Stewart-Peterson Market Commentary

Closing Commentary - November 19, 2019

Top Farmer Closing Commentary 11-19-19

CORN HIGHLIGHTS: After two consecutive weak finishes, corn prices made a turnaround today finishing with gains of 2-1/4 in Dec closing at 3.70 to 3-3/4 higher in May closing at 3.86-3/4. Dec 2020 closed 2-1/2 higher at 3.96. A lack of positive news has plagued the corn market over the last month as harvest continues to drag on slowly pressuring prices. A 3-day drop in the U.S. dollar may have provided some underlying support, as did another day of firmer wheat prices. We believe farmers’ selling is minimal and this too is providing underlying support. Yet, there is a lack of new positive news and the market is taking on a more of a holiday-type mindset with small trading ranges and prices failing to hold onto gains from earlier in the day. Today was that scenario again as Dec corn reached a high at 3.73, finishing 3 cents from this level. Prices got a boost thig morning when an announcement of 191,000 mt of corn sold to unknown destinations. While this isn’t a big amount, it was still positive and helped create short covering. Margins for ethanol producers seem to be stabilizing as well and this too was viewed as longer term supportive.

SOYBEAN HIGHLIGHTS: Soybean futures edged higher today in a rather rangebound and quiet session. Nearby Jan gained 1.25 cents closing at 9.11-1/2, while deferred Nov closed 3 higher at 9.49-3/4. There wasn’t a whole lot of news for the market to find traction from and that’s how prices traded. The bullish traders will argue that the market is oversold and today showed some stability. On the other hand, prices finished well off their high for the day by 5 or more cents in a tight trading range. Like yesterday, the market couldn’t hold onto gains from earlier in the session. The 100-day moving average is holding for support in Jan beans. A lack of new news on the export front, good weather in South America, and a difficult looking technical picture are keeping the market on edge. Bullish traders will argue that demand will pick up from here as South America could be likely tapped out of exportable product soon and if in fact there is an agreement between the U.S. and China, the market is poised to make a fast short cover rally, if not move into an uptrend. We agree with this assessment. Yet, at the same time, markets generally need positive news to move higher and those key elements we just mentioned are still missing.

WHEAT HIGHLIGHTS: Wheat futures again flexed their muscle today showing solid gains throughout the session and holding into the close. By day’s end, Chi finished 3-1/2 to 4-3/4 higher with Dec leading today’s charge closing at 5.12, while Dec KC closed up 7-1/4 at 4.25-3/4 and Mpls unchanged in Dec closing at 5.03-1/4. After posting an outside reversal yesterday in which prices traded in a range larger than the previous day and closed higher, the market followed through today. The 21-day moving average acted as resistance on Dec Chi. Prices are having a tough time being pressured. A lack of farmers’ selling and the continued presence of dry weather in Australia and expectations for a downgrade to world production are providing underlying support. The U.S. dollar dropped three days in a row and recovered slightly today, but its recent turndown has been viewed as supportive as well.

CATTLE HIGHLIGHTS: Cattle markets posted mixed to mostly lower closes today with Dec lives up 7 cents to 118.77, Feb lives were down 5 cents to 125.05, and Apr lives were down 22 cents to 126.17. Nov feeders were up 22 cents to 146.60 and Jan feeders were down 45 cents to 144.02. Choice beef values were down 1.68 at yesterday’s close to 239.12, but bounced 83 cents this morning to 239.95. A generally lower to choppy trend in beef values is likely to pressure the cash market this week. The Tyson plant that burned down a few months ago is expected to reopen the first month of December which could increase beef supplies, but also increase demand for slaughter supplies. Dec live cattle tested their 20-day moving average support level today, but were able to rally back and close above it. Feb lives were able to hold onto their 10-day moving average level by the close and Apr lives closed directly on the 10-day moving average level. Jan feeders staged a rally into the close, but were unable to close above their 20-day moving average level.

LEAN HOG HIGHLIGHTS: Hog markets were lower today, though the deferred contract staged impressive late session rallies to limit losses significantly. Dec, Feb, and Apr hogs all were down 60 cents by the day’s end with Dec finishing at 62.15, Feb at 69.62, and Apr at 75.75. The CME lean hog index was down 27 cents to 59.24. Carcass cutout values were up 1.01 at yesterday’s close to 89.14 and were up another 85 cents this morning to 89.99. The rally in pork values was very impressive considering near record pork production lately. Not only was last week’s slaughter an all time record, but weights are also extremely heavy. Headlines regarding trade negotiations were quiet today in limited speculative interests. The Dec contract closed near the day’s lows, but the Feb and Apr contracts found impressive late session buying. Feb traded as low today as 68.00 and closed 1.62 off the lows, while the Apr contract closed 1.70 off of the session lows. This again shows that speculators are unwilling to push hog markets out of recent ranges ahead of potential progress with China.

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