Stewart-Peterson Market Commentary

Closing Commentary - November 26, 2014

Stewart-Peterson Closing Commentary 11-26-14

CORN HIGHLIGHTS: For the second consecutive session, corn futures finished near the high of the day, gaining anywhere from 3-1/4 to 4-1/2 cents today as May led today's rally closing at 4.00-1/4. Dec corn closed 4 higher at 3.78-1/4, its highest close since Nov 14. At mid-day, funds were noted buyers of near 4,000 contracts. Volume was termed light with a holiday-type atmosphere. Yet, funds were on the offensive, and this was enough to give both corn and wheat a positive push for the day. Farmers have been relatively tight-fisted as well, and a noted improvement in some basis levels, as well as a push higher in the futures, may have to continue to occur in order to bring enough corn out of inventory. We see little in the form of weather in the southern hemisphere that has us concerned. This could likely mean limited upside potential.

SOYBEAN HIGHLIGHTS: Soybean futures edged lower today losing 2 to 4 cents with Nov leading today's drop closing at 10.47. Prices finished well off the low of 10.38-1/2, but nearly 8 cents off the high of 10.54-3/4. Continued talk that China's demand could be slowing and that the southern hemisphere weather appears to be improving could keep rally potential in check for beans. Nonetheless, bean prices are holding well but forming the right shoulder of a head-and-shoulders formation which could indicate a potential breakdown of prices in a move well under 9.75 in Jan. Yet, the low, just above 9.00, is likely the low for the year. Demand is just too strong to anticipate a nose-dive in prices will likely occur. We also question how much farmers are holding. Yes, there's a record crop, but with high prices last spring and a solid fall recovery, it's our expectation that farmers have been moving beans right along and that overall supplies owned by farmers on a relative basis is less as compared to corn.

WHEAT HIGHLIGHTS: Wheat futures closed higher with gains of 4-1/2 to 10-1/2 cents as Dec led today's rally closing at 5.62. While news as a whole is lacking, support today came from ideas that world supplies are beginning to tighten and that wheat quality expectations out of the southern hemisphere may not be as good as initially thought. French wheat rallied 50% of its decline May through Sept which would indicate that US prices could be undervalued. Yet, European and Black Sea wheat prices are still discounted to the US, and this will make it challenging for wheat prices to move higher. All that being said, we're encouraged with the way the wheat market has firmed in recent sessions. Funds were noted buyers today of more than 2,000 contracts.

CATTLE HIGHLIGHTS: After showing positive life early in the session, cattle futures reversed downward and finished with losses of 90 in Dec and 135 in Feb. Dec closed at 169.25 and Feb at 169.67. Yesterday's bounce back was encouraging, but the massive bearish key reversal from Monday should have technicians concerned. Yet, no major support has been violated. Prices held the 21-day moving average for the third consecutive session. Our bias is that competition will continue to grow from other sectors in the meat market, and that beef, while in tight supply, will continue to struggle to find new buying interest at higher levels.

LEAN HOG HIGHLIGHTS: Hog futures finished mixed with Feb losing 27 and April gaining 22. The market ended a quiet session and took on a holiday-type atmosphere. Nearby Dec closed at 90.95, near the 40-day moving average. We continue to concern ourselves with summer prices which are near contract highs. Yesterday's slide in June and poor close today would again suggest the market may be growing tired on this contract. The contract high was established on Monday at 99.60. Today's slaughter was estimated at 431,000 which compares to 435,000 a year ago. Cutout values were weaker for the second consecutive session losing 52 points at mid-day at 91.66. We'll stay with our bias that rallies are meant to be sold, and that if you continue to do so, you will be in good shape.

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