Stewart-Peterson Market Commentary

Closing Commentary - March 21, 2018

Top Farmer Closing Commentary 3-21-18

CORN HIGHLIGHTS: Corn futures stayed in consolidation mode as prices finished mixed. Front month May was up 1/2 cent to 3.75, Jul was up 1/2 cent to 3.83 and Dec corn down 1/2 cent to 3.96-3/4. Like yesterday, today saw a tight trading range; May posted a two-cent range. Prices continue to consolidate near the 50% retracement area of the most recent rally, as news is lacking in the corn market since Monday's strong sell-off. Weakness in the wheat market made it difficult for corn futures to gain much traction, and the market stays focused on South American weather. Argentina continues to see mixed precipitation with the next 7 day forecast mostly dry. Brazil's planting of second crop appears to be going well, and that will be a limiting factor in the market. Demand continues to be strong with the third consecutive day of export sales announced this week with a sale of 5.4 million bushels of corn to South Korea. The US Department of Energies Weekly Ethanol Production report saw an increase week over week, while inventory supplies were reduced, given slightly better demand. The combination of strong export sales and continued support from the ethanol industry have helped build support underneath the corn market.

SOYBEAN HIGHLIGHTS: Soybean futures saw two-sided choppy trade this afternoon as prices finished with slight gains. The front month May contract was 1-1/2 higher to 10.29-3/4, while Jul beans gained 1-1/2 to 10.40-1/4. New crop Nov beans gained 1-1/4 to 10.26-1/4. News was quiet, as soymeal and soyoil prices saw support helping bring carryover strength into bean markets today. Argentina weather forecasts are dry, which helps support the meal side with soymeal Argentina's chief soybean export. Strength in palm oil and crude oil markets carried over to provide strong support in bean oil, which finished 60 cents higher near the top of its trading range. Fundamentally, soybean markets have plenty of bearish news to be concerned about in 2018. Private analysts continue to increase the size of the Brazilian bean crop, which will provide direct competition for US beans on the global market. With next week's Prospective Planting report expecting to show an increase in bean acreage, this will likely provide momentum for US carryout projections for the fall to be the same continue to grow as we have seen this winter.

WHEAT HIGHLIGHTS: Chi wheat futures were under selling pressure the majority of the day, with late afternoon buying bringing prices back to small gains. Front month May contract gained 1/2 cent to 4.53-1/2, while Jul wheat was up 1/2 cent to 4.69-1/4. Weakness continued in other wheat markets as KC HRW wheat contracts were 2-4 cents lower, and spring wheat contracts posted 3-5 cent losses. Front month May KC wheat posted a 4-1/2 cent loss to 4.65-1/2, its lowest close in 7-1/2 weeks. While dryness in the southwestern Plains has been a major concern within the wheat markets, 7-day forecasts are showing the possibilities of moderate precipitation in some regions of these Plains, which could benefit this year's struggling wheat crop. The west half of the Wheat Belt will remain dry, with temperatures pushing into the 90s by the end of the week. Chi wheat futures rallied off of session lows but still failed to close above the 200-day moving average in front month contracts. This, combined with the KC wheat break of key support level may make more room for further technical downside, as prices look to challenge earlier winter lows.

CATTLE HIGHLIGHTS: Cattle futures closed sharply lower today as long liquidation continues after technical support levels were violated earlier this week. The nearby Apr contract closed 1.87 lower to 117.70, Jun closed 1.62 lower to 107.37, and Aug closed 1.42 lower to 105.27. Today, online fed cattle exchange saw 113 out of 113 head sold, all for 127. Cash trade was seen as high as 126, which though lower than last week, is still supportive. Beef prices fell 1.52 yesterday to 223.35 but bounced 63 cents this morning to 223.98. Much of the pressure recently has been due to expectations of high beef production in quarter two, and this was continued today. As of last Tuesday, managed money speculators held a net long position of almost 93,000 contracts, and with futures markets starting to crack, long liquidation was a major theme today. Declining open interest the last few sessions points to long liquidation. Prices are now technically oversold, but further movement lower is not out of the question, especially with Apr futures putting in two closes definitively below the 200-day moving average. More long liquidation is likely.

LEAN HOG HIGHLIGHTS: Hog futures finished mixed, attempting to consolidate after sharp losses in recent sessions. Nearby Apr futures closed 67 cents lower to 62.57, May closed 12 cents higher to 70.32, and Jun closed 47 cents higher to 77.22. The CME lean hog index was down 68 cents to 64.29, providing some support to the Apr contract from a basis standpoint. Carcass cutouts were up 9 cents yesterday to 72.07 and were up another 39 cents this morning to 72.46. Ribs were down 3.53 to 131.10, but hams picked up the slack, up 3.21 to 55.40 due to Easter demand. Bellies were up 53 cents to 103.94. Price action in the Apr contract was very weak with no trade higher than the opening price and the closing price slightly above the lows of the day. Prices are oversold, so a short covering bounce or bottom picking bounce could be seen at some point.

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