Stewart-Peterson Market Commentary

Closing Commentary - April 19, 2018

Top Farmer Closing Commentary 4-19-18

CORN HIGHLIGHTS: Corn futures finished lower for the fourth time in five sessions. Jul was down 3/4 cent to 3.91, and Dec was down 1/2 cent to 4.08. Corn futures, overall, have been in a sideways trading range since peaking in March. The market's anticipation turns toward planting and spring weather forecasts. Despite a cold April across the majority of the grain belt, forecasts have temperatures gradually increasing and becoming more favorable to begin planting corn. Demand was the main news with the USDA weekly export sales and shipments for the week ending 4/12 posted sales of 43 million bushels, and shipments at 63.7 million bushels respectively. To date, weekly corn export sales exceed the pace to meet the USDA target by 110 million bushels, but shipments continue to fall short of pace by about 125 million bushels. The gap is narrowing in the shipment number, as US exporters are starting to see a seasonal uptick in shipments that occurs annually.

SOYBEAN HIGHLIGHTS: Soybean futures saw selling pressure again this afternoon as contracts finished 2-3 cents lower. The second consecutive down session has soybean futures moving into Friday's trade down 17 cents on the week. Front month May beans were down 4-1/2 cents to 10.37-1/4, while Jul beans lost 4-1/4 cent to 10.49. New crop Nov beans were 3-1/4 cents lower to 10.42-1/2. Soybean futures were seeing some selling pressure with May options expiration tomorrow, with prices gravitating to the largest area of open interest, which are 10, 20 and 10.00 May put options. In addition, demand news continues to run neutral to bearish on beans with this week's weekly USDA export numbers. For the week ending 4/12, export sales were at 38.2 million bushels for the 17/18 crop year, and an additional 40.1 million bushels for the 18/19 crop year. Export shipments were disappointing at a market-year low of 14.8 million bushels. At this pace, total US soybean shipments are running approximately 13% under a year ago level, which may cause the USDA to change estimates and raise US ending stocks for the 17/18 marketing year and later on reports.

WHEAT HIGHLIGHTS: Wheat futures saw supportive Chi and KC prices, while spring wheat failed to join the rally. The front month Chi May contract was 1-1/2 higher to 4.67-3/4, while Jul wheat gained 1-1/2 to 4.90-3/4. Front month May KC HRW wheat was up 6-1/2 cents to 4.95-1/4, while May spring wheat lost 4-3/4 cents to 6.13-1/4. Chi and KC contracts saw support from ongoing drought conditions in the southwestern Plains. Thursday's updated drought monitor showed extreme drought conditions continue to dominate southwestern Kansas and the Texas panhandle. Forecasts are calling for rain to develop across this region Friday into Saturday, but amounts are not expected to be enough to provide relief to stressed crops. With temperatures forecasted to increase across the northern Grain Belt, planting progress will likely step up in spring wheat, causing pressure in that market this afternoon. Demand continues to be poor for wheat all season. The USDA export sales showed a net cancellation of 2.5 million bushels for the marketing year and shipments at 16.6 million bushels.

CATTLE HIGHLIGHTS: Cattle futures closed sharply lower today, posting reversals and giving back most or all of this week's gains. The nearby Apr contract closed 1.17 lower to 117.80, Jun closed 2.27 lower to 103, and Aug closed 2.02 lower to 103.12. Weakness in feeder cattle markets was a major pressure point today, along with the lingering concerns of increased production in the coming months. Export sales numbers for this week were strong. US beef export sales for the week ending 4/12 were reported at 19,900 metric tons, versus the previous 4-week average of 16,825 metric tons. This leaves cumulative sales for 2018 at 179,100 metric tons, 16.9% ahead of last year's pace. Choice cut values closed 49 cents lower yesterday afternoon to 211.64 and were another 4 cents lower this morning to 211.60. The recent jump in cattle prices and slide in beef values could push packing plants to slow down the pace of production to preserve margins. A few thousand head in Texas and Kansas were sold in the country today at 1.21 to 1.22. Price action today was not pretty. The spot month Apr futures contract put in a big bearish key reversal, while the deferred month contracts put in hook reversals. Jun and Aug futures both closed below their 10 and 20-day moving average levels for the first time since last Wednesday. The market is expecting the following numbers for tomorrow's Cattle on Feed report: Placements at 91.3%, marketings at 95.8% and on feed at 107.7%.

LEAN HOG HIGHLIGHTS: Lean hog futures traded with light volume in tight ranges today, closing mixed. The spot month May contract closed 30 cents higher to 70.15, Jun closed 45 cents lower to 78.07, and Jul closed 35 cents lower to 80.70. The CME lean hog index closed at 55.05. With the wide discount of cash hogs to Jun futures, the board has already priced in a sizeable drop in production in the coming months, so it may be tough to rally too far in the meantime. Weekly US pork export sales for the week ending 4/12 were very poor, reported at 17,900 metric tons, versus the previous 4-week average of 20,425 metric tons. This is the lowest weekly total since 2/1, and the second lowest for the 2018 calendar year. Cumulative sales for 2018 are currently at 524,700 metric tons, up just 1.9% from last year's pace. Carcass values have been the main supportive factor recently, up 25 cents yesterday to 68.46 and up another 40 cents this morning at 68.86. Price action today was fairly uneventful. The best-traded Jun and Jul contracts both held nearby support levels at the 50-day moving average for the Jun contract, and the 200 moving day average for the Jul contract.




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