Stewart-Peterson Market Commentary

Closing Commentary - May 23, 2017

Top Farmer Closing Commentary 4-23-17

CORN HIGHLIGHTS:Corn futures moved lower today, losing 4-1/4 to 5-1/2 cents. Despite rain on the radar and continued concerns with planting progress in areas that have remained wet, prices took a slide today and closed on a disappointing note. Wheat and soybeans were weaker as well. A firmer dollar, as well as the inability to hold higher prices yesterday due to increased selling at resistance, is proving sellers correct. This technical selling is having a greater impact than are fundamental factors. The Crop Progress report indicated 84% of the crop planted as of Sunday, in line with the 5-year average of 85% and a year ago at 84%. Obviously, farmers can plant much crop in very little time, and this was evident due to yesterday's figure. As the end of May approaches, if additional rainfall materializes as forecasted in the next 6 to 10 days, some corn in northern states may not be planted. Producers may instead take the insurance preventative plant or move to soybeans.

SOYBEAN HIGHLIGHTS:Soybean futures were under pressure, especially late in the day, as a lack of new positive news and expectation for some corn acres to switch to beans weighed on futures today. Yesterday's Crop Progress report indicated 53% of the crop planted versus the 5-year average of 52%. Despite wet conditions in big portions of the Midwest, this has not seemed to hamper planting progress, at least on average. Elsewhere, the market is still dealing with the impact of a lower Brazilian real, which took a significant drop on 5/18, and since U.S. prices have struggled as anticipation that China will move purchases to Brazil and away from the U.S., continues to grow. More than likely, it is a combination of good planting progress and this negative news that has weighed on beans.

WHEAT HIGHLIGHTS:Wheat futures finished weaker for the second consecutive session with prices losing 3-1/2 to 4-3/4 in Chi as Jul led today's drop closing at 4.29-1/2. Futures are still holding above where they were early last week, but yesterday's failure after reaching a high of 4.42-1/2 is viewed as nothing less than a disappointment. Elsewhere, KC wheat lost 3-3/4 to 5-1/2 cents, Mpls 4 to 5 cents. Crop ratings did not show appreciable change to the good and excellent category for wheat, as 52% of the winter wheat crop is in good or excellent shape, compared to 52% last week. The very poor categories are at 15% and this dropped from last week's 17%. In other words, despite copious rains and concerns of disease, crop ratings took a small turn for the better.

CATTLE HIGHLIGHTS:Cattle futures finished mildly lower today on falling boxed beef values and a continued bearish sentiment. The nearby Jun live cattle contract closed 85 cents lower to 123.07, Aug closed 70 cents lower to 121.32, and Oct closed 35 cents lower to 118.05. The nearby May feeder contract closed even at 144.25, Aug closed 1.27 lower to 151.50, and Sep closed 97 cents lower to 151.67. The May feeders contract expires Friday. Due to the 4-day week next week, packers need less inventory, which should move cash values lower. In addition, the additional day without slaughter will cause weights to increase. Choice cuts closed 74 cent higher yesterday afternoon to 247.88 and select closed 1.41 higher to 222.83. In midday today, choice cuts were down 1.42 to 246.46 and select cuts were up 32 cents to 223.15. With the strong rally in retail beef values, many consumers are thought to be substituting relatively expensive beef products to instead buying pork. Yesterday's Cold Storage report was essentially neutral, but many long positions are thought to be liquidating ahead of Friday's Cattle on Feed report. With the exception of the Jun live contract closing below its 10-day moving average, minimal technical damage was done as trading ranges were very tight.

LEAN HOG HIGHLIGHTS:Lean hog futures posted mixed finishes today, as contracts consolidate near the 80.00 contract highs. The nearby Jun contract closed 80 cents higher to 80.15, Jul closed 2 cents lower to 80.02, and Aug closed 22 cents higher to 79.90. Yesterday's Cold Storage report numbers were relatively neutral, leaving most of today's trade to focus on other factors. Carcass cutouts were up to 90.49 at midday today, after closing 1.45 higher yesterday at 88.71. This advance was led by an increase in rib prices by 10.07 today to 150.46. The recent surge in beef prices has likely left many consumers buying pork instead, which should account for some of the increase in pork prices recently. Both the Jun and Aug contracts made new highs today and Jul closed just below its highest close. All three near-month contracts are sticking pretty close to the 80.00 mark, and apparently waiting for some more demand to push higher.

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