Stewart-Peterson Market Commentary

Closing Commentary - December 18, 2018

Top Farmer Midday Update 12-18-18

Corn: Corn futures are slightly higher today, though are still experiencing very quiet trade. Mar corn is up 1-3/4 cents to 3.85-3/4, May is up 1-3/4 to 3.93-1/2, and Jul is up 1-3/4 cents to 4.00. Markets started the day lower but have since gravitated higher on market talk that China is expected to buy U.S. corn soon but Sinograin has not yet been given the full government go ahead to begin purchases. The market is still trading well within its recent ranges after gapping up two weeks ago, but the formation is beginning to look more like an island top than a breakaway gap. This would imply more downsides on the table in the near term. Funds sold 3,000 contracts of corn yesterday and are now thought to be long about 99,000 contracts.

Soybeans: Soybean prices are firming again today, with the Jan contract up 4-3/4 cents to 9.09-1/2, Mar is up 4-1/2 cents to 9.22-1/2, and May is up 4-1/4 cents to 9.35-3/4. Prices have tested their 10-day moving average resistance levels today but are currently trading just a tick below. The Trump Administration announced yesterday that it has approved the second round of payments in its trade aid package for farmers hurt by the trade war with China. Billions more may be spent through 2019 on additional payments to producers of soybeans and other farm commodities. Many are speculating that China will buy additional U.S. beans this week, but at this point there have been no official announcements. Funds bought 4,000 contracts of soybeans yesterday and are now short about 13,000 contracts.

Wheat: Wheat markets are soft this morning, currently trading within yesterday's ranges and further consolidating. The Mar Chi contract is down 2-3/4 cents to 5.32-1/2, Mar KC wheat is down 3-1/4 cents to 5.18-3/4, and Mar Mpls wheat is down 4-1/2 cents to 5.80-3/4. Extremely cold temps forecast for the Russian wheat-growing areas over the next couple of weeks are raising concerns about winter kill, but without evidence at this point, markets appear content to consolidate as recent price action has left wheat prices nearly overbought.

Cattle: Cattle markets are steady to very slightly higher this morning after taking losses yesterday. The nearby Dec live cattle contract is steady at 119.02, Feb is up 27 cents to 121.82, and Apr lives are up 35 cents to 124.20. Jan feeders are up 30 cents to 145.67 and Mar feeders are up 25 cents to 143.57. Feb futures have been unable to break back above their 10-day moving average resistance level while the Apr contract is trading just above its 10-day moving average. 6-10 and 8-14 day forecasts are shifting towards wetter-than-normal conditions which is a supportive force today. Show lists are smaller this week as well, keeping prices from breaking through near-term support. Feb lives have yet to close their gap from yesterday, but the stabilizing price action is impressive.

Hogs: Hog markets are falling lower again this morning, with the Feb contract down 1.40 to 62.42, Apr is down 1.15 to 67.82, and Jun is down 82 cents to 81.55. Because prices have fallen below their relatively tight recent consolidation range, multiple indicators are giving oversold readings. There is market talk this morning that China will be buying more U.S. pork sometime this week as the African swine fever situation intensifies. However, without evidence that significant amounts of U.S. pork are moving to China, the market appears somewhat uncomfortable with current price levels.

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