Stewart-Peterson Market Commentary

Closing Commentary - December 15, 2017

Top Farmer Closing Commentary 12-15-17

CORN HIGHLIGHTS: It was another quiet trading session in corn futures as prices finished slightly lower. Front month March contract was down 1 cent to 3.47-1/2, followed by May down 1 cent to 3.55-3/4. Front month corn futures posted new contract lows in today's trade, as the Mar contract pushed to a low of 3.46-1/2, taking out this week's earlier established contract lows. For the week, the Mar contract lost 5-1/4 cents, while Jul was down 5 cents. The news front stayed relatively quiet, as large supplies continue to weigh on the corn market. With March as the new front month trading 11-12 cents over December's final trade, traders are concerned that March may have to gravitate lower. The overall lack of exports continues to weigh on this market, as weekly export sales were within expectations in yesterday's report but so lackluster compared to last year. USDA did have an announcement of 5.3 million bushels of US corn sold to Costa Rica for this current marketing year. Early trade in the corn market did post higher gains on the overnight and early session but failed to break through resistance at the 10-day moving average and proceeded to gravitate lower for the rest of the session. With burdensome supplies, demand will be the key as we move into 2018. With the USDA is projecting a larger production in both beef and pork for next year as well as ethanol production at near record levels, domestic demand should stay relatively supportive. The key will be exports; South American sales typically fall off as we move into the first quarter.

SOYBEAN HIGHLIGHTS: Soybean futures pushed off of session lows to finish slightly lower in today's trade. Front month Jan beans lost 1/2 cent to 9.67-1/4, while Mar beans were down 3/4 cent to 9.78. Since posting nearby highs in early Dec, it has been a difficult couple of weeks for corn futures, as the Jan contract dropped 22-1/2 cents this week, followed by Jul down 22 cents. The Jan soybean contract held support just short of its lowest price point since Oct, as the most recent negative tone in bean futures continues to weigh on the market. On the demand front, the NOPA November crush data posted a record high of 163.5 million bushels, more than expected and up 2% from a year ago. This aggressive crush pace continues to show the demand seen for soybean meal and bean oil prices, domestically and internationally. Weekly export sales stayed relatively strong but are still trailing USDA projections. Sales were boosted with the announcement of additional sales of 9.4 million bushels to China, and 4.6 million bushels sold to unknown destinations for the 17/18 crop year. Despite some bullish fundamental factors on the demand front, the biggest concern in the market continues to be development of South America's crop as weather has improved. The near term forecast of rain in Argentina and southern Brazil looks to be supportive for their crop. The market is focusing on the potential for dry weather returning in extended forecasts.

WHEAT HIGHLIGHTS: Wheat futures saw two-sided trade this afternoon before prices rallied off of session lows to finish relatively unchanged. The Mar contract finished unchanged at 4.18-1/4, while May wheat was unchanged at 4.30-3/4. For the week, the Mar Chi contract lost 3/4 cent. KC was down 1/2 cent on the March contract. Despite receiving some export news this morning with the announcement of 4.8 million bushels of wheat sold to unknown destinations for the 17/18 crop year, export demand and global surplus of wheat has made it difficult for prices to move any direction but firmer. Prices may be seeing some support with yesterday's drought monitor showing continued concerns regarding the western US Plains, but at this stage, it is more of a "maybe, maybe not" factor. It is still early in the crop year for production of wheat on the western Plains. Weather will gain more focus as the crop breaks dormancy early spring. At this time, it may be more of a conversation piece in market news than an actual market factor. For now, the trend remains lower.

CATTLE HIGHLIGHTS: Cattle futures closed sharply higher to end the week with unexpectedly strong cash trade late this afternoon. The nearby Dec contract closed 2.62 higher on the session and 3.32 higher on the week to 118.90. Feb closed 1.87 higher on the day and 2.72 higher on the week to 121.02. Apr closed 1.85 higher on the session and 1.95 higher on the week to 122.15. Beef values weighed on prices for most of the session today. Yesterday afternoon, choice cuts closed 1.44 lower to 201.04, and select cuts closed 1.33 lower to 183.69. By midsession, choice cuts had bounced 75 cents to 201.79, and select cuts sagged 8 cents to 183.61. Prices traded slightly higher for most of the session today, as the recent drop left futures oversold, especially after Tuesday's USDA report showed a 95 million lb reduction in the estimate for 4th quarter beef production. The session was mostly quiet until 300 head in Nebraska were sold for 118, even with last week and beating expectations for this week. After the close, trade was reported at 119. Most were expecting packers to be well booked for the coming weeks considering slow holiday demand, so the solid cash number was a bullish factor. Buying interest pushed futures through the resistance level.

LEAN HOG HIGHLIGHTS: Hog futures finished with gains for the third session in a row, paring most of this week's losses. The nearby Feb contract closed 90 cents higher on the session, and 32 cents lower on the week to 68.52. Apr closed 55 cents higher on the session and 32 cents lower on the week. May futures closed 1/4 higher on the day and 67 cents lower on the week to 77.85. Carcass cutout values were able to stabilize today, a welcomed development in the face of plummeting belly values. Carcass cutouts closed 80 cents lower yesterday afternoon to 77.31 and were up another 21 cents at mid-session to 77.52. Picnic values down 2.25 and ribs down 5.17 were a negative factor for pork values, but hams bounced 2.03, and bellies were up 1.24, contributing to the neutral to positive carcass value movement. Production for this week was heavy, with 20,000 hogs more hogs slaughtered this week than last week, and 139,000 more hogs than the same week last year. End-of-week short covering today contributed to the positive closes, along with an oversold condition. The rally was halted at the 10-day moving average resistance level.

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