Stewart-Peterson Market Commentary

Closing Commentary - January 16, 2019

Top Farmer Midday Update 1-16-19

Corn: Corn futures are moving higher after holding trend line support on yesterday's close. The nearby Mar contract is up 3-1/2 cents to 3.74-3/4, May is up 3-1/2 cents to 3.83-1/4, and Jul is up 3-1/4 cents to 3.90-3/4. Despite milder extended forecasts for South America, near-term stress is still supportive. Traders are also likely buying corn today with a supportive view of big-picture fundamentals. With tightening U.S. and world ending stocks, dips like yesterday are seen as good spots to buy, especially when support levels are held. Funds sold 20,000 contracts of corn yesterday and are thought to be long about 88,000 contracts.

Soybeans: Soybean futures are slightly higher this morning, with Mar, May, and Jul beans all up 2-1/4 cents. Mar is trading at 8.95-1/2, May at 9.09, and Jul at 9.22. NOPA crush for December came in yesterday above the average market estimate. A total of 171.76 million bushels were crushed during the month versus the market's expected total of 170 million bushels. This is the third highest monthly crush on record. Normally, traders would buy this kind of data with more vigor, U.S. Trade Representative Robert Lighthizer said yesterday that there was no progress made on structural trade issues during trade talks with China last week. Nov beans closed below their 200-day moving average support level yesterday but are so far holding that support this morning. Funds sold 7,000 contracts of beans yesterday and are thought to be short about 23,000 contracts.

Wheat: Wheat markets are surging this morning after yesterday's selloff. Mar Chi wheat is up 5-3/4 cents to 5.16-3/4, Mar KC wheat is up 5 cents to 5.00-1/2, and Mar Mpls wheat is up 5-1/2 cents to 5.67-1/2. The Russian Agriculture Minister recommended yesterday that grain exporters slow sales in the second half of the season after last week's large sale. This recommendation was informal in nature and was thought to be made so that actual sales stay in line with early forecasts. Russian wheat sales so far this year have reached 24.7 million metric tons with early estimates calling for wheat sales of 42 million metric tons for the 2018/19 crop year. Mar Chi wheat is trading directly below its 50-day moving average resistance level. Mar Mpls wheat is trading directly at its 10-day moving average resistance level. Funds sold about 4,000 contracts of wheat in Chi yesterday and are now short about 15,000 contracts.

Cattle: Cattle markets are slightly higher this morning, with Feb lives up 32 cents to 127.27, Apr lives up 15 cents to 127.57, and Jun lives up 22 cents to 117.27. Jan feeders are down 20 cents to 144.55 and Mar feeders are down 77 cents to 143.97. Feb and Apr live cattle contracts made new highs yesterday and could be considered technically overbought. However, heavy snow and cold temps could disrupt marketings in the Plains later this week into next week. Beef values are still finding it difficult to move higher over the near term. Cash bids were seen as high as $124 early yesterday morning and today's asking prices on the Online Fed Cattle Exchange were seen at $127. No actual sales were made in the online auction.

Hogs: Hog markets are finding more selling pressure this morning, taking triple-digit gains in nearby contracts. Feb hogs are down 2.15 to 60.00, Apr is down 2.25 to 64.70, and Jun is down 82 cents to 77.82. Cash hogs and pork values are still rallying, so the selling action is likely speculative long liquidation. News that China's breeding stocks were down 8.3% in December is very supportive, especially considering this was the third month in a row of greater than 5% declines in breeding stocks. However, with still no news of large-scale purchases of U.S. pork, speculative traders holding long positions are growing impatient and taking money out of the market. Feb hogs are trading at their lowest level since November 12 and Jun hogs are trading below their 200-day moving average for the first time ever.

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