Stewart-Peterson Market CommentaryClosing Commentary - October 20, 2014
Stewart-Peterson Closing Commentary 10-20-14
SOYBEAN HIGHLIGHTS: Increased harvest pressure and a lack of positive news allowed bean prices to slip today, closing down anywhere from 6-1/4 to 7-3/4 with Mar leading today's drop. Nov closed at 9.44-1/4, down 7-1/2, but perhaps more importantly, a close back underneath the even 1/2 century mark of 9.50. The good news is once prices sold off today with futures down near 14 cents, the 21-day moving average acted as support and generated buying interest. With harvest kicking in full steam for much of the Midwest this week, we expect some pressure prices. Export inspections were considered neutral or perhaps even a little friendly at 73.2 mil bu. Year to date, inspections are running well ahead of last year by 19.2%. The good news here is that beans are not only being sold, but they're being shipped out. That makes this year's bean crop, despite record large, quickly evaporated into the pipeline, which could ultimately mean prices could rally significantly should anything less than ideal weather in the southern hemisphere develop. General drying in Brazil is expected to provide some support, yet forecasters are suggesting a northern 2/3 of Brazil could see more normal type rain in the week ahead.
WHEAT HIGHLIGHTS: Wheat futures ended quietly trading both sides of steady, but eventually finishing with losses of 1 to 2-1/2 cents. Bullish traders would argue that today's close was encouraging considering wheat struggled earlier in the session with losses of 8 or more cents. Yet, by day's end, it appeared the market is content to continue its near term consolidation with prices trying to find support above 5.00. Today's low was 5.07-1/4. New news of consequence was lacking. Export inspections, however, were considered somewhat subdued and not supportive at 17.7 mil bu as the market needs to see 23 mil bu on a weekly basis.
LEAN HOG HIGHLIGHTS: Hog futures were on the defensive again. A large slaughter closing in at 430,000, along with poor technical showing after the prices opened weaker today, after a good comeback on Friday, suggests that the trade wasn't ready to go long. We might counter that and believe that hogs are now undervalued, especially to beef. We feel it's just a matter of time, despite an increase in hog supplies, where retailers will back away from beef. Hog production should be up this year anywhere from 4% to 6%, but we'll likely just make up the shortfall from last year. Nonetheless, the trend of increasing supply is strong and that perception alone will likely keep rally potential in check and hedge pressure strong.
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