Stewart-Peterson Market Commentary

Closing Commentary - September 19, 2014

Stewart-Peterson Closing Commentary 9-19-14

CORN HIGHLIGHTS: Corn futures pushed to new contract lows this afternoon as futures ranged from 5 to 6 lower. Nearby Dec was down 6-3/4 to 3.31-1/2, followed by March down 6-1/2 to 3.44-1/4. For the week, the Dec contract posted a 7 cent loss. Dec corn futures pushed to new contract lows with a 5-day forecast for warmer temperatures that will be beneficial for maturing corn, as well as allowing harvest to progress. Early favorable harvest results along with the lack of any bullish news continues to pressure prices. Today's break below 3.35, which was established last week, opened the door for technical selling pressure as we may be testing to new lows. At this point, futures could be looking at another 10 to possibly 30 cents lower testing the 3.00 mark. Underlying support could come into the core market as producers are slow to sell at these reduced prices and the prospects of end users looking to aggressively buy this big inventory. Demand for overseas export could ramp up at these prices levels. Today, USDA announced that Mexico bought 14.8 mil bu of 2014/15 corn.

SOYBEAN HIGHLIGHTS: Soybeans futures continue their negative slide as contracts lost 14 to 15 cents. Nearby Nov beans closed down 14-1/2 to 9.57, followed by Jan down 14-1/4 to 9.65-1/4. For the week, the Nov contract posted a 28-1/4 cent loss. After breaking into new contract lows yesterday afternoon, selling pressure continued across the bean markets today. Much like corn futures, the overriding pressure continues to come from harvest as it will begin the ramp up the next few weeks, as well as the expectation of a record crop and carryout levels. Therefore, we'll continue to stay with our defensive posture because of the lack of bullish news from this market that could provide any positive direction. On the export front, China continues to be a major buyer this week at these price levels with a reported sale of 45 mil bu this morning. For this week, Chinese processors have picked up 76 mil bu of beans for next year. As prices continue to fall because of the large crop, these export sales could continue to increase as beans, compared to last couple of years, are certainly looking relatively cheap.

WHEAT HIGHLIGHTS: Wheat futures posted double-digit losses as contracts pushed to new lows at close this afternoon. Contracts lost from 12 to 14 cents. Nearby Dec wheat was down 14 to 4.74-1/2, followed by March down 14-3/4 to 4.91. For the week, the Dec Chi wheat futures posted a 28 cent loss. Wheat futures continued their steep down slide after pushing through to new contract lows yesterday afternoon. This continued to bring a bout of technical selling pressure, as the Dec contract may be poised to test the 4.50 level. The wheat market is pressured by global competition as the world is flush with wheat and world wheat prices slide. New lows were a factor in all three wheat markets as selling pressure continues. In addition to the global supply picture, southern Plains have picked up some needed moisture which will only help this year's winter wheat crop get off to a good start. The overall trend of other grains suggests that prices will have a tough time getting any bottom. The most a producer can hope for is any type of sideways to lower action.

CATTLE HIGHLIGHTS: Live cattle futures posted moderate gains in the deferred months, but front months were mixed this afternoon. Nearby Oct cattle gained 2-1/2 cents to 155.62-1/2, Dec lost 22-1/2 cents to 158.70. Nearby cattle futures were quiet in anticipation of this afternoon's Cattle-on-Feed numbers which showed animals on feed at 99% of last year, placements at 97% of last year, and marketed animals at 90% of last year. Overall, these numbers are considered fairly neutral given expectations were fairly close. Though the placement activity was slightly above expectations by a percentage point, this still represents the smallest late summer total placement of head since this data was collected starting in 1996. In addition, marketing of cattle during that month also represented the lowest total since 1996. Today's Cattle-on-Feed numbers continue to stress the nearby supplies which are very tight which has been providing underlying support under the live, as well as the feeder, cattle markets these past few weeks. Feeder contracts posted modest to solid gains this afternoon. Sept feeders are up 70 cents to 230.60 followed by Oct up 1.02-1/2 to 228.72-1/2. Feeder prices are still pushing to new record high levels as firm demand exists for a tight supply. In addition, feeder prices see support as corn futures broke into new lows this afternoon. Continued weakness in cash grain prices will help keep buyer interest active in the feeder market.

LEAN HOG HIGHLIGHTS: Hog futures saw limit moves in the nearby front month Oct contract, up 3.00 to 105.97-1/2. Dec futures posted an additional 1.05 gain to 94.85. Hog futures posted sharp gains on positive expectations in pork industry as carcass values at mid-day posted a 31 cent gain, and cash prices stayed firm. In addition, some short covering stepped into the market after yesterday's strong pull back in those front month futures. The pork market remains extremely volatile, supported as demand continues to stay firm as well as steady cash prices. As we go forward, we'll focus on slaughter numbers and weights as cheap corn prices are allowing producers to feed hogs to heavier weights. Estimated slaughter was a very manageable 169,000, well below last year's estimates.

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