Stewart-Peterson Market Commentary

Closing Commentary - February 22, 2019

Top Farmer Midday Update 2-22-19

Corn: Corn futures are mostly steady to mixed this morning, with Mar down 1/4 cent to 3.75-3/4, May down 1/4 cent to 3.84, and Jul steady at 3.92-1/4. New crop Dec corn is up 3/4 cent to 4.02-1/2. The market continues to feel cautiously optimistic about U.S./China trade negotiations continuing today. Meanwhile, the USDA Outlook Forum released some supportive news this morning, estimating 2019 ending stocks at 1.65 billion bushels versus 1.735 billion bushels this year. The International Grains Council raised global corn production for this year by 33 million metric tons to 1.109 billion tons. This is due to an increase in Chinese production of 37 million metric tons. Mar options expire today as the Mar contract caps off its most volatile week since the third week of January. Dec futures briefly tested their 100-day moving average support levels today and are trading back above their 200-day moving average levels. Funds bought 13,000 contracts of corn yesterday and are thought to be short about 19,000 contracts.

Soybeans: Soybean futures are drifting slightly lower in a quiet trade so far this morning. Mar beans are down 3/4 cent to 9.10-1/4, May beans are down 1/2 cent to 9.23-3/4, and Jul beans are down 3/4 cent to 9.36-3/4. Nov beans are down 3/4 cent to 9.53-1/2. The nearby Mar contract is trapped between its 10-day moving average support level and its 20-day moving average resistance level. Both sides have been tested today and prices remain mostly steady despite positive Outlook Forum and IGC data released this morning. The USDA Outlook Forum estimated 2019 ending stocks at 845 million bushels versus 910 million bushels this year. The IGC lowered global soybean production for 2018 by 5 million metric tons to 363 million metric tons. Trade negotiations today will be the main source of volatility, with President Trump meeting with the head of the Chinese trade delegation. Funds bought 9,000 contracts of soybeans yesterday and are thought to be net long about 9,000 contracts.

Wheat: Wheat markets are heavily mixed this morning, with Mar Chi wheat down 1/2 cent to 4.86, Mar KC wheat is up 1-1/4 cents to 4.56-1/2, and Mar spring wheat is up 9-3/4 cents to 5.67-1/2. The USDA Outlook Forum estimated 2019 all wheat ending stocks at 944 million bushels versus 1.01 billion bushels for this year. In addition, the International Grains Council lowered their 2018 global wheat production by 2 million metric tons to 735 million metric tons. Sagging world wheat prices and shrinking freight costs have increased global wheat competitiveness and recent currency fluctuations have made U.S. wheat just too expensive at the moment. Still, futures are oversold, especially in the winter wheat classes. Funds bought 6,000 contracts of wheat on Thursday and are thought to be short about 39,000 contracts.

Cattle: Cattle futures are choppy this morning in both the live and feeder cattle markets. Feb lives are up 42 cents to 128.05, Apr lives are up 5 cents to 128.65, and Jun lives are down 10 cents to 119.15. Mar feeders are down 10 cents to 143.12 and Apr feeders are down 10 cents to 145.42. The live cattle markets made bearish key reversals yesterday, and given the possible overbought condition of the market, could be due for a correction. However, traders are waiting to see how retail beef and cash trade wrap up the week. Wintry conditions are still supportive as cattle cannot get a break from snowy and cold weather. Most live and feeder contracts are still trading inside of yesterday's ranges.

Hogs: Hog markets are slightly higher this morning, trying to consolidate after reversing off of recent lows. Apr hogs are up a dime to 56.05, Jun hogs are up 37 cents to 76.05, and Jul hogs are up 7 cents to 78.37. Trading ranges today have been fairly tight, indicating that traders are still somewhat hesitant to take new positions. The Jun contract has broken through its 20-day moving average resistance level, and a close above it would be the first since February 13. U.S./China trade negotiations will be watched closely today, and any mention that pork products would be included in the perspective Chinese ag purchases would be very supportive.

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