Stewart-Peterson Market Commentary

Closing Commentary - February 23, 2018

Top Farmer Closing Commentary 2-23-18

CORN HIGHLIGHTS: Corn futures finished steady to slightly lower. Front month Mar was down 1/2 cent to 3.66-1/4, while May corn was down 1/4 cent to 3.74-1/2. The Mar contract posted a 2-1/2 cent trading range in today's intraday trade. For the week, the May contract closed down 1/2 a cent, while Dec was 1/4 cent higher in a quiet trading week. Corn futures stayed in consolidation mode again this afternoon, as prices have pushed to their highest level in nearly 4 months. South American weather stays in focus, as well as strength across the bean complex, as traders in the corn market are looking for some direction. Dry weather across Argentina has brought reductions to project6ions of the Argentinian corn crop this spring, and the Brazil crop is experiencing some delays in planting of their key Safrinha corn crop, contributing to global dwindling corn supplies. Demand has stayed active over the past few weeks, and today's USDA weekly sales and shipment numbers stayed in line. Last week corn sales totaled 61.2 million bushels, and shipments at 33.5 million bushels. Sales stayed at the high end of expectations and posted a sixth consecutive strong week. The overall combination is still bearish for the market, as sales and shipment totals are still trailing USDA expectations and last year's totals. Additional sales were posted this morning, as the USDA announced a sale of 4.5 million bushels to corn to Egypt for the 2017/18 marketing year. This week, USDA's early estimates for the 2018/19 crop year for projected carryout are at 2.27 billion bushels, slightly down from this year's current season estimate. A number of this value would keep prices roughly steady in the weeks and months ahead.

SOYBEAN HIGHLIGHTS: Soybean futures posted small gains, as front month Mar gained 4-1/4 cents to 10.47-1/2. Jul beans were 3-1/2 cents higher at 10.56, while new crop Nov beans were 1/4 cent higher to 10.28. For the week, the May contract posted a gain of 15-1/4 cents, led by Tuesday's strong trading action. South American weather has remained key support underneath the bean futures during this latest rally, as individual analysts have continued to lower the Argentina crop estimate. With forecasts staying supportive of the bean market, prices have been in consolidation, looking for better clarity regarding the quality and quantity of the Argentina crop. Despite potential weather problems in other regions, U.S. supplies are sitting with overall bearish fundamentals with bean carryout at 530 million bushels. Demand will be the key, and today's USDA exports sales and shipments were lackluster. Weekly sales saw a net reduction of 4 million bushels, while shipments totaled 32.8 million bushels. This was extremely bearish for the week after China showed reductions of 13.3 million bushels, and currently total soybean shipments are down 13% from last year's levels. The USDA did post a daily export sale of 3.9 million bushels to unknown destinations, of which 1.5 million bushels were for this crop year, and the remainder for the 18/19 crop year. The USDA gave early projections for 18/19, which may have stayed supportive in bean prices this afternoon despite weakened demand. The USDA is estimating 460 million bushels of ending stocks for the 18/19 year, trending lower from current estimates for this crop year.

WHEAT HIGHLIGHTS: Chi wheat futures finished steady to slightly higher. Front month Mar gained 1 cent to 4.52-1/4, and May wheat was unchanged at 4.64-1/4. KC wheat finished down 1-1/2 cents to 4.84-3/4, while May spring wheat finished 2-1/2 cents to 6.13-1/4. For the week, May Chi wheat lost 7-1/4 cents, while KC wheat was down 8-3/4 cents. Friday's UDSA export sales and shipments were 12.1 million bushels for sales and 15.4 million bushels of shipments. This is still a relatively bearish combination, showing not much movement of U.S. wheat supplies according to expectations. The USDA released early estimates that today's Ag Forum with U.S. wheat ending stocks projected at 931 million bushels for the 18/19 marketing year. That is down slightly from this year's current 1.009 billion bushels. Wheat futures have stayed choppy and range bound over the past few trading sessions, as the market continues to focus on southwestern Plains and dryness concerns. The latest drought monitor continued to show drought conditions across the HRW Wheat Belt. Regardless, as HRW wheat moves closer to dormancy, true estimates of this year's crop will become available. Global supplies are fundamentally bearish, keeping a lid on prices in the short term.

CATTLE HIGHLIGHTS: Cattle futures closed steady to lower, as the market still suffers from a growing sense of uncertainty despite positive fundamentals. The nearby Feb contract closed 35 cents lower to 128, Apr closed 52 cents lower to 124.85, and Jun closed unchanged at 116.80. Yesterday's Cold Storage report was supportive. Frozen beef stocks for the month of January were up 2% from December and down 7% from last January. This again speaks to the impressive demand noted lately. Boxed beef values continue to confirm this with choice cuts closing 1.03 higher yesterday afternoon to 218.40. This was the highest beef value since 7/10. By mid-session today, choice cuts had fallen 32 cents to 218.08. Today's Cattle on Feed report released after the close is not supportive for trade next week. Marketings came in at 106%, even with expectations. Placements came in at 104%, 3% above expectations. On feed came in at 108%, with expectations at 107.5%. The heavy placements number will be a focus for Monday's session and likely food for the bear camp. Long liquidation was noted today, especially on the general feeling that placements could come in heavier than expected following the trend of recent Cattle on Feed reports. The best traded Feb contract closed below its nearest support level, the 20-day moving average.

LEAN HOG HIGHLIGHTS: Hog futures closed slightly higher, drawing support from strong export sales numbers. The nearby Apr contract closed 10 cents higher to 71.37, May closed 17 cents higher to 77.60, and Jun closed 7 cents higher to 83.02. Yesterday afternoon's Cold Storage report was very bearish. Frozen pork supplies for the month of January were up 16% from December and up 8% from January 2017. Pork belly stocks were up 13% from the previous month and up 219% from the previous year. Weekly U.S. pork export sales for the week ending 2/15 were reported this morning at 45,700 metric tons, versus the previous 4-week average of 24,075 metric tons. This leaves cumulative sales for the year at 357,100 metric tons, 7.1% ahead of last year's pace. Carcass cutouts were up 77 cents to 79.47. Today did not bring any major technical developments for the nearby Apr contract, but the Jun contract closed above its 50-day moving average for the first time since 2/2. Prices have appeared to stabilize out of oversold levels, and direction looks choppy from here in the short term.

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