Top Farmer Closing Commentary 11-10-17

CORN HIGHLIGHTS:After sliding more than 6 cents yesterday after a negative USDA report, futures gained 1-1/2 to 2 cents as Dec led today's comeback closing at 3.43-1/2. Today's low on Dec corn was 3.41, above yesterday's low of 3.40-3/4. The significance of this is that prices, after factoring a very bearish report yesterday, failed to retest yesterday's low, and in fact moved higher. Farmer selling remains light, and likely will so after the next couple of weeks when harvest should wrap up. Harvest has been behind schedule due to a slow dry-down for the crop and farmers having big yields to work through. Yesterday's record 175.4 bushels an acre did catch the market off guard, as the highest pre-report estimate was 174. The increase in carry-out of near 150 million bushels suggests a higher likelihood that more sideways base-building for prices, as the market chews through inventory. Outside influences that could have impact may be the U.S. dollar or Southern Hemisphere weather. Both at present have little impact.

SOYBEAN HIGHLIGHTS:Soybean futures finished with small gains of 2 cents on all futures contracts, Nov through Jul. Next Nov finished a quarter lower at 9.98-3/4, after reaching a high today of 10.03. If behind on sales for next year, get current with the recommendations, as the ratio between new crop soybean and corn for 2018 is about 2.58. This could suggest more bean acres. Plus, we like the idea of selling beans near 10.00 as we've got 10% already in place. We'll add to that position. For the week, beans were virtually unchanged with Nov futures closing today at 9.77-1/4, as compared to last Friday's close of 9.77. Yesterday prices reached their highest level in over 2 weeks, but posted a very negative looking bearish key-reversal. However, support and critical moving averages held, and prices traded to the positive side most of today's session. Good demand continues to underpin beans, as does a lack of farmer selling. Yesterday's Supply/Demand report did narrow carry-out 5 million bushels, which was viewed as supportive, but increased world projected carry-out just under 2 million metric tons, was viewed as negative. Yield remained unchanged as the market was looking for a slight downgrade. The final crop production estimate will be in January. After yesterday's reversal, bean prices may have been on the verge of falling apart, but instead held together today. Volume was relatively light.

WHEAT HIGHLIGHTS:Wheat futures gained 2-1/2 to 4 cents. Yesterday's relatively neutral, if not slightly supportive, USDA report seems to be enough to keep traders believing that a near-term, if not longer-term, low may be in place. We were encouraged with wheat prices finishing stronger for the second consecutive session, and just as important, closing above the 21-day moving average for the first time since early October. Short-covering may have been a feature today, as the trade could feel that wheat has little new reason to move lower. Expectations are that wheat acres will again be very small in the U.S. this year, and with world inventories more than adequate, could be a shortfall wheat acres elsewhere. Good export sales this week were also viewed as supportive.

CATTLE HIGHLIGHTS:Cattle futures moved sharply lower today under pressure from both the fundamental and technical fronts. The nearby Dec contract closed 1.90 lower on the day and 6.72 lower on the week to 120.57, Feb closed 1.77 lower on the day and 5.00 lower on the week to 126.75, and the Apr contract closed 1.65 lower on the day and 2.70 lower on the week to 127.10. Sellers kicked off the session to an active start, as futures closed the gap on the charts created on October 30. The bottom edge of the gap did not give any buying support, and prices quickly moved below the 20-day moving average support level. Cash trade was reported late yesterday afternoon at 122.00 vs 124.00 on Tuesday, 124.00 on Wednesday's Fed Cattle Exchange, and 125.00 last Friday. Beef values were mixed for today's trade session. Choice cuts closed 39 cents lower yesterday afternoon to 212.74, and select cuts closed 59 cents lower to 198.30. By mid-session today, choice cuts rebounded 1.84 to 214.58, and select cuts fell 1.09 to 197.21. While such a strong advance in choice values compared to select cut values is normally a bullish factor, many believe that beef prices may be outrunning demand and will cause a further cash pull-back. As previously mentioned, technical sellers were very active today as well. Traders with long positions exited the market today when the gap was closed and new shorts entered after the 20-day moving average was breached. Today's close below that level for the Dec contract was the first since September 5. The next support level for the Dec contract should come in at the 119.00 level, and pass that to the 50-day moving average at 117.00.

LEAN HOG HIGHLIGHTS:Hog futures closed the day with mixed results on very light trade. The nearby Dec contract closed 70 cents lower on the day and 2.62 lower on the week to 62.47, Feb closed 2 cents higher on the day and 1.72 lower on the week to 70.25, and Apr closed 2 cents higher on the day and 1.40 lower on the week to 74.05. Carcass cutout values closed 65 cents higher yesterday afternoon to 81.32, and were up another 37 cents at midday today to 81.69. Butts and hams led the way higher, up 2.25 and 1.44, respectively. Belly prices were up 86 cents at midday to 122.47 vs 113.62 last week. Some are worried that a turn lower in belly prices could significantly impact carcass cutouts into the end of the year. Technicals for today's session were decidedly mixed. The nearby Dec contract experienced a moderate sell-off, but was able to hold its 200-day moving average support level. The deferred contracts fell below their 20-day moving average support level for the majority of the session, but were able to rally and close back above them. Prices are no longer oversold.




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