Stewart-Peterson Market Commentary

Closing Commentary - November 22, 2017

Top Farmer Closing Commentary 11-22-17

CORN HIGHLIGHTS: For the third consecutive session, corn futures closed with little change, as Dec gained 1/4 cent closing at 3.45-1/4 heading into the Thanksgiving holiday. Deferred contracts were 3/4 to 1 cent higher, with Dec 2018 closing at 3.89. We'll focus on these 2018, as expectations for acreage to be similar to last year's would suggest another high yielding crop year could send Dec 2018 prices well under 3.50. It's a long way off, but a target point to 4.00 or better is a good starting point. We're short Mar corn and we'll stay that way through the holiday weekend, and likely then move out of this position. We just don't see farmer selling, and with harvest toward its wind-down, the idea of extra corn into the pipeline is close to nil. Basis levels are improving in regions, and this will also suggest farmer selling remains light. News of consequence continues to lack with export sales figures due out for release Friday due to the Thanksgiving holiday tomorrow.

SOYBEAN HIGHLIGHTS: Soybean futures finished with solid gains, as commercial buying in soymeal was noted. Soymeal finished up 6.00 or more per ton, with soybean futures contracts anywhere from 5 to 8-1/4 cents higher, as Jan led today's gains closing 9.97-1/4, its highest close since November 8. Jan beans have now rallied 30 cents off their recent low. Good demand continues to underpin the bean market, but just as important, the fourth consecutive day in which prices closed above the 21, 40, 50, and 100-day moving average is also giving credence to the idea that soybean prices have room to work higher. Farmer selling remains light on pull-backs. As we look ahead, we see good demand continue to underpin the market, but we also see a market that is range-bound, with overhead resistance roughly at 10.15 and support closer to 9.60. A break above 10.15 would occur if the South American weather conditions take a turn for the worse. At present, we'd have to argue that wet weather conditions are generally considered supportive for crop production.

WHEAT HIGHLIGHTS: Like the corn market, wheat was plagued by light volume on a holiday-type trade day as futures remained range-bound, finishing the day mixed. Nearby Dec Chi lost 2 closing at 4.22-3/4, while Mar lost 1/2 and Jul gained 1-1/4 closing at 4.67-1/2. KC finished with gains of 3/4 to 1 cent, while spring wheat remained mostly unchanged. Volume was light and it appears traders may have headed to the sidelines for a long weekend. The markets are open on Friday until noon CT. News of consequence was lacking with export sales due for release on Friday, which could provide some direction. Weather is a non-event. While little snow has fallen so far this fall, temperatures in the forecast are not concerning enough to the cold side to warrant any major issue. Bottom line, there just isn't much news and the market is behaving as such.

CATTLE HIGHLIGHTS: Live cattle futures have finished with modest gains this afternoon, as contracts gained from 70 cents to 1.42-1/2. Front-month Dec cattle were up 1.075 to 119.05, while Feb cattle were up 1.425 to 125.475. A firmer cash tone than last week's 4.00 to 5.00 drop, helped provide support underneath the Dec contract as cash trade today ranged from 119.00 to 120.50. This is firmer than early week 118.00 trade, and running relatively steady with last week's totals. In addition, retail values saw firmer levels at midday with choice carcasses 29 cents higher, while select was up 26 cents, in what was classified as moderate box movement. With the firming of cash values and stronger retail demand, live and feeder cattle futures saw pre-holiday short covering as traders squared positions into the Thanksgiving weekend. The USDA announced Cold Storage numbers this morning, which still confirmed relatively steady product movement, with total pounds of beef in freezers up 2% from the previous month, but down 5% from last year at a total of 506.9 million pounds. Despite the large slaughter numbers, this continues to show good product movement which helped stay supportive on cattle prices after morning gains.

LEAN HOG HIGHLIGHTS: Lean hog futures posted strong gains as contracts finished 1.20 to 2.15 higher. Front month Dec hogs gained 2.125 to 62.825, while Feb hogs were up 2.15 to 69.10. Hog futures saw some additional short coverings this afternoon as traders exited short positions before the Thanksgiving holiday. Friday's trading session will be brief, and usually light in volume in overall trading activity. Further gains were supported by cash prices moving higher this afternoon, supported by rebound in carcass values at midday with hog carcasses gaining 1.16 trading to a value of 82.03. The monthly USDA Cold Storage numbers were considered relatively neutral for pork at 597 million pounds of pork in coolers, below trade estimates and posting a decline from September's totals. Today's price action mostly limited yesterday's losses, as Dec and Feb futures may be looking to etch out a short-term bottom since correcting off of October highs. Like beef, retailers may step back into pork and pork products after we've passed the Thanksgiving holiday window. In this timeframe, retail favors turkey for Thanksgiving dinner, and beef and pork retail demand slips. After the holiday buying is through, the shift will move back to other red meats, which can provide support into the end of the year. Slaughter numbers are staying relatively heavy at 460,000 kill this week, this is down 5,000 from last week, but still nearly 15,000 over last year. While hog futures may have some room to move technically higher, large slaughter numbers and an abundance of supply will make sustained rallies extremely difficult.

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