Top Farmer Midday Update 4-26-19

Corn: Corn futures are finding more buyers again this morning, following yesterday's reversal type action. May corn is up 4-3/4 to 3.52-1/4, Jul corn is up 4-3/4 to 3.62, and Dec corn is up 4-1/4 to 3.81-1/2. While it is still early in the planting season, the market appears to be growing increasingly worried about forecasts showing higher than normal precipitation. Both the 6 to 10 and 8 to 14 day outlooks show above normal moisture, which should slow down corn planting. In a solid week, the market can see 35% to 40% of corn acres planted, which means we still have a lot of time to get the crop in the ground, but with funds so short, they are likely growing increasingly sensitive to planting delays. Yesterday's reversal type action was impressive, with corn futures making new lows and then rallying to make positive closes. Funds bought an estimated 12,000 contracts of corn yesterday and are still thought to be net short about 355,000 contracts.

Soybeans: Soy bean futures are slightly lower this morning, so far putting in an inside session. May beans are down 1-3/4 cents to 8.57-1/2, Jul beans are down 1-1/2 to 8.71-1/4, and new crop Nov is down 1-3/4 cents to 8.91-1/2. Soybean meal was responsible for much of yesterday's buying, but is so far lower today. Jul soybean meal made a bullish outside trading session yesterday, engulfing the previous four sessions and breaking through nearby resistance. Without surging prices similar to the corn market, soybean prices may be trying to carve out a consolidation range instead of reversing back higher. The supply and demand picture is still a dark cloud over the soybean prices. Funds bought about 7,000 contracts of beans yesterday and are thought to be net short about 118,000 contracts.

Wheat: Wheat markets are higher this morning, with Jul Chi wheat up 2-3/4 cents to 4.44-1/4, Jul KC wheat is up 1-1/4 to 4.12-3/4, and Jul spring wheat is up 2 cents to 5.15-3/4. After making new lows yesterday and then closing higher, winter wheat buyers seem at least slightly more comfortable entering markets. Still, heavy supplies around the world are keeping a wet rag over any exciting rallies. The International Grains Council increased its global wheat crop forecast by 3 mil tons to 762 mil tons. Technical price action has been impressive so far in Chi, with Jul trading just a few ticks off the day's higher, while KC wheat and Mpls wheat have already fallen well off the day's highs. Funds bought an estimated 3,000 contracts of wheat in Chi yesterday and are thought to be net short about 66,000 contracts.

Cattle: Cattle markets are higher this morning in some corrective action after this week's technical breakdown. Apr lives are up 1.05 to 125.10, Jun lives are up 40 cents to 115.77, and Aug lives are up 20 cents to 113.12. May feeders are up 1.30 to 144.85, and Aug lives are up 80 cents to 154.05. Weakness over the second half of this week, particularly yesterday, left both live and feeder cattle futures deeply oversold. Jun and Aug lives made their first ever closes below their 200-day moving average levels. While prices are not surging higher by any stretch, a drop of nearly 6.00 in two sessions for the live cattle contracts was too much too soon and prices are correcting today. Cash trade and beef values have been trending lower, likely giving speculative traders the signal to begin exiting their record long positions.

Hogs: Hog markets are mixed to mostly higher this morning, with Jun up 1.02 to 90.80, Jul is up 22 cents to 90.47, and Aug hogs are down 12 cents to 96.02. Jun hogs are so far putting in an outside session today, trading below yesterday's lows and making highs above yesterday's highs. Jun hogs still have a gap to close created between Wednesday's and yesterday's session, and with the Jun contract currently trading at a 7.00 premium to the cash market vs. the normal seasonal premium of 11.00, there should be some room to move higher in the near term. Some of the weakness yesterday was due to lower export sales, and prices cannot rally back in the afternoon due to sharply lower cash pork values. Without much new on the U.S./China trade front, we expect prices to stay choppy, but keep in mind that negotiations will restart next week in Beijing.

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