Stewart-Peterson Market Commentary

Closing Commentary - July 20, 2017

Top Farmer Closing Commentary 7-20-17

CORN HIGHLIGHTS:A hot/dry forecast gave corn prices a boost today, finishing 7-1/2 to 8-1/2 higher with Dec leading today's charge upward, closing at 4.04-3/4 after reaching a high of 4.06-3/4. Today's solid close, as well as a solid push above the 4.00 mark, something the market has failed at the last two sessions, suggests there's renewed buying interest and that not only speculative, but potential end-user money is coming into the marketplace to hedge corn. Overnight rainfall totals were impressive in parts of the Dakotas, Minnesota, Wisconsin, Illinois, and Indiana. Yet, large swaths of the central and western Midwest were missed with rain, and with the 6-10 and the 11-15 day forecasts indicating below-normal precipitation and above-normal temperatures, prices moved higher. Spillover support from beans, which had double digit gains, steady to higher wheat, and a weaker dollar also provided support. The U.S. dollar is now trading at its lowest level in nine months with new lows established on its downtrend today.

SOYBEAN HIGHLIGHTS:Soybean futures punched higher today with gains of 12-3/4 to 14-1/2 as Nov led today's rally closing at 10.27, its highest close since July 12. The recent recovery off the low of 9.84 on July 14 is encouraging, with a gain now of 41 cents at today's close. As weather goes, so likely will the markets. Our bias is that beans are very susceptible to dry weather over the next 3-4 weeks and the longer term range outlooks continue to suggest a mostly warm and dry picture. Funds were net short coming into today by an estimated 6,000 contracts. We anticipated likely they could be net-long beans at this time.

WHEAT HIGHLIGHTS:Wheat futures traded both sides of steady, but eventually followed corn and soybeans higher. Wheat finished with gains of 2 to 4 cents in Chi and KC, and 2 to 8 cents in Mpls. Wheat prices haven't found much news as of late to provide direction, either friendly or negative. However, they have found support after a strong downward retracement since peaking on July 5. Sep Chi futures show a 50% retracement at 5.03, and for the last four sessions prices have traded at or either side of this level. Today's hook reversal upward would suggest buyers may be gaining confidence to own wheat. With winter wheat harvest winding down in the weeks ahead, and spring wheat picking up steam, it will be apparent that there should be little harvest pressure on wheat prices any longer, due to expectations for poor spring wheat yield numbers.

CATTLE HIGHLIGHTS:Cattle futures finished moderately lower today after lackluster export sales numbers and the lack of cash support in the country. The nearby Aug contract closed 1.40 lower to 115.87, Oct closed 1.80 lower to 117.07, and Dec closed 1.57 lower to 118.10. Yesterday's fed cattle exchange trade around 118.00 and subsequent cash trade 118.50 yesterday in Texas and Oklahoma was down from 120.00 last week. With falling beef prices, it is unlikely that packers are willing to pay much more than that for cattle this week. Choice cuts closed 32 cents lower yesterday afternoon to 207.73 and select cuts closed 24 cents higher to 195.49. By mid-session today, choice cuts were back up 36 cents to 208.09 and select cuts picked up another 37 cents to 195.86. U.S. beef export sales for the week ending July 13 were reported this morning at 12,400 metric tons versus the previous 4-week average of 14,325 metric tons. Cumulative sales for 2017 at 491,700 metric tons are up 9.7% from last year's pace. The marketplace is expecting about a 3% increase in the on feed number from a year ago, and a 4-5% increase in placements from a year ago in tomorrow's Cattle on Feed report releasing after the close.

LEAN HOG HIGHLIGHTS:Hog futures finished the day with a negative tone after pork export sales continued to disappoint. The nearby Aug contract closed 1.47 lower to 81.10, Oct closed 95 cents lower to 67.85, and Dec closed unchanged at 62.95. Carcass cutouts closed 70 cents higher yesterday afternoon to 104.69, but slid 87 cents lower today to 103.82. Weakness was especially noted in butt and rib values, both down almost 6.00 today. U.S. pork export sales for the week ending June 13 were reported this morning at 11,700 metric tons versus the previous 4-week average of 18,450 metric tons. This is especially disappointing considering the recent slide in the U.S. dollar value. Cumulative sales for 2017 of 736,600 metric tons are up 7.2% from last year's pace. No real significant technical damage was done today with the losses. The 10, 20, and 50-day moving averages are all converging around the 81.00 level, so expect prices to mirror that, barring a major fundamental development.




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