Stewart-Peterson Market Commentary

Closing Commentary - April 18, 2019

Top Farmer Closing Commentary 4-18-19

CORN HIGHLIGHTS: Corn futures finished mixed. Front month contracts were slightly higher with May corn closing up 1/4 cent to 3.58-1/2, while Jul was up 1/4 cent as well to 3.67-1/4. Dec 19 finished 1/2 cent lower to 3.86-1/4. For the week, May corn futures fell 2-1/2 cents, while the Dec contract lost 2-3/4 cents. It was a quiet trading day, as front month contracts had a 2-cent trading range from intraday high to low. Weakness in the wheat market made it difficult for corn futures to find any traction as prices were consolidating into the 3-day Easter weekend. The fundamental picture remains bearish on corn as supplies have grown since the first of the year. Today's weekly export sales failed to spark any buying enthusiasm. For the week ending 4/11, the USDA reported sales of 37.3 million bushels for the 18/19 crop year and additional 700,000 bushels for 19/20. This week's sales were an improvement over last week, but currently, total export commitment for this marketing year are approximately below last year's levels. Export shipments for the week were at 48.2 million bushels, which is above the necessary pace to meet the USDA's projected export total for the marketing year.

SOYBEAN HIGHLIGHTS: Soybean futures finished higher. Front month May finished 1-1/2 higher to 8.80-1/2, while Jul beans finished 1-3/4 higher to 8.94-1/4. New crop Nov beans also finished 1-1/4 higher to 9.13-1/2. It was a difficult week for bean futures, as the May contract lost 14-3/4 cents, and Nov beans lost 14-1/4 cents in this week's trade. South American harvest is starting to wrap up, which may begin to alleviate hedge pressure on the soybean market. The overall fundamental picture remains bearish. Weekly export sales for the week of 4/11 posted 14 million bushels of sales for the 18/19 crop year and 800,000 bushels for the 19/20 marketing year. Last week's export shipments were 17.3 million bushels, which is below the necessary pace to reach the USDA's 18/19 crop year export target. Total commitments in terms of sales are still trending 18% below year ago levels, making this week's export sales numbers bearish overall for the soybean market. Today's lift in prices may be more of a short covering move, as prices are moving into the holiday weekend after aggressive selling for the majority of the week. Headline news may become a factor in the short term as ongoing U.S. / Chinese trade negotiations are working closer to a potential deal with trade representatives going to China next week with return business the week after. Talk of a potential trade deal finalized by the end of the month may bring optimism. Until particulars are known, soybean futures will stay focused on fundamentals.

WHEAT HIGHLIGHTS: Wheat futures continued their drift lower in Chi today, as contracts were 2-5 cents lower. Front month May wheat was down 2-3/4 to 4.44-1/4, while Jul wheat was down 2 to 4.48-1/4. Other classes of wheat saw mixed to lower trade, as Jul KC was down 1/2 cent to 4.25-3/4, and Jul Mpls was down 1-3/4 to 5.29-1/2. It was a difficult week for the wheat market, as the Chi May contract posted a 20-1/4 cent loss for the week, while Jul wheat futures dropped the same 20-1/4 cents. As the wheat market continues to deal with growing global supplies and export competition, the weekly export sales numbers failed to provide any buying support. The USDA reported sales of 11.7 million bushels of wheat for the 18/19 marketing year and additional 8.4 million bushels for the 19/20 marketing year. This has total wheat commitments up 8% over a year ago, but the USDA was predicting a larger increase. Weekly export inspections shipments were at 18.4 million bushels, which is below the necessary 31.7 million bushels to reach the USDA's target. Keeping response to the export sales bearish to the wheat market. Moisture moving across southern Plains continue to aid crop conditions despite lower acreage. The U.S. wheat crop is starting off in relatively good shape.

CATTLE HIGHLIGHTS: Cattle markets closed mostly higher today in a relatively quiet session. Apr lives closed 1.60 higher to 128.52; Jun closed 30 cents higher to 122.67; Aug lives were up 20 cents to 119.75. Apr feeders went off the board 37 cents higher to 145.70; May feeders closed 92 cents higher to 151.52, and Aug feeders closed 22 cents higher to 160.67. U.S. beef export sales for the week ending 4/11 were reported this morning at 28,800 tons, versus the previous 4-week average of 15,975 tons. Cumulative sales for 2019 at 362,700 tons are 4.3% behind last year's pace. This afternoon's Cattle on Feed report was more negative than expected. Placements for Mar came in at 105%, marketings at 97% and on feed supply at 102%. This was the highest on feed total since Cattle on Feed reports began in 1996. There is also talk of active placement activity during the month of April. Choice beef values closed 71 cents higher yesterday afternoon to 232.76 and were up another 45 cents this morning to 233.21. Cash cattle traded as high today as 130 to 132.50 in Iowa. The best traded Jun live cattle contract made its highest close today since 3/22. Prices saw pressure early in the session but rallied back near the end to close just off of the day's highs. Aug, Sep and Oct feeder cattle contracts all made new highs again today.

LEAN HOG HIGHLIGHTS: Hog markets had a mixed trading session today, keeping the trend of volatility moving forward. Jun hogs closed 62 cents higher to 96.75, Jul hogs closed 7 cents lower to 100.55 and Aug hogs closed 2 cents higher to 101.77. The CME lean hog index was up 40 cents today and 88 cents on the week to 80.24. Carcass cutout values closed 47 cents higher yesterday afternoon to 87.00 but were down 1 cent this morning. U.S. pork export sales for the week ending 4/11 were reported this morning at 40,300 tons versus the previous 4-week average of 38,075 tons. 2019 pork sales have reached 631,800 tons, 20.4% ahead of last year's pace. China has been responsible for 26.3% of that total, 166,318 tons. A year ago, China was responsible for just 4% of U.S. pork sales. With China spot pig prices choppy to lower lately and U.S. pork values relatively stable, futures markets have been volatile but still trading relatively sideways. The Jun contract, despite trading with a range of over 5.00 this week, closed only 1.75 lower for the same time frame. Jul futures traded within a range of almost 4.00 but only lost 80 cents for the week. Money flow in and out will keep markets volatile, but continued advances in pork and pig prices, along with a solid flow of U.S. pork to China, will be a catalyst for another leg higher.

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