Stewart-Peterson Market CommentaryClosing Commentary - February 27, 2015
Stewart-Peterson Closing Commentary 2-27-15
WHEAT HIGHLIGHTS: Wheat futures saw an impressive bounce off of near-term lows as contracts posted double-digit gains this afternoon. Front-month March wheat was up 14-1/4 to 5.17-1/2, followed by May up 12-1/2 to 5.13. For the week, the May contract posted a 6 cent gain despite seeing heavy selling pressure for the majority of the week. After pushing through and testing contract lows yesterday, wheat rebounded at the end of the day and saw continued follow-through this afternoon. This may have been more of a profit-taking type rally after short stepped aside following an overall negative month for the commodity. The key going forward will be the demand pace on the US grain versus the world which is some of the reason we saw this month's pullback after testing the month highs. US wheat still runs at a premium to the global wheat price levels, and the strength of the US dollar is not aiding in that overall export picture. In addition, this week brought snow cover through parts of the HRW wheat belt which was in need of some excess moisture as that snow pack melts off in the weeks ahead. Globally, the supply picture continues to stay flush for wheat. Today's rally could be short-lived as we move forward into March. The focus, besides demand, will be the springtime as the US wheat breaks dormancy, and we get a healthy picture of what this spring's crop will look like.
CATTLE HIGHLIGHTS: Cattle futures finished the day mixed with strength seen in the front month contracts. As the Feb contract closed today, down 3.12 to 158.00, April cattle, as well as June, benefited from positions out to those months. April cattle were up 1.90 to 151.70, followed by June up 90 cents to 143.85. For the week, the April contract gained 3.17-1/2. Cattle futures held modest losses for the majority of the morning as profit taking and some tech selling held the direction of the market. But as mid-day boxed beef values came in firmer, some buyers stepped forward, lifting us to our finish on the day. At mid-day, choice carcasses were up 81 cents while select was up 1.03. In addition, the April contract is holding about a 9.00 discount to last week's cash price levels. As boxed beef values have firmed, the prospects of cash bids holding steady and keeping that discount intact offered some support to the April cattle. Cash trade was very quiet this week as bids and offers are still holding steady. Feeders also finished mixed with front-month contracts gaining triple-digits. March was up 1.60 to 201.90, followed by April feeders up 1.27-1/2 to 200.325. The remaining feeder cattle contracts saw mild losses this afternoon. Lack of direction in the live cattle market, as well as strength seen in grains helped limit any upside momentum for those feeder positions today.
LEAN HOG HIGHLIGHTS: Hog futures ended mixed this afternoon as April hogs posted a 32-1/2 cent gain to 67.47-1/2, followed by June up 25 cents to 82.87-1/2. Overall, it was a quiet week for the April hogs as they posted a 7-1/2 cent gain. Front months saw some profit taking as we ended the Feb trading month, also being supported by some strength in wholesale carcass values. Wholesale prices at mid-day were 1.85 higher after seeing a volatile week, mostly pressuring the price levels. Cash prices have been steady to firmer this week as cold as well as snowy weather throughout the Midwest has limited movement from the countryside having packers a bid up for hogs. Overall, front months have been seeing some gains but have hit resistance levels today, and next Monday's trade could be key in terms of what direction we may be headed. Deferred contracts continue to see expectations of large supply which is keeping the summer and later months in check in terms of any potential rallies. Going forward, the fundamental picture looks negative for hogs as producer expansion grows, bringing more hog supply forward.
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