Stewart-Peterson Market Commentary

Closing Commentary - December 05, 2019

Top Farmer Midday Update 12-5-19

CORN HIGHLIGHTS: It was another soft landing for futures, as corn gave up 1-1/4 to 3-1/4 cents. Nearby Dec led today’s drop, slumping into the close, finishing at 3.65-1/2 with a low of 3.65-1/4. Mar lost 1-3/4, closing at 3.76-3/4, and new crop Dec was down 1-1/2 to 3.90-1/2. Traders appeared to be willing to buy beans and sell corn today. Beans were up for the third consecutive session, gaining 5-6 cents. Wheat futures were weaker in Chi and KC. The U.S. dollar was weaker again, but that failed to spur much interest in corn, as prices continue to slide on a lack of strong export activity, as well as lack of positive news. Basis levels remain firm, reflecting light farmer selling. Yesterday’s close below 3.80 Mar had you selling another 5% of old crop. Get current if behind.

SOYBEAN HIGHLIGHTS: Soybean futures finished higher for the third consecutive session with gains of 3-3/4 in Nov 20 to 6-3/4 higher in Jul 20. Nearby Jan gained 6-1/4, closing at 8.84-1/4 with a high today of 8.88-3/4. The recent low came on December 2 at 8.67-1/2. The recent recovery is reflective of thoughts of oversold, somewhat drier conditions developing in Argentina and a sale of unknown destinations of 245,000 metric tonnes. Soybean meal led the way higher, gaining 5.00 to 6.00 and helping to pull the complex higher. Export sales of 25.1 million bushels were solid but indicated a slowdown over the last four weeks. A weaker U.S. dollar again today may have contributed to support.

WHEAT HIGHLIGHTS: A disappointing export sales number at 8.4 million bushels and a lack of new positive news allowed prices to fall into negative territory, losing 2-1/2 to 3-3/4 cents on Chi. KC was cents lower, and Mpls finished mixed. We don’t see much technical damage on charts, however, this is the third of the last four days in which Mar wheat futures closed at or near the low of the day. In addition, prices closed back under the 10-day moving average. The overall uptrend for Chi wheat remains in check, while KC wheat remains in a slight uptrend in holding the 100, as well as 40-day moving average. Our concern with KC is, if prices don’t hold and break support, then a retest of the November 18 low of 4.23 is likely, which would mean another dime lower. If this level doesn’t hold, then look for a retest of the October 10 low of 4.13-1/2. A weaker U.S. dollar today failed to provide support.

CATTLE HIGHLIGHTS: Cattle markets finished mixed to higher, with Dec lives up 47 to 119.92. Feb lives were up 42 cents to 124.60, and Apr lives were up 15 cents to 125.15. Jan feeders were down 32 cents to 140.55, and Mar feeders were down 27 cents to 141.15. Carcass cutout values closed 3.20 lower yesterday afternoon to 226.95. This was the lowest choice value since October 25. Choice beef has fallen over 15.00 since peaking on November 14. Choice beef was down another 1.11 this morning to 225.84. Cash bids in the country today surfaced between 1.18 and 1.19, mostly steady with last week’s trade. A few live cattle traded in Kansas yesterday at 1.19 to 119.50, which was steady to slightly higher than last week. U.S. beef export sales for the week ending November 28 were reported this morning at 528 tons for 2019 delivery and nearly 12,000 tons for 2020 delivery. This was the lowest weekly total since September 26 when there were net cancellations of over 27,000 tons. A dry 5-forecast should add weight to already heavy steers, but forecasts are calling for above normal precip in the 6-10 day outlook. The best-traded Feb live cattle contract held support this morning at its lower Bollinger band, and prices bounced on talk of steady to slightly higher cash trade. However, sellers defended the 10-and 20-day moving average resistance levels, and today’s close was about halfway up the day’s range. Jan feeders also tested nearby resistance at the 10, 50 and 200-days moving average levels but were unable to close in the upper half of the day’s range.

LEAN HOG HIGHLIGHTS: Hog markets were unable to retain any positive momentum today, and instead closed lower. Dec hogs were down 30 cents to 61.57, Feb hogs were down 85 cents to 67.57 and Apr hogs were down 1.25 to 73.50. The CME lean hog index was up 82 cents to 58.20, and China’s spot pig prices were up 0.54% overnight, which leaves the market up 9% so far this week. Carcass cutout values were up 39 cents at yesterday’s close to 81.00 and were up another 2.32 this morning to 83.32. Hog markets have been unable to find much buyer interest on U.S. / China trade optimism lately, as traders appear to be disregarding all headlines until a deal is actually signed. Weekly export sales for the week ending November 28 were reported this morning at nearly 31,000 tons for 2019 delivery and about 1,400 tons of cancellation for 2020 for a net sale total of just over 29,000 tons. China sales for 2019 delivery reached almost 11,000 tons, but cancellations of 8,500 tons for 2020 delivery were disappointing, Still, outstanding sales to China for 2020 have reached nearly 242,000 tons, versus 9,200 tons last year. Feb hogs closed directly below their 10-day moving average support level after two consecutive closes above earlier this week. Apr hogs also closed below their 10-day moving average level in disappointing technical action. Both the Feb and Apr contracts are still very close to being oversold from a technical perspective.

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