Stewart-Peterson Market Commentary

Closing Commentary - August 23, 2019

Top Farmer Midday Commentary 8-22-19

CORN: Corn futures are lower again today, trading near the low end of the recent consolidation range and contract lows. Sep corn is down 3-1/2 cents to 3.59-3/4, Dec corn is down 3-3/4 to 3.67-1/4, and Mar corn is down 3-1/2 cents to 3.79-1/2. Pro Farmer found MN's average corn yield at 170.4 bu per acre vs 178.7 last year and the 3-year average of 184.2. Pro Farmer found IA's average corn yield at 182.8 bu per acre vs 188.2 last year and 185.4 on average. A survey of IA farmers suggests that corn yield could actually be higher than the Pro Farmer estimate. Farmers are a slow seller of corn and soybeans at the moment, and corn basis remains extremely strong. The negativity seems to have been mostly due to China's increased tariffs on U.S. soybeans. The Dec corn contract has traded as low this morning as 3.65-1/2, just 1-3/4 cents off the contract low. Prices are still oversold, but given that the current USDA carryout estimate is actually higher than it was last year when Dec corn traded as low as 3.42, there could still be some downside lurking. Speculative funds were thought to have bought about 2,000 contracts yesterday.

SOYBEANS: Soybean markets are sharply lower in early trade this morning with Sep beans down 11-3/4 to 8.44-1/4, Nov beans are down 11-3/4 to 8.57, and Jan beans are down 10-3/4 to 8.71-3/4. China imposed an additional 5% tariff on U.S. soybeans in wheat is seen as another blow to the demand side of the balance sheet. The Chinese Yuan dropped to 11-year lows yesterday, also reducing demand for U.S. beans. Forecasts for cooler temperatures will make it difficult for the immature soybean crop to finish strong. IA and MN pod counts sampled on the Pro Farmer tour yesterday were lower than last year and were lower than average. The Nov contract is trading at its lowest level since August 5 and has broken trendline support at 8.65. Momentum has turned back lower, disappointing considering the lateness of the crop and forecasts for cool weather. Next onside target appears to be the nearby lows at 8.54-1/2.

WHEAT: Wheat markets are choppy this morning with Sep Chi wheat up 2 cents to 4.69-1/4, Sep KC wheat is down 2 cents to 3.91-1/4, and Sep spring wheat is up 1/2 of a cent to 4.99. Forecasts for heavy rains in ND and MN over the next week will likely delay spring wheat harvest and could potentially impact quality. Yesterday's strong export sales data helped to strengthen calendar spreads in the winter wheat contracts despite a weak Russian currency pressuring European wheat prices. Sep Chi wheat has punched through its 10-day moving average resistance level for the first time since August 12, and a close above would be the first since August 9. Sep KC wheat made its first close above its 10-day moving average resistance level yesterday since July 15, and a successful test today could open up an additional 15% of near term upside. Spring wheat futures were lower from most of the morning, but have regained buyer interest later in the day. Speculative funds were thought to have bought about 3,000 contracts of wheat yesterday.

CATTLE: Cattle markets are weak in disappointing action today, with Aug lives down 35 cents to 104.62, Oct lives were down 1.87 to 99.22, and Dec lives were down 1.95 to 104.15. Aug feeders were down 95 cents to 137.45, and Sep feeders were down 3.70 to 132.72. Beef markets were not able to put together a solid close yesterday afternoon, though cash cattle are trading a little higher than they were last week. The Cold Storage report released yesterday afternoon was mostly neutral, and such wide swings ahead of this afternoon's Cattle on Feed report are rare and a bit concerning. The best traded Oct live cattle contract fell sharply below its 10-day moving average support level after an impressive move above it yesterday. Feeder markets were met with selling interest almost immediately this morning and are pushing back below nearby support.

HOGS: Hog markets are sharply lower this morning with Oct down 2.77 to 59.52, Dec is down 2.32 to 59.22, and Feb hogs are down 2.05 to 66.52. Negativity this morning is likely due to increased trade tensions with China, but also a somewhat heavy Cold Storage report released yesterday afternoon. Frozen pork supplies were above last year's total, which is no surprise, but the belly stocks that were 37% higher than last year is bearish. Oct hogs gapped lower this morning and are trading at their lowest value since August 2018, while Dec and Feb are holding nearby lows made on August 5. Momentum has turned lower again, but hogs below the 60.00 mark seems cheap.




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