Stewart-Peterson Market Commentary
Closing Commentary - March 24, 2017
Top Farmer Closing Commentary 3-24-17
CORN HIGHLIGHTS:Corn futures finished unchanged to down 3/4 cent, with July leading today's slide. Today's trading range was less than 3 cents in most contracts. It doesn't get quieter than this. Sharp losses in soybeans once again weighed on corn futures, but support came from wheat, which gained 3 to 3-1/2 cents. It was a tough week for corn futures, which showed good strength on overnight trade Sunday and early Monday morning and then closed lower 5 consecutive sessions. For the week, May corn lost 11-1/4 cents, and new crop Dec closed at 3.795, losing 10-1/4 cents. Despite a weaker dollar, corn could not find any support as news from Argentina and Brazil remains conducive for corn production. This month's increase and expectations for southern Hemisphere corn was enough to push prices lower. Technical weakness weighed in as funds began peeling off long contracts. Prices are currently just below a 50% retracement from the August low to the high in February. This does not bode well for bullish traders, yet when viewing corn priced at 3.56 in May, we believe it is a bargain for end users, and farmer selling will begin to slow. Don't be surprised to see short covering into next week in front of the all-important Stocks and Acreage report. Over the years, these reports have generally found negative news for corn prices, and we believe the market has been somewhat conditioned to prepare for negative news this year.
SOYBEAN HIGHLIGHTS:Soybean futures broke support and finished with sharp losses of 11 to 15-1/4 cents. Nearby May reached its lowest level since mid-October, closing at 9.7575, down 15-1/4, while new crop Nov closed at 9.77, down 14-1/4. Continued speculative long liquidation, along with more confidence of southern Hemisphere crop likely growing in subsequent USDA reports, has pressured prices. We are not surprised futures are under pressure, as the end of March approaches. The quarterly Stocks and Acreage report will likely show strong usage as well as a bump in acres. The fundamental numbers likely point to increasing US carryout.
WHEAT HIGHLIGHTS:Wheat futures gained 2 to 3-3/4 cents, as rainfall totals so fare could be viewed as disappointing. However, there is more in the forecast. It is likely that today's bounce is more on ideas of oversold conditions after prices dropped 4 consecutive sessions. With futures pushing below the 4.45 mark on Jul futures Monday, futures continue to erode with the exception of today. A drop off in the US dollar in recent sessions has also been viewed as supportive and may have been enough to give traders reason to take profits on short positions or begin establishing long positions today.
CATTLE HIGHLIGHTS:Live cattle futures closed mixed after trading sharply higher in the morning, then slamming lower to finish near the middle to lower portion of the day's range. The nearby Apr contract closed 32 cents higher to 122.10, Jun closed 5 cents higher to 112.85, and Aug closed 10 cents lower to 107.80. Cattle traded triple digits higher this morning on light cash cattle movement yesterday at 130. However, when higher cash trade was not seen and movement was abnormally quiet, traders sold off the futures contracts from overbought levels. Beef demand has also not been friendly. Choice cuts closed 72 cents lower yesterday afternoon to 222.28, and select closed 3 cents lower to 215.77. Beef values were down again today, with choice down 19 cents at midday to 222.09, and select down 21 cents to 215.56. The Brazilian beef market has taken a huge hit since the scandal reached the news earlier this week. Brazilian beef is now on sale in the world market, so despite the higher quality of American beef, not everyone is concerned about Brazilian beef; thus, American beef prices are under pressure. Today's cattle on feed report released after the close was overall neutral. On feed was reported at 100%, vs the average market guess of 110.5%; placements were 99%, vs the average market guess of 98.5%; marketings were at 104%, vs the average market guess of 103.5%. Due to lack of support, these numbers could lead to a sell-off next week. The technical charts look toppy and vulnerable to a tip-over.
LEAN HOG HIGHLIGHTS:Hog futures took back all of yesterday's gains, and then some. The nearby Apr contract closed 2.07 lower to 67.27, May closed 1.72 lower to 72.22, and Jun closed 185 lower to 75.75. Upon early morning analysis, the market clearly decided that yesterday's gains were overdone, especially considering there was not much reason to take futures that much higher. Carcass cutouts also closed sharply lower yesterday afternoon, led by butt values falling 7.488 and bellies losing 4.71. Carcass cutouts were actually up 157 at midday to 79.06, but it was not nearly enough to provide real support to prices. The best traded Jun contract briefly eclipsed its 50-day moving average level of resistance but quickly fell back below the 50-day and 10, 20 and 100-day moving averages. The closes today were ugly but not particularly surprising.
Market Commentary provided by: Stewart-Peterson 137 South Main Street, West Bend, WI 53095