Stewart-Peterson Market Commentary

Closing Commentary - August 17, 2017

Top Farmer Closing Commentary 8-17-17

CORN HIGHLIGHTS:Corn futures edged lower today losing 1-1/2 to 2-1/4 cents, with Dec leading today's drop closing at 3.64-1/4, its lowest close since August, 2016. In 2016, Dec 2017 corn futures bottomed at 3.58-1/2 on August 31. The price pattern in which the recovery of prices occurred into early summer months and then subsequent decline looks very similar to this year. Carryout, according to the last USDA report, is in line with a year ago prices. Bottom line, there's probably not a lot of reason to be bearish from here. Yet, it's challenging to suggest prices are in a position to recover in the near-term. Part of the concern for the marketplace is the idea that farmers holding old crop corn will need to move this, probably by the end of the month, to make bin space and also basis contracts will likely be due. That being said, the market is well aware. Next week's pro-farmer crop tour could shed light on yield expectations. Many are of the belief the USDA did not lower yield enough on this month's report. The market was looking for near 166 bushels an acre, and the actual figure came in at 169.5 bushels.

SOYBEAN HIGHLIGHTS:Soybean futures found solid footing today gaining 5-1/2 to 8-1/2 cents. Export sales at 16.7 million old crop and 33 million new crop, were considered supportive and above expectations. Short-covering noted today as well. Recent rains have been beneficial and there's more rain in the forecast, according to the 6-10 day outlook. Temperatures are expected to be normal. However, advertised rainfall recently hasn't lived up to expectations and, in some areas, sparse rain was viewed as slightly helpful to crop production, but areas are in need of much more. This could be supportive for bean prices as pod-filling could suffer.

WHEAT HIGHLIGHTS:Wheat futures looked identical to the last three sessions, with prices finishing weaker and toward the low of the day. By day's end, Chi wheat lost 5-1/4 to 6-1/4 cents, as Dec led the drop closing at 4.40-1/2. New contract lows were established on all futures contracts. KC wheat finished 2 to 5 lower and Mpls down 3 in Sep, but up a quarter in Mar. Lack of favorable news, continued liquidation, and what we believe is fund-selling adding to short positions to push prices lower as they're making money on shorts are all variables driving the prices of the wheat lower. Many technical indicators are showing oversold, but until there's a better sign of a bottom, we're going to stay on the defensive. Export sales today at 23 million bushels were termed supportive, but that seemed to offer little to a market that is stuck in a sharp downturn.

CATTLE HIGHLIGHTS:Cattle futures closed sharply lower today on disappointing cash trade and further long liquidation. The nearby Aug contract closed 2.35 lower to 107.12, Oct closed 2.10 lower to 106.22, and Dec closed 2.02 lower to 108.27. Feeder contracts faced heavy selling as well, with closes between 1.77 and 2.40 lower for the day. Carcass cutouts closed with losses yesterday afternoon, choice down 1.44 to 197.51 and select down 83 cents to 195.04. Further weakness was noted at midday, with choice cuts down another 1.85 to 195.66 and select cuts down 47 cents to 194.57. Cash trade in the country was noted at 110.00 today, 5.00 lower than last week. Weekly U.S. beef export sales were reported this morning at 12,800 metric tons versus the previous four week average of 13,550 metric tons. Cumulative sales for 2017 are at 546,300 metric tons, 5.7% ahead of last year's pace. Exports to China have accounted for just 75 tons, or 5% of the total. With the negative cash news today, long liquidation was a large part of the selling. As of yesterday's close, open interest in live cattle futures was down 68,000 contracts from August 1. The nearby Aug contract made new lows for the move, but Oct and Dec have yet to do so themselves.

LEAN HOG HIGHLIGHTS:Hog futures compounded yesterday's losses, trading and closing below major moving support levels. The nearby Oct contract closed 1.85 lower to 66.92, Dec closed 1.67 lower to 61.80, and Feb closed 1.40 lower to 66.30. Prices were pushed lower today primarily by carcass cutouts, down 2.30 yesterday afternoon to 91.55, but rebounded 70 cents higher to 92.25 by midday today. Cutout values were pushed lower by belly prices yesterday afternoon, but stabilized today with the help of loin and ham values. Weekly pork export sales were reported this morning at 18,400 metric tons versus the previous four week average of 16,875 metric tons. Cumulative sales for 2017 are now at 810,800 metric tons, 8.8% ahead of last year's pace. Prices today opened lower than yesterday's closes, and quickly pushed below support levels. The nearby Oct contract closed below its 10, 20, 50, and 100-day moving averages, able to hold only its 200-day moving average by the end of the session. Meanwhile, the Dec contract closed below all of its major moving average levels.

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