Stewart-Peterson Market Commentary

Closing Commentary - March 25, 2019

Top Farmer Midday Update 3-25-19

Corn: Corn futures are slightly lower this morning, with May corn down 1/4 of a cent to 3.78, July corn down 1/4 of a cent to 3.87-1/4, and new crop Dec corn is steady at 4.00. Corn markets are very quiet so far this morning considering Friday's close in the Dec contract was the first above its 50, 100, and 200-day moving average levels since February 22. Especially after funds added to their record net short position by last Tuesday, many were expecting somewhat of a short covering bounce today. Continued wet weather in the Corn Belt is causing many to lower their estimates for Friday's Perspective Plantings report. The USDA estimated 2019 corn plantings at 92 mil acres, while the average estimate for corn planting on Friday's report is around 91.3 mil acres. On this morning's export inspections report, a total of 996,000 tons of corn reported shipped for the week ending March 21. Cumulative shipments for this marketing year are currently running about 5.3 mil tons ahead of last year's pace. During Friday's session, funds bought about 13,000 contracts of corn and are now thought to be net short about 236,000 contracts.

Soybeans: Soybean futures are slightly positive this morning in quiet and choppy trade. May beans are up 2 cents to 9.05-3/4, Jul beans are up 1-3/4 to 9.19, and Nov beans are up 1-1/2 cents to 9.39. Price action has been somewhat muted after Thursday's closes above the 100-day moving average resistance level was taken out by a negative session on Friday. The lower Brazilian real is a pressure point this morning, along with expectations that this Friday's Perspective Plantings report is likely to show a bearish soybean acreage number. The USDA was looking for 85 mil acres of soybean plantings this year in their outlook forum, while the average market estimate for Friday's report is around 86.2 mil acres. A trend line yield coupled with 86 mil planted acres would add to an already heavy balance sheet and could spell sharply lower prices down the road. Widespread flooding conditions may shift even more corn acres to soybeans later in the season. The U.S. shipped about 858,000 tons of beans for the week ending March 21 vs. 850,000 tons the previous week and 710,000 tons the same week last year. Still, U.S. soybean exports are running 12.4 mil tons behind last year's pace. Speculative funds sold about 6,000 contracts of beans on Friday and are thought to be net short about 62,000 contracts.

Wheat: Wheat markets are mixed to mostly higher this morning, trying to lead the grain complex higher to start the week. May Chi wheat is up 4 cents to 4.70, May KC wheat is up 3-1/2 cents to 4.48-1/2, and May spring wheat is up 1/4 of a cent to 5.72-1/2. Though spring wheat futures are choppy this morning, widespread planning delays, particularly in North Dakota, have sparked the recent rally. Fears of winter wheat damaged due to flooding, or even lost acres elsewhere, have supported the Chi and KC contracts and pulled them out of their recent lows. There is also speculation that world wheat prices may be cheap enough to attract greater feed usage. KC wheat futures back tested nearby support and the 10 and 20-day moving average levels this morning and are finding buyers are mid-morning. A total of 340,000 mt of wheat were reported shipped for the week ending March 21 vs. 385,000 tons last week, and 344,000 tons the same week last year. U.S. shipments for the current marketing year are running about 1.1 mil tons behind last year's pace. Funds were net even in Chi wheat on Friday, leaving their net position short about 65,000 contracts.

Cattle: Cattle markets are moderately this morning following toppy looking price action on Friday, as well as a bearish Cattle on Feed report. Apr lives are down 1.17 to 128.55, Jun lives are down 1.20 to 122.30, and Aug lives are down 90 cents to 119.12. Apr feeders are off 52 cents to 148.27, and May feeders are off 65 cents to 153.40. The best traded Jun live cattle contract made a bearish key reversal on Friday and is now back within it Bolinger Band range. Friday's Cattle on Feed report was considered negative as well, with placements coming in at 102.2% vs. the 96% expected placements number. Jun lives gapped lower this morning, trading below their 10-day moving average support level for the first time since March 24, but have since bounced slightly higher. Aug futures showed similar price action, falling down to their 10-day moving average support level, and then bouncing above. Hog markets are mixed to lower this morning, keeping outside market support relatively limited. In addition, Friday's Cold Storage report was considered supportive, which may limit losses in the near term.

Hogs: Hog markets are mixed this morning in relatively quiet trade so far. Apr hogs are up 42 cents to 78.75, Jun hogs are down 57 cents to 95.10, and Jul hogs are down 10 cents to 98.47. Carcass values are rallying along with the CME lean hog index, so charts do not necessarily look toppy, possibly just tired from the sharpness of the recent rally. China's spot pig prices were down 1.1% overnight, also slowing down futures buying action. Technically, hog futures are severely overbought, but new buyers will not hesitate to step in on more African swine fever news coming out of Asia.




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