Top Farmer Closing Commentary 11-8-19
Stewart-peterson Commentary - SPC - Fri Nov 08, 3:51PM CST

CORN HIGHLIGHTS: Corn futures ended its 5-day selloff streak by posting small gains in today’s trade. Dec corn was up 2 cents to 3.77-1/4, while the Mar contract gained 2-3/4 cents to 3.86-1/4. For the week, despite today’s modest gains, the Dec contract lost 12 cents while Mar traded 12 cents lower as well. Today’s trade was all about the November USDA Crop Production and Supply and Demand report which has had the market on the defensive over the last handful of trading sessions. In today’s numbers, the USDA lowered projected corn yield for this year’s corn crop to 167 bushels per acre, down 1.4 bushels per acre from the October report. While making no change on harvested acreage at this time, and adding some reduction to demand again for the month by bringing in 100 million bushels of less demand to the table, this lowered corn carryout projections for the 2019/20 marketing year to 1.911 billion bushels, down 18 million bushels from last month’s report. That number was above expectations, which may have limited any short-term rally in the market today. World corn carryout numbers stayed supportive with the reduction of 6.5 million metric tonnes from last month’s total bringing world corn carryout to 2.96 million metric tonnes, which was below expectations. The combination of lower yield, as well as lower global stockpiles, provided some buying support as the Dec contract did post a reversal off of this morning’s lows. In addition, the technical picture is slightly improved with the Dec and Mar contracts testing the 62% retracement from the September low to the October high before reversing today. In other positive news, corn futures saw its first published export sale with unknown destinations picking up 217,000 metric tonnes of corn for the 2019/20 marketing year.

SOYBEAN HIGHLIGHTS: Soybean futures saw two-sided consolidative trade today as contracts finished 4 to 5 cents lower. Nov beans were down 5-1/2 cents to 9.19-1/2, while Jan beans were down 5-1/2 cents to 9.31. It was a choppy week for bean futures as the Nov contract finished down 4-3/4 cents on the week, while Jan beans finished 5-3/4 cents lower led by today’s push down. The USDA crop production numbers for soybeans stayed relatively unchanged from the October report in terms of overall crop production. Yield stayed unchanged at 46.9 bushels per acre, and harvested acres also stayed unchanged. With a slight adjustment taking 15 million bushels off of demand due to a weaker crush, carryout projections for the 2019/20 marketing year moved to 475 million bushels. This was above expectations and was probably the biggest reason for the push in the market on today’s prices. Front-month bean contracts did push to 10 to 11 cents lower, before firming towards the end of the day to finish with a mid-range close. Today’s Crop Production report stayed neutral overall to slightly bearish due to the heavier carryout projection as the market was anticipating to see some reduction in yield, acreage, and final carryout. Going forward, the market may still be anticipating those reductions to occur but those will be held off until possibly on the January report. The demand side of the equation has stayed strong, with weekly export sales last week at 66 million bushels with China being our largest customer. That stayed above analysts’ expectations, and the last two days saw reportable soybean sales. Today, the USDA announced a sale of 270,000 metric tonnes of beans to unknown destinations for the 2019/20 marketing year. It seems that demand has improved overall on the export front, and U.S. business is turning more lively as we move further into winter as we still digest where this harvest may be.

WHEAT HIGHLIGHTS: Wheat futures saw small losses in today’s trade as Chi contracts were 1 to 3 cents lower. Dec wheat was down 2-1/4 to 5.10-1/4, while Mar was down 3 to 5.14-1/4. KC hard red winter wheat Dec contract was down 3/4 cent to 4.21-1/2, while Mpls spring saw fractional losses with the Dec contract down 1/4 cent to 5.18-1/2. For the week, Chi Dec contract posted a 5-3/4 cent loss, while KC Dec contract was down 4-1/2 cents. Wheat numbers in today’s USDA’s Supply and Demand report brought some mixed reaction overall as domestic supplies of U.S. wheat posted an ending stock estimate at 1.014 billion bushels, approximately 20 million bushels below expectations and down 30 million from last month. The global wheat market tends to have more impact on prices, which saw an ending stock increase of 500,000 metric tonnes to 288.3 million metric tons, which was 1.5 million metric tonnes above the market’s expectations. This brought pressure into the Chi and KC contracts but Mpls wheat did see strength during the majority of the trading session until the very end. Mpls was supported as ending stocks were softer at winter wheat were projected at 110 million bushels, down from 158 last year, as this year’s harvest was reflected in those lower overall supplies. With overall numbers still staying relatively negative, wheat futures failed to find traction and did see some late-session profit-taking today. The focus now will stay on the demand side of the equation, which the USDA made no adjustments on overall U.S. wheat export numbers today. The world still seems to have ample wheat supplies, and without confirmation of exports to U.S. shores, could make price movement difficult in a window where historically prices could turn softer.

CATTLE HIGHLIGHTS: Cattle markets put in slightly positive closes today, with underwhelming buying action despite positive fundamentals. Dec live cattle were up 25 cents to 119.25, Feb lives were up 17 cents to 125.02, and Apr lives were up 25 cents to 126.10. Nov feeders were up 22 cents to 147.00 and Jan feeders were up 10 cents to 145.87. Boxed beef values made their highest close yesterday since August 22, up 1.15 to 238.29. Choice beef was up another 96 cents this morning to 239.25. Cash cattle trade was reported today in Kansas, Nebraska, Texas, and Colorado $2 to $3 higher than last week’s trade. This is especially impressive given the fact that averaged dressed steer weights jumped 6 pounds last week to their highest levels since December 2016. The best traded Dec live cattle contract back-tested its 10-day moving average support level today for the first time since October 23 and bounced to close higher. Dec lives lost 27 cents on the week in what could be considered a weekly hook reversal though the trend still looks higher. Jan feeders closed today at the same level they opened on Monday in a choppy quiet week.

LEAN HOG HIGHLIGHTS: Hog markets made mixed closes today, with Dec down 17 cents to 64.12, Feb hogs were up 12 cents to 73.90, and Apr hogs were up 17 cents to 80.32. The CME Lean Hog Index made its first higher close today since October 24, up 3 cents to 60.19. Carcass cutout values were down 30 cents at yesterday’s close to 80.64 but jumped 2.10 this morning to 82.74. This is the highest pork cutout value since August 20 in a gain of over 6% for the week so far. China’s national average spot pig price was down 0.39% overnight and is down 1.6% for the week, 2.7% for the month, but up 197.6% year to date. U.S. pork production for the week ending October 26 came in 5.57% ahead of last year. The best traded Dec lean hog contract had a fairly quiet trade session today, drifting again towards the low end of the recent consolidation range. Feb hogs were trapped between their 10-day moving average support level and the 50-day moving average resistance level. Apr hogs posted their highest close today since October 23 despite relatively uneventful trade.

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