Stewart-Peterson Market Commentary

Closing Commentary - May 26, 2017

Top Farmer Closing Comments 5-26-17

CORN HIGHLIGHTS:Corn futures posted modest gains this afternoon as contracts finished 3 to 5 cents higher. Front month Jul was up 5 cents to 3.74-1/4, followed by Sept up 4-3/4 cents to 3.81-3/4. For the week, Jul corn finished 1-3/4 cents higher. Though gains were small, this is the fifth consecutive week corn prices have finished higher than the previous week. Weather forecasts continue to be the focus of the marketplace, as weekend rains are forecasted across the Grain Belt over the next 3 days. Portions of the Corn Belt have seen heavy rainfalls already this spring bringing concerns of overall crop quality, and the planting pace, as producers look to finish up this year's crop. Crop progress numbers had corn planting at 85% last Monday, but given wet weather across the region, the last 15% may be difficult to get accomplished. Due to cold temperatures and wet ground, planted acres may be in need of replant or may be looking to switch to other crops, possibly soybeans. With that in mind, it was very evident that grain markets were seeing spreading action today with traders buying corn, and selling soybean contracts. As crop-insurance states are starting to loom on the calendar, prospects of reduced acreage for this year's corn crop are bringing some premium into the marketplace, as overall demand has stayed supportive throughout the spring months.

SOYBEAN HIGHLIGHTS:Soybean futures, with the selling pressure of the grain markets, has broken yesterday's weakened close and brought additional follow-through selling. Front month Jul was down 13 cents to 9.26-1/2 and Aug was down 12 cents to 9.29-1/2. This ended a difficult week for bean futures, as the Jul contract dropped 26-1/2 cents, closing at its lowest price point since 3/2016. Soybean futures were on the sell side of spreading action today, as traders bought corn and wheat futures, and sold beans. With the prospects of additional acres shifting from corn to soybeans, the market was already susceptible to some selling pressure due to potential global supplies, and now additional acres will only add to that prospect of large stockpile next fall. With yesterday's weak technical close, bean futures could possibly have additional selling pressure, as prices are struggling to find support levels. The next few trading sessions could be key if bean futures can find some stability and at least consolidate prices in the short term. Weather will stay as a factor in the marketplace, as the corn crop is getting close to being completed, and attention may focus on key bean producing areas and their ability to get this year's crop in. Demand has stayed supportive, as seen with strong export sales numbers yesterday, and lack of production could bring quick price support given the global demand picture.

WHEAT HIGHLIGHTS:Chi wheat futures posted modest gains this afternoon as contracts finished 5 to 7 cents higher. Front month Jul was up 7-1/2 cents to 4.38-1/4, while Sept was up 7 cents to 4.51-1/4. For the week, Chi Jul contract picked up 3 cents and Sept finished 2-3/4 cents higher. Spillover strength from the corn market, as well as noticeable spreading versus soybeans, helped support wheat futures at a potential short covering rally this afternoon. Weather forecasts have also stayed on the supportive side as rain through the U.S. winter wheat crop may have impacts on quality as well as quantity of this upcoming potential harvest. Hard red winter wheat has had a difficult time estimating a potential yield with lower acres planted, and the mixture of weather events from early season, drought-stress to snow and rains late, may make this year's crop yields extremely variable. Short-term, this should keep wheat prices supported.

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