Stewart-Peterson Market CommentaryClosing Commentary - May 21, 2015
Stewart-Peterson Closing Commentary 5-21-15
SOYBEAN HIGHLIGHTS: Soybean futures, despite higher wheat and corn, couldn't find much footing today to gather upward traction and instead ended with small losses of 1-1/4 in Nov to 2-3/4 in July which closed at 9.38-1/2. Today's close in Nov at 9.18-1/2 was another new contract low close. Both corn and beans are on a slippery slope, and beans have been the recipient of more of a downward slide as of late. Good crop conditions in the southern hemisphere have allowed for big inventory, and harvest continues to move along. The dollar was a little softer today, but that didn't seem to provide much support for beans which appear to be more focused now on the longer-term picture which suggests record carryout for 2015/16 and, consequently, the real possibility that bean prices could trade sub-9.00 for some time to come. That being said, weather would be the most dominant factor in the weeks and months ahead. We believe there's little premium in any row crop commodities from a weather perspective. However, the trend remains down, and we'll stay aggressively short. We don't see a compelling reason to suggest otherwise.
CATTLE HIGHLIGHTS: Cattle futures continued their back-and-forth movement with gains today of 97 to 122 points in the live market as Oct led today's rally. Nearby June closed up 1.02 to 152.37. Feeders gained anywhere from 95 to 102 with Aug leading today's rally. Slaughter at 113,000 continues to remain light and below year ago levels. Last year was 117,000. This morning's cutout value report indicated choice cuts down 76 cents and select down 49. However, at 264.22, we expect that choice cuts are priced high enough to support current futures prices. In fact, we'd argue that with cash likely to trade in the upper 150's next week or possibly low 160's, that June is still at a discount. As the calendar gets closer to June, we expect either futures to move higher, cash to move lower, or likely both. We wouldn't be surprised to see June make a move more toward the high from Jan. of 158.again, may have given traders opportunity to jump on-board long wheat positions.
LEAN HOG HIGHLIGHTS: Hog futures finished mixed with nearby June gaining 122 points, closing at 83.77, posting a very friendly-looking upward bounce after testing support early in the week. Support comes in play near 81.50, and once prices held this level on Tuesday, prices have moved higher since. Bull spreading was noted with strength in front months and weakness in Dec and Feb, each closing down a nickel. We like the consolidation, and we like the entire meat complex. Both cattle and hogs are at near-term uptrends with both trying to break to the topside. We've made the argument that we think hogs could have trouble moving much above the 85.00 mark. The first area of resistance comes in from last week's high of 85.20 June. Daily slaughters, while smaller than they were in the first quarter, are still more than adequate at 425,000 today. This compares to 372,000 a year ago. The AM carcass cutout report indicated a 1.30 increase to 87.43.
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