Stewart-Peterson Market Commentary

Closing Commentary - March 30, 2015

Stewart-Peterson Closing Commentary 3-30-15

CORN HIGHLIGHTS: Corn futures edged higher today with solid gains of 3-1/4 to 3-1/2 cents with many futures contracts posting their second highest close since mid-Feb. New crop Dec clawed up above the 100-day moving average with futures closing at 4.18-1/4, a 1/4 cent from today's high. Overhead resistance at 4.20 holds in place. The market seemed to take more of an offensive approach in front of tomorrow's quarterly Stocks and Acreage report. Pre-report estimates have acreage at 88.73 mil versus the 2014 90.597 mil planted acres. Quarterly stocks are anticipated at 7.609 bil and that compares to last year's 7.008 bil. The big winner today was wheat prices, shooting higher with solid gains of over 20 cents. We feel this may have provided support for corn. Drought index maps continue to show expanding dry conditions in the western Corn Belt with dry conditions virtually in all western states with the exception of the central Midwest and the critical eye states of Iowa, Illinois and Indiana. However, Iowa is beginning to show some net drying, and this will be watched closely.

SOYBEAN HIGHLIGHTS: Soybean futures ended quietly with futures gaining 1/2 to 1-1/4 with Sept leading today's futures closing at 9.58. New crop Nov gained 1/2 closing at 9.49-1/4, unable to hold on to gains posted above the 9.50 mark earlier in the session. Weekly export inspections at just over 24 mil bu should be viewed as supportive. It appears the bean market is having more difficulty finding buyers, anticipating that tomorrow's reports could not only show increased acreage, but also stocks. Pre-report estimates have acreage at 85.919 mil, and this compares to 83.701 a year ago. Quarterly stocks are estimated at 1.346 bil, and this, too, is above last year's 994 bil.

WHEAT HIGHLIGHTS: Wheat futures had a strong day closing with solid gains of 18-3/4 to 22-1/2 cents higher as May Chi led today's rally closing at 5.30-1/4. This is the second consecutive close in which prices closed at or near the high of the day. For May wheat, other than a close at 5.34 on March 23, this is the highest close since mid-Feb. Charts are beginning to look stronger with today's push back above the 40 and 50-day moving averages in most contracts. New crop July is forming an inverted head-and-shoulders formation which could produce an upside objective of over 5.75. The fundamental catalyst is continuing concern over drier weather in the western wheat regions. Kansas continues to run on deficit rain, and this formation pushes into the Panhandle and then east with significant drying in Oklahoma. As spring pushes along, dry weather becomes more critical and, consequently, the market seems to be taking a more serious notice today.

CATTLE HIGHLIGHTS: Cattle futures weakened early in the session but managed to bounce back finishing mixed with April closing 12 lower at 162.50 and Aug 32 higher at 150.27. We were encouraged with today's close considering prices began to show weakness to start the day but picked up late in the session. Recovering hog prices as well as a general bias for firmer commodity prices provided underlying support. This despite a firmer US dollar. Slaughter continues to run on the light side as was evident today with 109,000 marketed versus 116,000 a year ago. Weight gain has been excellent, and weights are on the heavier side. Cutout values firmed this morning with choice trading at 252.50,up 170, and select up 257 at 249.28. These prices would suggest futures are well supported at current price levels. The question is whether or not demand can continue to hold with stiff competition from pork and poultry.

LEAN HOG HIGHLIGHTS: Hog futures responded positively to the Hogs and Pigs report, at least by the close of today's trade. Prices got off to a weak start on opening calls continuing to get more negative as the morning wore on. Yet, when looking at the general numbers from last week's Hogs and Pigs report, we can't help but believe that the market is poised to find a low in the very near-term if it has not done so already. The negative numbers on Friday's report were the winter pig crop at 109%, and Dec through Feb farrowings at 107% versus and average estimate of 105.5%. Yet, for the most part, all other numbers were in line. Therefore, you can look at the report one of two ways, the first showing increased supplies from a year ago. The second, of course, is to compare these numbers to two years ago and you'll find there is not much of a difference in the overall hog population and, consequently, this should lead to better demand. The wildcard could be the US dollar which was firmer today, but overall still in a uptrend since last July. 

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