Top Farmer Closing Commentary 2-9-18

CORN HIGHLIGHTS: After three consecutive sessions with positive closes, corn futures edged lower today losing 2-1/4 to 3-3/4 cents, as nearby Mar led today's drop. Mar closed at 3.62, while new crop Dec lost 2-3/4 closing at 3.92-1/4. Nonetheless, prices firmed for the week, and although gains were small, the market did receive positive news from different venues. Export sales were very solid, and the Supply/Demand report was also viewed as positive. We can't help but think that the market low could very well be in place, and that from a technical perspective, a downtrend, followed by a sideways pattern, and an upturn (otherwise known as a saucer bottom) would suggest that futures are going to now be viewed as opportunities to buy on price dips rather than add additional short positions into weakness. Funds were noted buyers throughout the week. From a planting perspective, less-than-ideal conditions in some parts of Brazil for second crop corn, along with expectations that if weekend rains aren't strong enough, much of the South American crop may struggle as well. Nonetheless, there are good chances for rain in parts of Argentina, which by some accounts has experienced generally dry conditions on 50-60% of their crop land.

SOYBEAN HIGHLIGHTS: Soybean futures ended the week on a soft note, losing 4-1/2 to 5-1/4 cents, as May led today's drop, closing at 9.93-1/2. Mar closed 4-3/4 at 9.83, above last Friday's close of 9.78-3/4. New crop Nov lost 4-1/2, closing at exactly 10.00, in the middle of its recent trading range. The good news this week was that prices had a soft start on 2/6 trading as low as 9.89, and found new buying interest. For the week, Nov beans gained a penny. Additional chances for rain in Argentina weighed on futures after a strong positive price turnaround on Tuesday. Yet, the USDA report on Thursday adding 60 million bushels to carryout, put a damper on rally potential, as did a cautious approach into the weekend, as we feel traders trimmed positions not wanting to trade against South American weather.

WHEAT HIGHLIGHTS: Wheat futures softened today with losses noted in both Chi and KC, as ideas of increased moisture chances and less threatening weather weighed on futures. Mar Chi lost 7-1/4, closing at 4.49, ending the week gaining 2-1/4 cents. Mar KC lost 9, closing at 4.65, also finishing pennies higher for the week. But, in the end non-consequential as the market pushed through 40 and 50-week moving averages by mid-week, but failed to close above these levels. Commercial selling was noted this week. We're not necessarily convinced the weather forecast, which does seem to indicate a slight increase in moisture over the next week, is going to be a game changer, as most of the key-growing areas remain very dry as indicated by drought maps.

CATTLE HIGHLIGHTS: Cattle futures ended the week with mixed finishes, as futures continue to consolidate above support. The nearby Feb contract closed 75 cents higher to 126.52, Apr closed a dime lower to 123.62, and Jun closed a dime lower to 115.42. Stock market volatility for the sixth session in a row continues to raise questions about long-term beef demand. Beef demand questions were reflected in beef prices for today's session. Choice cuts closed 84 cents lower yesterday afternoon to 208.53, and select cuts closed 65 cents higher to 203.79. By mid-session today, choice cuts were down 2.03 to 206.50, and select cuts were down 76 cents to 203.03. At the time of this writing, there have been no noted cash trades in the country today. This would follow the logic that with packer margins dropping over 8.00 last week, they will not be looking for anymore cattle than they need. In addition, hints of weakness in beef export sales data this week and a rising dollar do not bode well for beef exports and in turn packers willingness to pay up for cattle. All major support levels were held with today's closes, but the Apr and Jun contracts did close about 2.50 lower on the week, setting a negative tone for next week.

LEAN HOG HIGHLIGHTS: Hog futures capped off a week of losses with more negative closes today. The Feb contract closed 22 cents lower to 73.17, Apr closed 60 cents lower to 68.85, and May closed 25 cents lower to 74.77. Similar to the beef market, stock market volatility is causing some skittishness when it comes to perspective pork demand. Carcass cutouts closed 42 cents lower yesterday afternoon to 76.92. By mid-session today, pork prices dropped 1.60 to 75.32. Bellies led the way lower, down 11.05 at midday to 115.65. This is more than a 30.00 drop in just a week's time. Despite the pressure, some support was found today from the oversold prices, wide basis and the lows made the past two sessions. While end-of-week short-covering was not pronounced, we could still see a bounce without changing the negative picture.




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Stewart-Peterson
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