Top Farmer Closing Commentary 4-8-19

CORN HIGHLIGHTS: Corn futures traded both sides of steady, but finished on a weak note and near the day's low with May corn closing down 2-1/2 at 3.60-1/2. New crop Dec lost 1 cent, closing at 3.89. New crop continues to hold together rather well near 3.90, about 10 cents lower than the average price of Feb at 4.00. Old crop, however, continues to lose ground to new crop with Jul futures now trading at 3.68-1/2, close to 30 cents lower than Dec. The market has significant carry priced in and may be telling farmers to either sell the new crop or that it doesn't necessarily want your old crop at present. At least that's the way the futures are trading. Instances of strong basis improvement due to a lack of farmers' selling and end user buying is providing underlying support. Export inspections at just under 41 mil bu were termed non-supportive as the market will need to see near 55 mil bu on a weekly pace to meet USDA weekly projections.

SOYBEAN HIGHLIGHTS: Bean futures finished quiet with nearby May closing 1/4 lower at 8.98-3/4, and new crop Nov down 1/2 to 9.32-1/4. Today's trading ranges were very small with most futures near a nickel from high to low. Soybean meal gained mostly 1.00 and soybean oil down 25 to 28 points. Export inspections at 32.6 mil bu were termed neutral and in line with the pace needed to meet exports of 1.875 bil bu. Expect tomorrow's Supply and Demand report to show record carryout at near 900 mil bu. This report, from a historical perspective, has a tendency to not be much of a market mover. As we look ahead, weather will be a dominant factor, as will trade talks. While it appears that significant progress has been made, there were words hinting that there is much to go and that hope of a quick resolution by late March/early April is quickly fading.

WHEAT HIGHLIGHTS: Wheat futures finished quietly on all three exchanges with mixed values as futures generally settled a penny high to 2 pennies lower. Nearby may Chi led today's drop, closing 2-1/2 lower at 4.65-1/2, with new crop Jul Chi down 1 cent at 4.68-3/4. KC wheat was 1 cent higher, and May Mpls 1-1/2 higher, while new crop Sep closed 1/2 lower at 5.31-3/4, as another new contract low at 5.41 was established today. Positive new news was lacking and prices, while choppy, failed to hold onto gains from mid-session. Tomorrow's USDA report could shed light on price direction. Slow export activity this year, or at least compared to expectations, suggests that carryout will likely top a billion bushels as the average pre-report estimate at 1.076. World ending stocks are expected to come in at 271 mmt, which would be slightly above the market estimate of 270.5. World production and projected world carryout will likely be a more dominant factor than U.S. wheat conditions or production. Export inspections at 19.8 mil were not viewed as supportive.

CATTLE HIGHLIGHTS: Cattle markets put in mixed to mostly higher closes today with harsh weather on tap for later this week in cattle country. Apr lives closed 25 cents lower to 125.80, Jun lives closed 22 cents higher to 120.57, and Aug lives closed 35 cents higher to 117.72. Apr feeders closed 57 cents higher to 146.72, and May feeders were up 35 cents to 150.57. Choice beef values closed slightly higher on Friday afternoon to 226.93, but jumped 2.20 this morning to 229.13. Cash cattle trade last week lost about 1.00 from the previous week with weather conditions conducive to weight gain. However, the Dakota's and Nebraska are forecasted to receive heavy snowfall and high winds. This will make near term weight gain difficult and also make feedlots muddy yet again. Despite the solid jump in beef values today, buying action was somewhat muted. Hog markets took losses today and speculative funds are still holding a near record net long position as of last Tuesday. The best traded Jun live cattle contract was caught between its 10 and 20-day moving average levels today. Aug lives jumped back to their 20-day moving average resistance level today. Feeder contracts had more impressive price action, falling lower early in the morning, checking nearby support levels and then rallying higher.

LEAN HOG HIGHLIGHTS: Hog markets had a choppy and mostly negative start to the week today, with the Apr contract down 42 cents to 78.60, Jun hogs were down 82 cents to 98.15, and Jul hogs were down 60 cents to 100.97. The CME lean hog index was up 27 cents today to 78.53. Carcass cutout values were down 38 cents on Friday afternoon to 81.84, but jumped 2.02 this morning to 83.86. More cases of African swine fever were reported this weekend in China, but the market appears to be growing impatient with the fact that Mexican and Chinese tariffs have not been lowered on U.S. pork products. Chinese buyers appear to be waiting for more concrete developments between the U.S. and Chine while increasing tensions between the U.S. and Mexico are not leaving many hopeful that Mexican tariffs will be lower anytime soon. Current futures prices are likely not justified if we do not start exporting more pork relatively soon. However, mixed trade feelings are at this point, mostly that China will need to import enormous amounts of pork later this year. Technically, today's trading ranges were very tight, especially compared to the recent volatility. Prices may need to consolidate for a bit again to allow cash fundamentals to catch up.

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