Stewart-Peterson Market Commentary

Closing Commentary - April 20, 2018

Top Farmer Closing Commentary 4-20-18

CORN HIGHLIGHTS: Prices started the week on a soft note and ended the week on a soft note as prices slipped 5-1/4 to 5-1/2 cents on expectation for planting progress to pick up steam in the weeks ahead. Technical selling was noted once Dec corn futures pushed through the 40 and 50-day moving averages, closing at 4.02-1/2, its lowest close since 3/28. The technical picture looks challenged after today's close, but it is Friday, and funds have been aggressively long corn futures this winter. The question now is if the market has much reason to move lower from here, as farmers' patience to sell has paid dividends this year and will likely again. Yet, as the season pushes forward, and planting gets underway in the next few weeks, the longer term outlook could suggest less rally potential. Nonetheless, we do not expect farmers to be aggressive sellers at current price levels of either old or new. Not only have farmers seen rally potential occur this year, they are not interested in selling much corn on a price dip this time of year. Yet, bears will argue that bullish news may be tough to come by. We do not disagree.

SOYBEAN HIGHLIGHTS: Soybean futures ended the week lower, losing 7-1/2 in Nov, closing at 10.35 to 8-3/4 lower on Jul, closing at 10.40-1/4. Weakness in the commodity complex, particularly in row crops at the end of this week as well as a firmer US dollar and prospects for better spring planting weather, all seemed to be enough to push prices to their lowest level in over two weeks. Nov soybeans posted a low of 10.33-3/4, filling a gap left on 4/6. Prices did close below the 21 and 40-day moving average, signaling not the best close, but by filling the gap, they may be poised to try and recover. We believe that the bean market is running out of favorable news. All of the recent supportive news is old news.

WHEAT HIGHLIGHTS: Wheat futures had a challenging day, losing 12 to 13-1/2 cents in Chi, as May led today's drop, closing at 4.63-1/4, erasing gains of the last three sessions. For the week, May wheat finished down 9-1/4 cents. KC lost 12-13 cents, and Mpls was similar. There was weakness in all row crop commodities. Funds were noted sellers in corn, beans and wheat. Techncials look weak after today, and the racing gains of the last couple of sessions and finishing the weak lower suggests the market is anticipating improved crop conditions, particularly in winter wheat regions that are dry and should receive rain this weekend. The world has ample wheat, so any forecast of rain seems to be enough to cut the legs out from under the wheat market, and that is what it looked like at the end of this week. Export sales have not been stellar, but that is typical for this time of year.

CATTLE HIGHLIGHTS: Cattle futures closed higher on the week, showing mixed but stable results on weekly charts. The spot month Apr futures closed 1.55 higher today and 2.80 higher on the week to 119.35, Jun closed 72 cents higher today and 7 cents higher on the week to 103.72, and Aug closed 67 cents higher today and 47 cents lower on the week to 103.80. Cash cattle traded as high as 124 in Iowa today, providing a late session jolt of buying interest. For most of the day, cattle futures were trading mixed to lower, as many traders holding long positions exited the market before this afternoon's Cattle on Feed report. Placements in feedlots during March were reported at 91% versus the average market estimate of 91%; March marketings were reported at 96% versus the average market estimate of 96%; on feed was reported at 107% versus that average market estimate of 108%. While the on feed number is heavy, the lower placements is supportive. It reasons to follow that the cattle producing industry cannot keep expanding at the pace it did last year. Price action today was impressive, again, drawing much support from high cash trade in Iowa today. Prices traded to triple digit losses early in the session, but rallied to close positive. The best traded June futures closed above their 10 and 20-day moving average levels.

LEAN HOG HIGHLIGHTS: Hog futures closed slightly lower, finishing a mixed week of trade. The nearby May futures closed 20 cents lower on the day and 25 cents higher on the week to 69.95, Jun closed 52 cents lower on the day and 10 cents lower on the week to 77.55, and Jul closed 67 cents lower today and 45 cents higher on the week to 80.02. The CME lean hog index picked up 92 cents today to close at 55.97. Cash prices were up a total of 3.00 this week, their first weekly gains since the week of 2/5. Sluggish pork export sales were a factor in fundamental selling again for today's session. Cutout values were only slightly negative, closing 4 cents lower yesterday afternoon to 68.42 and down another 3 cents to 68.39. Bellies were up 1.46 to 92.95. The continued strength this week also limited losses. June futures are currently pricing in a large decrease in pork production. Until basis is able to return to more seasonable levels, it will be difficult to sustain much of a rally from here.

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