Stewart-Peterson Market Commentary

Closing Commentary - June 21, 2019

Top Farmer Closing Commentary 6-21-19

CORN HIGHLIGHTS: Corn futures ended the day and the week on a soft note losing 6 to 7-3/4 cents as Jul led today's drop closing at 4.42-1/4. Today's hook reversal takes away most of yesterday's gains. Yet, technical damage was minimal today. It looks like profit taking, as well as hedging in front of the weekend, not to mention additional farmers' selling, has weighed on prices as the market consolidates awaiting further news to provide direction. On the one hand, very wet conditions again in parts of the Midwest this week need to be viewed as supportive, yet the 6 to 10 day forecasts offers for above normal temperatures, something the crop sorely needs to move forward. The crop was well behind and by many accounts anywhere from 20 to 30 days. Weakness in soybeans weighed on corn late in the sessions and beans went into double digit losses. Next week's much anticipated Quarterly Stocks and Acreage reports are due out on Friday. Monday will likely confirm little acreage planted for corn and consequently, the Progress report will be viewed as supportive. We don't anticipate crop ratings making much change.

SOYBEAN HIGHLIGHTS: A potentially improved forecast for growing conditions weighed on beans late in the week, as did technical weakness after prices failed to punch higher after yesterday's very friendly looking reversal. Even though it was a weak finish today with futures losing anywhere from 12 to 13-1/4 cents as Aug led the way lower, prices did no technical damage and consolidated for the week. Nov beans closed 13-1/2 lower at 9.27-1/2, yet still gained 4 cents on the week. Heavy rains in parts of the Midwest may have put the final nail in the coffin for some producers planting beans. All states are now beyond the 2019 soybean crop insurance final planting date, with the exception of the southeast corner of KS. Next week's weather will have many farmers decide whether they will try and finish planting beans or take prevent insurance.

WHEAT HIGHLIGHTS: Wheat futures finished nearly unchanged in Chi with Jul closing 1/2 lower, however, KC lost 8 in Jul, closing at 4.52-1/2, while deferred months closed 5 cents lower, and Mpls wheat 1 to 2-1/4 cents weaker. KC continues to come under heavy pressure as expectations for a good crop, along with harvest pressure are keeping prices in check. The spread between Chi and KC continues to widen, which is somewhat surprising. Yet, heavy rains have likely hampered more of the soft red winter wheat this week and traders reflecting that by owning Chi and selling KC. As far as other news, the market awaits further weather developments. Heavy rains may continue to hamper harvest. Elsewhere, the ongoing pesky dry conditions in parts of Australia, Canada, and eastern Europe are viewed as supportive. Yesterday's export sales of 6.9 mil old crop just didn't have any fire to it and the market may be running out of upside gas.

CATTLE HIGHLIGHTS: Cattle markets ended the day with triple digit losses, with Jun down 1.62 to 106.55, Aug was down 1.72 to 102.22, and Oct lives were down 1.42 to 104.15. Aug feeders are down 1.02 to 133.67, and Sep feeders were down 1.32 to 134.05. Choice beef values closed 87 cents lower yesterday afternoon to 220.72, their lowest value since May 22. Choice beef was down another 72 cents this morning to 220.00. Cash trade in TX was seen at 110.00 today, 2.00 lower than last week. This afternoon's Cattle on Feed report was considered just slightly bearish. Placements came in at 97% vs the average market guess of 96%, marketings came in at 101%, steady with expectations, and cattle on feed was reported at 102% vs the average market guess of 101%. The June 1 on feed total at 11.7 mil head was the largest June 1 inventory since Cattle on Feed reports began in 1996. Price action today was very disappointing, with the best traded Aug live cattle contract making a new low close today. Jun lives had their lowest close today since May 18, 2018, and Oct lives made their second lowest close for the life of the contract.

LEAN HOG HIGHLIGHTS: Hog markets closed sharply lower today with the three nearby contracts all settling with limit down prices. Jul hogs were down 3.00 to 76.25, Aug was down 3.00 to 77.90, and Oct was down 3.00 to 72.72. The CME lean hog index was up 6 cents to 79.55. Carcass cutout values were down 25 cents yesterday afternoon to 77.44, their lowest value since March 21. Cutouts drifted 7 cents lower this morning to 77.37. China's national spot pig price was up 1.6 today, which pushed prices up 11.4% for the week to the highest level since January 2017. Still, U.S. export sales to China last week totaled a net negative 75 tons. There is talk that the U.S. and Chinese negotiations teams have begun to communicate again, which is a positive ahead of next week's meeting between President Trump and President Xi. Still, domestic demand is running at a very slow pace for this time of year and production is overwhelming. Technically, today's session was as ugly as it gets. The best traded Aug contract made its lowest close today since February 20. Jul futures made their lowest close since August 15, 2018. Open interest is at its lowest levels since mid-April with speculators liquidating large amounts of long positions.

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