Stewart-Peterson Market Commentary

Closing Commentary - July 26, 2017

Top Farmer Closing Commentary 7-26-17

CORN HIGHLIGHTS:After sliding more than 8 cents yesterday, corn futures gained back between 3-3/4 and 4-1/4 cents today as rain on the radar may not have been as much as advertised yesterday. Outside news was relatively quiet. Stock prices continue to move upward as the Dow Jones reached new contract highs. This may be keeping some monies out of commodities, as this has been a strong bull market for multiple months. Corn futures are likely to vacillate between 3.80 and 4.00 over the next week, trying to find news for direction. If rainfall totals disappoint and temperatures warm, then there could be issues with western Corn Belt production. For now, rain at the end of July is viewed as beneficial, and where it did fall, the overall crop yield potential may actually be on the rise, despite declining crop conditions, which are recorded each Monday on the USDA Crop Progress report. Private estimates continue to suggest the crop is somewhere likely between 163 and 168 bushels. The most recent Planalytics, which utilizes satellite imagery, is suggesting 165.3 bushels. This is down from last month's estimate of 166.6.

SOYBEAN HIGHLIGHTS:Soybean futures gained 6-3/4 to 7-3/4 as Sep led today's gains, closing at 9.93-3/4. New crop Nov closed up 7-1/2 at 10.00-1/4. Today's hook reversal upward looks encouraging that prices may have overdone it yesterday with support coming from the 21-day moving average. Weather forecasts continue to evolve and since yesterday, some forecasters have taken the wide-spread copious amounts of rain out of their forecast and replaced it with more scattered rain. Most of the heavier rain is moving south of the drier regions in IA. This seemed to be enough to help prices claw into positive territory and finish on a solid note near the day's high, after posting a low of 9.84-1/2. Crop ratings at 14% poor to very poor certainly suggest this year's crop will have little likelihood of reaching a trend-line yield of 48 bushels an acre. Yet, we're just entering the window most critical for soybeans, so as weather goes, so may bean prices. Downside objectives still point under 9.00, should yield surprise producers. Otherwise, just as we've indicated in the corn market, this year's weather is likely pulling up the bottom side to where prices can sink.

WHEAT HIGHLIGHTS:Wheat futures edged higher today gaining 2 to 3-3/4 cents. Support came from confirmation from the wheat tour that this year's crop is not very good. Further results are expected from the wheat tour. As for outside markets, a weaker U.S. dollar continues to provide some type of undercurrent of support, as was evident in today's higher prices for wheat. The dollar is now trading at its lowest level in over a year. As long as that's the case, we can look for an increase in net export activity. That wasn't necessarily the case today, as it was announced that France was the winner of an Algerian tender. As far as the spring wheat crop is concerned, harvest will be winding down soon, but the crop tour is in some of the better areas of spring wheat country that may not have been affected as much by rain, with an average yield of 37.9 bushels estimated.

CATTLE HIGHLIGHTS:Cattle futures finished higher this afternoon on firmer-than-expected Fed Cattle Exchange trade and an uncharacteristically wide basis. The nearby Aug contract closed 1.12 higher to 114.30, Oct closed 60 cents higher to 113.37, and Dec closed 35 cents higher to 113.97. Cash trade in the country was seen at 117.00, about 2.00 lower than last week. A total of 772 head were sold on the online FCE. For delivery in 1-9 days, 403 head were sold at a weighted average price of 117.72. For delivery in 1-17 days, 369 head were sold at a weighted average price of 117.63 and although 147 head were offered for delivery in 10-17 days, none were sold. Boxed beef prices were mostly steady today. Choice cuts closed 16 cents higher yesterday afternoon to 207.62 and select cuts closed 1.04 higher to 198.93. By midday today, choice cuts were down 7 cents to 207.55 and select cuts down 59 cents to 198.34. Both the Oct and Dec futures fell below their 100-day moving averages early in the session, prices rallied the second half of the day to close above their 100-day moving average levels. The Aug contract did challenge its 100-day moving average, but was not able to close above it. Nearby support for the Aug contract is the low trade from July 6 at 112.42. Support for Oct and Dec come in at the 100-day moving average levels then the lowest trade put in June 22, about 2.00 lower than today's close.

LEAN HOG HIGHLIGHTS:Hog futures were able to take advantage of oversold prices and an extreme discount to cash market today, closing moderately to higher. The nearby Aug contract finished 55 cents higher to 82.00, Oct finished 80 cents higher to 67.65, and Dec finished 37 cents higher to 61.92. At today's close, Aug hogs are at an 8.44 discount to futures versus the normal discount of just under 3.00. Oct futures are almost 23.00 below cash, versus normal seasonal discount of under 16.00. These spreads need to narrow for the hog market to revert to more normal seasonal price patterns. Carcass cutouts closed 19 cents higher yesterday afternoon to 102.40 and were up another 42 cents by midday today to 102.82. Despite loins, butts and ribs all losing 4.00 to 6.00 in value today, the increase in carcass cutout value was due to bellies rallying 12.58 to 227.54. Stochastics are still reading oversold for the Oct and Dec contracts, while the Aug was able to rebound today. For the first time in a week, the Aug contract closed above all major moving averages. The Oct contract closed just shy of its 10-day moving average and Dec was able to close above its 200-day moving average.

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