Stewart-Peterson Market Commentary

Closing Commentary - October 08, 2015

Top Farmer Closing Commentary 10-8-15

CORN HIGHLIGHTS: Corn futures lost ground today for the second consecutive session with futures losing 4-1/2 to 4-3/4. Dec closed at 3.91-1/4, its lowest close in four sessions. Yesterday's high was 3.99-3/4, again an area near 4.00 which prices fail to find follow-through buying. Tomorrow's USDA report could shed some direction on where prices may be headed in the near-term with corn production estimated at 13.504 bil with an average yield estimate of 167.1. Harvested acres are anticipated at 80.826. Last month's harvested acres was 81.101, yield 167.5, and production 13.585 bil. We are still of the bias that, despite generally good yields across the board and some surprisingly better than expected, production at 167 is still too aggressive a figure.

SOYBEAN HIGHLIGHTS: Soybean futures lost ground today with futures closing 7-1/2 to 9-3/4 lower as Nov led today's drop, closing at 8.81-1/4. In recent sessions, the market tested the 8.95 area but failed to push through this area as well as the 50-day moving average, and it was just perhaps a matter of time before good yield results and position squaring before tomorrow's USDA report pushed prices on the defensive. Traders are anticipating soybean yield at 47.2 bu per acre which would be up 1/10 of a bu from last month. Production is now estimated at 3.908 bil, according to the average of analysts' estimates. This compares to last month's 3.935. Harvested acres are expected to edge downward to 82.914 mil from last month's 83.549. Tomorrow's report could provide direction as will weather over the next week. As of now, harvest appears to running wide open, and well over half the crop should be off the field. If good weather persists, the market will likely find additional bushels available that farmers do not intend to store but rather sell. This could put some more near-term pressure on prices and push futures down to 8.50.

WHEAT HIGHLIGHTS: Wheat futures weakened today for the second consecutive session after posting a very negative-looking hook reversal yesterday. By day's end, futures were 4-1/2 to 5-1/4 lower with Dec closing at 5.11-1/2. Dec's high yesterday was 5.31-1/2. Profit taking as well as hedge pressure and an increase in farmer selling may have weighed on futures today. Position squaring in front of tomorrow's report may have been a factor as well. At 11:00 AM Central Time, the USDA will release its Grain and Soybean production as well as Ending Stocks estimates for both the U.S. and world. Analysts are anticipating carryout at 819 mil and this would be below the 875 mil from the Sept report. World projected carryout, however, is expected to remain basically unchanged at 211.37 mmt versus last month's 211.31.

CATTLE HIGHLIGHTS: Cattle futures, as of this writing, were rebounding for the third consecutive session with strong to sharp gains. Oct cattle were leading today's rally at 177 points higher at 131.12, while the feeder market showed strong gains with Nov leading today's rally gaining 4.07 at 185.30. A solid close above the 21-day moving average in the feeder market set the stage for potential further advance another 4.00 to 5.00 higher. However, we're concerned that the overall trend with meat is still down and that a rally from here could be short-lived. At the same time, we'll look at a rally as a second opportunity to make sales from what may have been a missed opportunity in early Sept when prices began to fall apart. Cash prices seem to be stabilizing as to cutouts. Estimated slaughter today was 107,000. The average cash price for cattle is 118.91. This would suggest futures may have a short-lived bounce unless cash rebounds soon. Cutout values were firmer this morning, gaining 139 on choice.

LEAN HOG HIGHLIGHTS: Hog futures, as of this writing, were trading 37 to 50 higher with Feb leading today's rally. Oct continues to make a grind upward, trading 40 higher at 74.22, in line with last week's highs. However, Oct hogs stopped trading on Wed, and unless the cash market makes a significant change for all practical purposes, we'll settle out somewhere close to 74.00. That leaves Dec with too much of a discount. That is why we are not going to hedge Dec hogs until we see a bit of a run. Futures in Dec ran into heavy overhead resistance at the 200-day moving average on Sept 7 and 29. We believe the market will move through this, and in fact, take out the high from last May which is 70.80. Cash is holding firm, and we're beginning to see a turnaround in the cattle market that is providing life for all meats. 

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