Stewart-Peterson Market CommentaryClosing Commentary - May 03, 2016
Top Farmer Closing Commentary 5-3-16
SOYBEAN HIGHLIGHTS:Soybean futures posted strong gains on the overnight trade, with new highs for the uptrend experienced on all contracts. However, prices reversed in the morning session, pushing into negative territory, once the US dollar, which traded sharply lower on the overnight, began a comeback and pushed into positive territory. New news of consequence was lacking, and this may have been enough to keep prices on the defensive, as commodities as a whole seem to go on the defensive. Energy was down over 1.00 per barrel in crude oil, and losses were experienced in corn and wheat as well. While prices did post a hook reversal, today's chart activity does not look as negative when comparing to corn, which posted a bearish key reversal. A bearish key reversal is where the trading range is larger than the previous day, and the close is lower than the previous day. Today's reversal in beans simply indicated prices pushed to a new high, ran out of buying interest and then weakened by day's end. Nov finished down 7-1/2, closing at 10.1025, while may lost 14, closing at 10.215. Bean meal went from positive to negative losing 4 to 5.80, and bean oil finished with losses of 6-9 cents. Expectations that the reduction in the South American crops due to excessive moisture in Argentina and too dry in parts of Brazil may be factored in.
WHEAT HIGHLIGHTS:Wheat futures were under pressure from early in the morning session as the dollar began to climb higher, and it did not take long for prices to slide into double digit losses. By day's end, May Chi lost 17-1/4, while Dec lost 18. It was a rough looking technical day, and with prices slicing through the 100, 21, 40 and 50 day moving averages, there is no doubt sell stops were triggered, pushing prices even lower. Crop ratings improved for the week with 61% of the crop rated good to excellent, up 2% from last week and 18% in the good to excellent category compared to a year ago.
LEAN HOG HIGHLIGHTS:Hog futures ended quietly with nearby May gaining 5, closing at 78.47, while deferred summer months gained 22 each in June and July. Hog prices continue to consolidate in what appears to be a good recovery, but prices have likely run out of steam to the topside. This is the 5th consecutive higher close for June, but with today's gain so small, we cannot help but think traders are running out of reason to buy. Slaughter numbers appear adequate as was evident in today's figure at 430,000, which compares to 419,000 a year ago. Weakness in beef cutout values would suggest retailers would likely switch to beef soon and would aggressively promote this product as it is considered a value. The grilling season is likely to kick in majorly in the next 4-6 weeks. Yet, hogs have held together well. We view this as an opportunity to take a more defensive posture in the summer months through the use of put options.
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