expectations, while export shipments were at 49.2 mil bu, which keeps those shipments at a strong pace. While shipments have been favorable, export sales numbers are now trending 9% below last year, while the USDA was forecasting a rise in overall total sales. Planting progress has seen some movement this week, but weather forecasts into next week with potential heavy rainfall across the majority of the Corn Belt may have also aided in some buying action today as regions of the Corn Belt have yet to get started and with a week of difficult weather, it will now start moving us in to the critical month of May.

SOYBEAN HIGHLIGHTS: Soybean futures finished 3 to 4 cents higher with front month May up 4 cents to 8.59-1/4, while Jul beans were 4 cents higher to 8.72-3/4. Like corn, bean futures traded off of early session lows with the Jul contract finishing 5-3/4 cents off of today's intraday low. Regardless, it's been a difficult week for bean futures as we move into Friday trade tomorrow with the Jul contract down 21-1/2 cents so far in this week's trade. Like other grains, short covering was the strength in the marketplace as technical selling has been the driving force behind the bean market this week. With today's bounce and turn off the lows, follow through buying in tomorrow's session will be key to determine if we are at a short term bottom in prices. Demand stays as a concern in the bean market given more than burdumsome supplies in the U.S., as well as globally, and weekly export sales stayed as a bearish factor in the overall market. The USDA reported 21.9 mil bu of sales for the week of April 18, and export shipments at 14.6 mil bu. Both of these numbers are below the estimates necessary for the USDA to meet their current export targets, and currently export commitments are down 17% on the year ago levels.

WHEAT HIGHLIGHTS: Like the rest of the grain markets, wheat futures bounced off of early session lows and finished with modest gains, the front month May Chi contract was 2-1/2 cents higher to 4.34-3/4, while Jul wheat gained 3 cents to 4.41. KC hard red winter wheat was mixed with the May contract 1/4 of a cent lower to 4.04-1/4, while Mpls spring wheat May gained 1-3/4 to 4.05. Strong crop ratings at 62% good-to-excellent have weighed on KC hard red winter wheat futures, which has put pressure across the entire complex. The Chi contract did post a technical hook reversal on short covering, which is the second time in three days we have seen this type of price action. The key again will be follow through in tomorrow's trade as it's been an aggressive week in the wheat market to the downside. Export sales this week stayed relatively neutral for the wheat market as 15.6 mil bu of wheat run sales for 18/19 crop year and an additional 8.3 for the 19/20 crop year. Export shipments were at 29.1 mil bu, which is below the necessary pace to reach the USDA's export target as the marketing year for wheat is coming closer to an end.

CATTLE HIGHLIGHTS: Cattle markets closed sharply lower today in further fund liquidation on fundamental weakness. The nearby Apr live cattle contract closed 2.72 lower to 124.05, Jun lives closed 2.97 lower to 115.37, and Aug lives closed 2.90 lower to 112.92. May feeders were down 2.97 to 143.55, and Aug feeders were down 3.47 to 153.25. Choice beef values were down 1.15 at yesterday's close to 232.96 and were down another 63 cents this morning to 233.59. Cash cattle have traded lower this week so far, with trading Kansas down 2.00 from last week and Nebraska trade down 1.50 from last week. U.S. beef export sales for the week ending April 18 were reported this morning at 23,100 tons vs. a previous 4-week average of 18,500 tons. Cumulative sales for 2019 are running 3% behind last year's pace at 385,8000 tons. Open interest in the cattle markets was down nearly 7,400 contracts yesterday and was lower again today. Funds were holding record net long position as of last Tuesday's close, and are likely beginning to move out. Jun live cattle made their first close below their 200-day moving average and the lowest close since December 10. Aug live cattle made their first close below their 200-day moving average level and their lowest close since January 31. Aug feeder cattle made their first close below their 50-day moving average since March 6, and posted their lowest close since March 14.

LEAN HOG HIGHLIGHTS: Hog futures faced heavy selling pressure today, with all contracts from Jun 2019 to Dec 2019 closing limit lower. Jun feeders ended the day at 89.77, Jul at 94.65, and Aug at 96.15. The CME lean hog index was up 72 cents to 82.79. Carcass cutouts were down 1.94 at yesterday's close to 86.98, but were up 3.51 today to 90.49. This is the highest carcass cutout value since August 2017. Much of the selling pressure today was seen from a poor export sales report. U.S. sales for the week ending April 18 were reported this morning at 15,500 tons vs. a previous 4-week average of 40,825 tons. Cumulative sales for 2019 have reached 647,300 tons, 17.5% ahead of last year's pace. The trade was focused on China's small cancelation of 214 tons. Chain's purchases of U.S. pork so far this year have reached 166,144 tons, accounting for 26% of all U.S. sales. At this time last year, Chinese commitments represented just 4% of the total U.S. pork sales. Despite today's negative export sales data, we still expect China to be a major customer of U.S. pork products in the future. On the price charts today, the selling was apparent early on . Jun, Jul, and Aug futures all gapped lower from yesterday's closes and closed on the lows of the day. Jun and Jul both closed at their lowest levels today since April 1.

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