Stewart-Peterson Market Commentary

Closing Commentary - February 08, 2016

Top Farmer Closing Commentary 2-8-16

CORN HIGHLIGHTS: Corn futures lost ground for the third consecutive session with futures losing 3-1/2 to 3-3/4 cents. March closed at 3.62-1/4, its lowest close since Jan 15. About the only good news today is that prices filled a gap that was left between Jan 15 and Jan 19. In addition, prices held support at a downward channel line. Tomorrow's Supply/Demand report will make some attempt to estimate carryout. However, from a historical perspective, this report does not have much influence on prices. It appeared after prices reached their highest level last Wednesday at 3.73-3/4 on March futures and then the subsequent failure to move above this level on Thursday and Friday, prices began their slide. Wheat prices have dropped well over 20 cents, and this may have helped pull corn prices weaker as well. This is the fourth consecutive down session for corn futures, and will likely lead to a lack of strong farmer selling. In other words, we would look for new buying interest to develop. Why prices have slid lately, however, is somewhat of a head-scratcher considering the sharp sell-off in the US dollar over the last week as well. 

SOYBEAN HIGHLIGHTS: Beneficial rains in the southern Hemisphere, weakness in commodities as a whole and technical selling all weighed on futures today. In addition, traders may have been position squaring in front of tomorrow's Supply/Demand report, which historically does not have much bearing on price. Export inspections are considered solid at 1.17 mmt. We are not anticipating much if any change to the Brazilian and Argentine crop on tomorrow's report. There has been some argument over the last couple of months that the USDA should have lowered expectations last month, and perhaps that could show up tomorrow.

WHEAT HIGHLIGHTS: Wheat futures softened again and finished with significant losses for the third consecutive session. By day's end, Mar Chi closed 8-1/4 lower, leading the Chi futures downward with a finish at 4.58-1/2. On Jan 26, prices were at 4.88-1/2. This drop of 40 cents is surprising and disappointing. Export inspections were considered uneventful at near 400,000 tons. Carryout is expected to be more than adequate at near 940 mil bu on tomorrow's report. Expect the world figures to show adequate supply as little to no weather developments worldwide have surfaced in months.

CATTLE HIGHLIGHTS: Live and feeder cattle traded limit lower earlier in the day and have stayed locked as such. Nearby Feb is down 3.00 at 133.05, while Mar feeder cattle are down 4.50 at 159.32. Expectation for weaker cash, a difficult looking technical picture after prices gapped lower today and a triggering of sell stops may have all contributed to today's sharply lower markets. We indicated last week that supplies could back up to a winter storm pushing through the Midwest. The market has to grapple with extra inventories. Today's estimated slaughter was 109,000, which compares to 111,000 a year ago. Cutout values were mixed this morning with choice down 89 at 219.71 and select up 73 at 217.24. Friday saw choice cutouts losing 2.43, while select lost 1.97. The erratic behavior in the cattle market continues. A sharp drop in the stock market, along with weaker energy prices, may have contributed to today's drop in prices as well.

LEAN HOG HIGHLIGHTS: Lean hog futures seemed to feel the effects of sharply lower cattle prices as deferred months last traded 50-72 points lower. The last trade on Feb was 10 lower at 64.90 with a settlement price of 64.02. LTD for Feb hogs is Friday 2/12. We believe that, near term, the market has run its course and will probably run out of gas. Both the index and Feb futures have aligned themselves closely with futures at 64.90 and the index at 64.30. That being said, it appears the hog market continues to see a stream of steady demand and in general, expectations are that prices could continue to find support on dwindling slaughter numbers into March. Today's estimated slaughter was 371,000 vs year ago 409,000. 


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