Top Farmer Closing Commentary 4-23-19

CORN HIGHLIGHTS: Corn futures finished with losses of 1-1/2 to 3-1/2 cents as the downward spiral continues. A firmer U.S. dollar, along with sharply lower soybean prices weighed on corn futures, as did continued selling by managed money. Funds are said to be well above 300,000 contracts short, and our guess would be they added to positions again today. It was estimated they added 12,000 net short positions yesterday. Wheat prices firmed, and traders may have been buying wheat and selling corn, or perhaps buying wheat and selling beans. New news in wheat was somewhat scarce. As for corn, planting progress is 6% complete as of Sunday, behind the 5-year average of 12%. The 6-10 day forecast suggests a wet outlook for the latter part of April, which could push most planting back to the first or second week of May. The market doesn't seem to be overly concerned as it is well known that a small window of time is needed to plant most of the crop. Bears would argue that later planted corn in warmer/moist soil has better potential to germinate quicker and capture heat for early growth. Stay defensive.

SOYBEAN HIGHLIGHTS: Soybean futures had a tough technical day, breaking below channel line support, uncovering sell stops and pushing to their lowest level since November. Nearby May beans finished 15 cents lower at 8.62, while new crop Nov lost 13-1/2 at 8.96-1/4. Wheat indicated channel line support near 9.02, and once prices slid through this level, it didn't take long for prices to lose another 4-5 cents. Perhaps even more discouraging for bullish traders is that beans finished near the low end of the price range for the fourth out of the last five sessions. Expectations are for a robust Argentine crop, along with an upgrade to the Brazilian crop on the past USDA report from earlier expectations nearly two months ago when dry weather appeared to be affecting the crop more so than it actually did. A firmer U.S. dollar reaching its highest level in several months didn't help the cause either. It also appeared that traders were buying wheat and selling beans. Both meal and oil finished with losses as meal gave up nearly 1.50 and oil nearly 60 cents.

WHEAT HIGHLIGHTS: Wheat futures rebounded today after a couple of down sessions, with both Chi and KC gaining 2 to 3-1/2 cents. Prices are on a slippery slope following the corn and soybean markets lower. Nearby May Chi closed 3 higher at 4.38-3/4, holding above the contract low close from 3/11 of 4.28-1/2. Jul KC lost 2-3/4, closing at 4.21 after reaching a new contract low. Bullish traders may argue a minor hook reversal could be signaling that a low could be in place. We are not a believer that today's technical activity would be strong enough to warrant that belief. Mpls wheat gained 1 to 1-3/4, but it too scored a new contract low before clawing to positive territory. The wheat complex remains in a difficult spot. Export sales never reached their potential this year, and expectations are for a rebound in world production after drought-stricken areas of Russia and Europe tightened supplies last year. Bottom line, buyers are in control, and with the dollar reaching a new yearly high, no one seems to anxious to own much wheat.

CATTLE HIGHLIGHTS: Cattle markets closed mixed to mostly lower in relatively choppy trade. Apr cattle closed 17 cents lower to 28.32, Jun closed 45 cents lower to 121.12 and Aug cattle closed 57 cents lower to 118.20. May feeders were down 1.17 to 149.62, and Aug feeders were up 7 cents to 159.70. Choice beef values closed 83 cents higher yesterday afternoon to 234.48, the highest choice values since 6/26 of 2017. Choice beef was up another quarter today to 234.73. Yesterday's Cold Storage report was supportive with frozen beef stocks in March down 2.9% from last year and 4.9% for the month. The 10-year average declined for the month as 1.7%, so the 4.9% drop is supportive and is another indicator of recent beef demand strength. Some of today's choppy trade was likely due to another negative session in the hog markets. The best traded Jun live cattle contract closed below its 10-day moving average today for the first time since 4/3. Jun lives had an inside session, but the close below moving average support is not a positive technical development. The Aug live cattle contract also closed below its 10-dya moving average level for the first time since 4/3. In the feeder markets, price action was more volatile, at least in the nearby May contract. May feeders made their first close below their 10 and 20-day moving average levels since 4/3. Momentum in both live and feeder markets may be slowly turning over, but we do not expect too much pressure without a break in beef or cash trade.

LEAN HOG HIGHLIGHTS: Hog markets closed sharply lower again today with Jun down 1.40 to 92.37, Jul down 77 cents to 97.20 and Aug down 95 cents to 98.62. The CME lean hog index was up 52 cents to 81.54. Today's advance in the index was the biggest since 4/5. Carcass cutout values closed 1.06 higher yesterday afternoon to 88.92 and was up another 1.30 this morning to 89.16. Yesterday's Cold Storage report showed end of March frozen pork stocks were down 0.1% from last year and down 0.9% for the month. The 10-year average decline for the month is 1.6%, so the drop of just 0.9% is a bearish figure. Fundamentally, besides yesterday's Cold Storage report, the hog market still seems poised to rally in the big picture. Nearby technicals are a bit softer. Prices may still be overbought, and with speculative money moving in and out of markets quickly, profit taking may be a culprit of the recent pressure. The Jun contract gapped lower today on the open but was able to close the gap later in the session. The Jun contract still has a gap in between 4/2 and 4/3. Jun, Jul and Aug futures all closed below their 20-day moving average levels. Nearby technical momentum is pointing lower.

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