Stewart-Peterson Market Commentary

Closing Commentary - June 18, 2019

Top Farmer Closing Commentary 6-18-19

CORN HIGHLIGHTS: Corn futures saw some profit taking today, as the market finished 4-6 cents lower. Front month Jul corn was down 5 cents to 4.49-3/4, while Dec corn was down 5-1/2 to 4.63. Besides profit taking, weakness in the wheat market also brought sellers forward in the corn as the USDA planting progress and crop condition numbers met expectations. In weekly planting progress, the USDA estimated this year's corn crop at 92% planted, again matching lower expectations. This still leaves approximately 7 million acres of corn unplanted on 6/16 and many questions regarding the actual total acreage of corn planted or prevent plant. Weekly crop ratings did not change with 59% of this year's crop rated good to excellent, in line with market expectations. After a strong week last week and follow through buying yesterday, the market may be at a pause, working toward events at the end of June. This week will see Jun options expiration on Friday, first notice day and deliveries on Jul corn futures next week, as well as the anticipated quarterly Grain Stocks and Acreage report at the end of the month.

SOYBEAN HIGHLIGHTS: Soybean futures saw two-sided trade before ending with mild gains, as the Jul contract was up 3/4 cent to 9.13-1/2. Nov beans gained 3/4 cent to 9.40-1/4. Weakness in the other grain markets made it difficult for soybean futures to gain much traction today, but prices during intraday trade still pushed to their highest level since March. The USDA planting progress saw this year's bean crop at 77% planted, versus a 93% 5-year average. The biggest laggard states were Illinois, Indiana, Ohio and Missouri. Wet forecasts will stay supportive in the bean market over the next 10 days, as rain is still forecasted for the eastern Corn Belt, which has struggled all spring with getting crops planted. With yesterday's planting progress number of 77%, there is an estimated 17-18 million acres of beans unplanted on 6/16. With wet forecasts, little progress may occur this week in those key regions. The market is still wary of overall large global supply, which may limit rallies, but with managed money still holding a short position, the market seems to be moving higher as those shorts move to the sidelines.

WHEAT HIGHLIGHTS: Chi wheat futures finished 6-8 cents lower, with Jul Chi down 8 cents to 5.31-1/2. Sep was down 7-1/4 to 5.35-1/2. HRW wheat was the weakness of all wheat classes with the Jul contract down 10-1/4 to 4.65-1/4. Spring wheat followed suit, down 8 cents to 5.52-1/4 in Jul. Wheat saw long liquidation and profit taking after its most recent push higher, as U.S. winter wheat and spring wheat crop ratings stayed strong. Currently, U.S. winter wheat crop ratings are 64% good to excellent, vs 39% last year. Spring wheat crop is rating 77% good to excellent, vs 78% last year. North Dakota, a key spring wheat producing state, is holding an 83% good to excellent rating. HRW wheat is also starting to move into the harvest window with 8% of this year's wheat crop harvested. With a late-maturing crop, they are still running well behind the 5-year 20% average. Early yield results in HRW and spring wheat are running better than expected. U.S. supplies are heavy with wheat, and strong harvest will likely keep hedge pressure in the wheat market in the short term. Rain in the forecast for the southern Plains is supportive to the market.

CATTLE HIGHLIGHTS: Cattle markets closed mixed with Jun lives steady at 109.45, Aug down 7 cents to 105.55 and Oct lives up 35 cents to 107.05. Aug feeders were up 32 cents to 137.25, and Sep feeders were up 42 cents to 137.60. Choice beef values closed 41 cents lower yesterday afternoon to 221.82 and were down another 3 cents this morning to 221.79. Select beef has been in relation to the choice market, which indicates that either choice demand is low, or select demand is too high. Cash cattle trade will likely hold off this week until after Friday's Cattle on Feed report. A lower day in the corn markets was supportive for the feeder cattle. Technical price action today was disappointing in the live cattle markets. Jul futures traded in a tight range and were unable to close above their 20-day moving average resistance level. Aug live cattle opened above their 20-day moving average level but closed back below it. Feeder markets were also unable to break through nearby resistance despite positive closes.

LEAN HOG HIGHLIGHTS: Hog markets posted lower closes today after failing to break through overhead resistance. Jul hogs were down 1.57 to 81.47, Aug hogs were down 55 cents to 81.70, and Oct hogs were down 17 cents to 76.60. The lean hog index was down 19 cents to 79.27. Carcass cutout values were down 24 cents at yesterday's close to 82.97 but bounced 1.64 this morning to 84.61. Ribs were down 6.85 to 127.42, and bellies were up 9.07 to 120.34. Hams were up 1.39 to 76.19. News this morning that President Trump and President Xi would be meeting at next week's G20 meeting was supportive, as this could get U.S. / China trade talks back on track. China's national spot pig price today was up 1.22% from yesterday, up 7.9% for the month and up 21.6% year to date. Production remains extremely heavy with slaughter yesterday totaling 467,000 head, vs 471,000 head last week but sharply higher than a year ago at 416,000 head. Technical price action today was extremely disappointing with an early test of the overhead 10-day moving average resistance levels. The hog markets quickly found sellers at these levels and pushed prices to lower closes. Hog markets are still oversold, but without very strong pork demand and extremely heavy production, near term direction looks mixed to lower.

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