Stewart-Peterson Market Commentary

Closing Commentary - January 23, 2017

Top Farmer Closing Commentary 1-23-17

CORN HIGHLIGHTS:Corn futures finished uneventful, losing 1/4 in March and gaining 1/4 in May, as prices traded in a 2-1/2 cent range for most futures contracts. For a Monday it was uneventful with little news to provide direction. Export inspections at just under 38 million bushels were termed supportive. Near to date, export inspections are at 780 million, which is significantly above the pace same time a year ago by 76%. This pace also suggests that the USDA may have to edge up export sales on subsequent reports if sales and inspections continue at their current pace. South American weather has turned less volatile as most forecasters are indicating generally good growing conditions. Our bias is the market has moved to its highest price in 7 months but is not finding a lot of willing buyers. At the same time, between farmer selling and ideas the market could set back, selling interest is also minimal. We will remain cautiously optimistic, even though there is probably not enough near term news to provide support.

SOYBEAN HIGHLIGHTS:Moderating weather in South America as enough to keep prices on the defensive today with futures losing 3-1/2 in Nov to 9-3/4 in March as it led today's drop, closing at 10.5775. Beans had a relatively quiet trading day and finished in the lower half of the range. News of consequence was lacking. Better weather conditions forecasted for the week ahead is also keeping rally potential in check and may have added to pressure, pushing prices lower today. Export inspections at just over 47 million bushels were viewed as supportive and continue to suggest that demand is outstripping the current USDA projections. The key will be export sales in the weeks ahead to see if in fact business may be switching to South America, or if customers of the US are beginning to move to the sideline, waiting to see if prices can retreat. Today's number was supportive, yet the market did not react as such.

WHEAT HIGHLIGHTS:Wheat futures rallied into the close, finishing with gains of 3-5 cents as traders appeared content buying wheat and selling beans into the close. Mpls was on the defensive as traders may have been buying soft and hard red winter wheat and selling spring wheat. March Mpls finished down 4-1/4, up 5.6425, while Mar KC closed 1-1/4 higher at 4.4675. Both Chi and KC are trying to establish uptrends, while the Mpls wheat, in an uptrend since Aug, looks as though prices may have peaked after posting a very bearish looking key reversal on 1/17.

CATTLE HIGHLIGHTS:Cattle futures posted mixed closes today on relatively quiet trade and a lack of a definitive fundamental picture. The nearby Feb contract closed even today at 120.25, April closed 20 higher to 119.17, and June closed a dime lower to 108.60. On Friday, choice cuts closed over 1.00 lower to 190.42, and select closed 85 lower to 186.64, despite cash trade that was 3.00 higher last Thursday. These conflicting numbers were part of the indecision of today's session. We saw more mixed signals at mid-day today with choice up 58 to 191 and select down 7 to 186.57. This all comes at a time when packer margins are tightening and slaughter numbers declining. The very light beef movement recently could be due to two different reasons. Either packers are sitting on large amounts of inventory in anticipation of higher beef prices or, if they are concerned about lack of retail demand, they could be preparing to dump a large amount of beef while they can. Another reason for the mixed direction today was the fact that traders are starting to roll out of Feb futures and into April as first notice day for the Feb contract is just two weeks away. The 10-day moving average support levels were still held today, and the bullish uptrend remains intact though momentum appears to be waning. Beef values will become very important as they are needed to confirm this move higher.

LEAN HOG HIGHLIGHTS:Hog futures posted relatively moderate losses today as trade concerns remain at the front of the market's mind. The nearby Feb contract closed 30 cents lower to 65.00. The May contract closed 30 cents lower to 72.97. The April contract closed 70 cents lower to 67.77. Hogs saw some good buying support early in the session as traders focused on the strong carcass cutout close Friday afternoon of 79.71. At mid-day today though, carcass cutouts were down 107 to 78.64. President Trump's trade ideas continue to steal the headlines and thus demand questions, especially from Mexico, have kept a dark cloud over the hog markets. It remains to be seen what the trade deals will actually be or what effect they will have, but it is clear the market is worried about Mexican demand at this point. The most heavily traded April contract today closed below its 20-day moving average for the first time since Dec 5, a bearish signal. However, we remain within the recent trading range, and the bearishness today may have been exagerated by the low trade volume. Carcass cutouts will likely lead the way either up or down for the rest of the week, and that 80.00 mark for carcass cutouts appears to remain a critical level.

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