Stewart-Peterson Market Commentary

Closing Commentary - March 19, 2019

Top Farmer Midday Update 3-19-19

Corn: Corn futures are lower this morning in choppy trade, with May down 2-1/4 cents to 3.69-1/4, Jul down 2 cents to 3.78-3/4, and Dec down 1-1/4 cents to 3.93-1/2. The corn market is still finding it difficult to rally after yesterday's disappointing export inspections numbers and managed funds net short position of about 260,000 contracts as of last week. Ethanol prices are rallying due to flooding effecting plants and railroads, but this is also effecting demand for corn. The sixth 10-day and eighth of 14-day forecasts are showing above normal precipitation which could worsen flooding conditions, and depending on how the spring goes, delay corn planting. Corn futures prices have fallen back below their 20-day moving average levels, and today's trading ranges of less than 4 cents in most contracts still shows just how low volatility is. During yesterday's session, funds sold about 9,000 contracts of corn and are thought to be net short about 229,000 contracts.

Soybeans: Soybean futures are just slightly lower this morning, trapped between nearby moving average support and resistance. May beans are down 1-3/4 cents to 9.04, Jul beans are down 1-3/4 cents to 9.17-1/2, and Nov beans are down 1-1/4 cents to 9.37-3/4. During yesterday's session, prices were supported at the 10-day moving average, but gains were stopped at the overhead 20-day moving average levels. This is true of today's session as well. While Ag Secretary of Purdue made comments yesterday indicating that China has offered some very attractive numbers for purchases of U.S. farm goods in a prospected deal, many are beginning to question whether soybeans would play a major part in those purchases. No one knows exactly how many hogs have been destroyed in China, but the numbers are likely enormous. This would seriously dent China's appetite for U.S. soybeans. However, despite a bearish tilt to fundamentals, the commercial grain position is nearing a record net long position. Speculative fund traders bought about 3,000 contracts of beans yesterday and are net short about 84,000 contracts.

Wheat: Wheat markets are slightly higher this morning, with May Chi wheat up 1-1/2 cents to 4.58-1/4, May KC wheat is steady at 4.36-1/2, and May Mpls is up 3-3/4 cents to 5.64-1/2. Chi wheat contracts in every month of 2019 were unable to close yesterday above their 20-day moving average levels. Prices are finding more sellers at the 20-day again this morning. KC wheat futures are showing very similar price action, with prices trapped between their 10 and 20-day moving average levels. President Trump is meeting with Brazil's President Bolsonaro, with opening up U.S. wheat exports into Brazil as a main topic. This is supportive, but improving wheat conditions in most states this week is keeping sellers active. Fund traders sold about 4,000 contracts of wheat yesterday and are thought to be net short about 68,000 contracts.

Cattle: Cattle markets are slightly higher again this morning, with Apr lives up 20 cents to 128.52, Jun lives up 10 cents to 122.67, and Aug lives up 30 cents to 118.40. Apr feeders are up 1.37 to 147.67, and May feeders are up 1.57 to 149.90. Apr lives have traded in a very tight range today of just 52 cents, while the Jun, Aug, and Oct contracts have all made new highs. Feedlot conditions in the Plains are muddy at best, and there are even reports of widespread calf loss due to flooding. Flooding makes weight gain for cattle difficult, but there are also enough logistical issues with getting feed to feedlots that weight may be even more difficult to keep on. Deferred contracts making new highs are still technically overbought with managed money holding a very large ownership position and prices moving above their Bollinger Band ranges.

Hogs: Hog markets are slightly lower this morning, collecting themselves after an extremely sharp rally. Apr hogs are down 25 cents to 70.77, Jun hogs are down 77 cents to 87.02, and Jul hogs are down 17 cents to 90.20. Most of the deferred contracts are slightly higher. Hog futures are deeply overbought from a technical standpoint, so today's price action may lead to some correction. However, we cannot rule out the surge of late buying as we saw yesterday. The African Swine fever in China appears to be coming to a head and Chinese demand for U.S. pork products may continue to surge. Meanwhile, domestic pork and pig prices are surging as well, with the CME lean hog index already almost 5.00 of off recent lows a week ago.

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