Stewart-Peterson Market Commentary

Closing Commentary - December 10, 2019

Top Farmer Closing Commentary 12-10-19

CORN HIGHLIGHTS: Corn futures ended mixed with nearby Dec losing 2-1/2 cents closing at 3.63-1/4, while Mar closed 1-1/4 higher at 3.77. New crop Dec closed 2 higher at 3.91. With today’s tight trading range, one would never have probably guessed there was a USDA report. Most contracts traded in a 3 cent range. The report was a non-event with most, if not all, numbers unchanged or close to unchanged. Projected carryout remained unchanged at 1.910 billion bushels. 2018/19 projected world corn carryout dropped from 320.1 million metric tonnes to 319.2 million metric tonnes. The 2019/20 world projected carryout, however, rose 4.6 million metric tonnes to 300.6 million. The market will now focus its attention on the January Supply and Demand report, which is 30 days away, however, it will be the final yield estimate. Passage of the USMCA trade agreement was viewed as supportive and may have helped to give prices a small boost today.

SOYBEAN HIGHLIGHTS: Soybean futures finished firmer again today with gains of 2-1/2 to 4 cents. Continued dry weather in Argentina, as well as technical short-covering, are providing a boost to prices. Today’s USDA Supply and Demand report had little impact on the market as almost all numbers were neutral. Projected carryout is 475 million bushels on today’s report, and that is the same as November. World projected carryout for the 2018/19 crop year came in at 109.8 million metric tonnes vs an average estimate of 110 million. Lastly, projected carryout for the year ahead drops to 96.4 million metric tonnes, below the pre-report estimate of 96.2 million. A lack of farmer selling and continued good demand provided underlying support, as did the agreement to the Mexico/Canada Agreement signed today.

WHEAT HIGHLIGHTS: Wheat futures finished with gains of 1 to 5-1/4 cents on all three exchanges. KC led the way higher as Mar closed 4.31-1/4, up 5-1/4. Chi closed up 3/4 to 2-3/4 and Mpls steady to 4-3/4 higher. Continued dry weather concerns in the Plains region provides underlying support for KC wheat. Today’s USDA report was slightly friendly with projected carryout at 974 million bushels vs the pre-report estimate of 1 billion and the USDA November estimate of 1.14 billion. A strong export pace has been helpful to price as has weather uncertainties in Australia due to dry weather and as mentioned early in the western regions of the U.S. There is a continued rumor that Russia may have less wheat available for export in the year ahead. Beyond that, wheat prices continue to find direction from the U.S. dollar which was weaker throughout the session.

CATTLE HIGHLIGHTS: Cattle markets made mixed closes today, with Dec lives down 30 cents to 119.87, Feb lives were down 17 cents to 124.57, and Apr lives were down 35 cents to 125.05. Jan feeders were up 12 cents to 141.65 and Mar feeders were up 25 cents to 142.52. Choice beef values were down 50 cents this morning to 223.14 after closing at their lowest value yesterday since October 23 at 232.61. Beef values were down nearly 4% last week, and given the dry weather last week and forecasts for dry weather through this week, cash cattle could begin to turn lower. Seasonally speaking, cattle futures can move higher through the end of the year, but there is also reason to expect a selloff come Q1. Beef production from Q1 to Q2 is expected to increase by 545 million pounds, the biggest increase in production since 2006. In 2006, Apr cattle made a contract high in mid-January and then lost 19% in value by April 5. Feb lives opened higher today, testing their 20-day moving average resistance levels and then found sellers to push prices lower. Apr lives never tested resistance at the convergence of the 10 and 20-day moving average levels. Jan feeders closed higher but couldn’t muster a finish above nearby resistance at the 10, 50, and 200-day moving average levels.

LEAN HOG HIGHLIGHTS: Hog markets made positive closed today, with Dec up 47 cents to 60.47, Feb hogs were up 1.27 to 67.97, and Apr hogs were up 1.22 to 74.20. The CME Lean Hog Index was down 37 cents to 58.12 after making four consecutive higher closes. Carcass cutout values closed 10 cents lower yesterday afternoon to 81.98 but jumped 2.75 today to 84.73. The major development in hog markets today was that the U.S. finally signed the USMCA trade deal between the U.S., Mexico, and Canada. This should help boost exports to Mexico, much needed given the recent production pace. Feb hogs were able to punch back above their 10-day moving average resistance level today after disappointing action below that level for the past three sessions. Prices are again tracking towards the high end of the recent trading ranges though upside looks limited unless a deal between the U.S. and China can get signed. Near-term resistance for both the Feb and Apr contracts lies at the overhead 20-day moving average levels at 69.05 and 75.35 respectively.

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