Stewart-Peterson Market Commentary

Closing Commentary - July 21, 2017

Top Farmer Closing Commentary 7-21-17

CORN HIGHLIGHTS:After solid gains yesterday, corn futures gave those gains back and then some with double digit losses of 10-1/2 to 11-1/4 cents as both Sep and Dec futures led today's drop. Rain on the radar and less heat in the forecast had prices on the defensive throughout the morning session. As the day wore on, rain on the radar in dry regions of IA and MN, in particular, pressured prices. Not all regions of the Midwest received rain, and some are getting very parched and in need of moisture. Weather could be critical next week. The most recent 6-10 day forecast still indicates above-normal temperatures for the majority of the Midwest and below-normal precipitation, particularly the western regions of the Midwest. That being said, rain this week benefitted much of the Midwest, and there were crop saving rains for both corn and beans in the Dakotas. In other words, even though crop ratings are expected to show another decline, the crop as a whole may have actually improved. Whether that's enough to pressure prices, is another question. We believe at this point, probably not. Yet, as the calendar ticks by the chances of sustaining an upswing in prices typically becomes less in late July and August.

SOYBEAN HIGHLIGHTS:Soybean futures finished with losses of 1-1/4 to 4-3/4 cents as Nov led today's drop, closing at 10.22-1/4. Nov beans closed 21-3/4 cents higher, gaining back much of their losses from last week. Despite weakness in corn, as well as beneficial rains this past week, expectations are that prices are likely to consolidate until more weather is known for bean production. Key growing weather for beans is late July and August. Consequently, the more recent weather forecast continues to suggest generally warm and dry, which is not beneficial in areas that have remained on the dry side. The eastern Corn Belt likely has too much rain, and this could also be plaguing crop conditions. Bottom line, ideal conditions are not the majority of what the bean crop is facing at present. Therefore, prices are well supported.

WHEAT HIGHLIGHTS:Wheat futures struggled at day's end finishing with losses of 6 to 6-1/2 cents in Chi, while KC finished 7 to 7-3/4 lower, and Mpls 9 to 12 cents lower. For the week, Sep Chi wheat lost 11-3/4 cents. Sep KC lost 17-1/2, and Sep Mpls gained 7-3/4. A continued plunge in the U.S. dollar is being viewed as supportive. Yet, traders sold all grains today, and wheat picked up selling interest late in the session after trading higher throughout much of the morning hours. Bottom line, there just wasn't much friendly news for wheat today, and despite a good export sales figure for the week, prices still came under pressure. Harvest is wrapping up, but was delayed due to rain this week. Spring wheat is in the harvest zone as well, but was also delayed due to wet weather.

CATTLE HIGHLIGHTS:Slightly higher cattle closes today were right in the middle of the recent consolidation range, as cash trade was unable to provide meaningful direction today. The nearby Aug contract closed 55 cents higher to 116.42, Oct closed 32 cents higher to 117.40, and Dec closed 7 cents higher to 118.17. Bids in the country today were mostly at 118.00, with very minimal movement. Sliding beef prices have packers hesitant to make large purchases, especially given the normal seasonal slide in beef demand. Feed lot managers are also holding asking prices fairly steady. Today's Cattle on Feed report was very bearish. Marketings were reported at 104% versus the average market guess of 104%, placements were reported at 116% versus the average market guess of 106%, and on feed was reported at 104% versus the average market guess of 103%. The July 1 cattle inventory was reported 4% higher than July 2015 and the calf crop was up 3% from last year's calf crop and 6% from 2015.

LEAN HOG HIGHLIGHTS:Hog futures closed steady to negative today under continued pressure from pork prices. The nearby Aug contract closed steady to 80.80, Oct closed 62 cents lower to 67.22, and Dec closed 97 cents lower to 61.97. Carcass cutouts closed 67 cents lower yesterday afternoon to 104.02 and were down another 1.07 by midday today to 102.95, further strengthening the argument that the seasonal pork highs are in. Loins were down 1.16 today, butts down 3.33, picnics down 1.83, and ribs were down 3.26. Hams and bellies were the only primal cutouts that were positive, up 7 cents and 6 cents respectively. Despite the Chicago Lean Hog Index falling five days in a row, the Aug discount of almost 11.00 is still very wide for this time of year which is supportive for prices. While the Aug contract closed steady, both the Oct and Dec contracts closed below their 100-day moving averages, leaving the next downside targets at the 100-day moving average levels, 50 cents to 1.00 lower.

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