Top Farmer Closing Commentary 7-12-19
Stewart-Peterson Commentary - SPC - Fri Jul 12, 3:43PM CDT

CORN HIGHLIGHTS: Corn futures finished with strong gains for the second consecutive day, as front month contracts were 9 to 11 cents higher. Today was the last trading day for Jul corn, which finished its trading session at 4.49-1/2. Sep corn futures traded 10 cents higher to 4.54-1/4, while Dec corn was 11-1/4 cents higher to 4.59-1/4. For the week, Sep corn futures finished 15-1/2 cents higher, while Dec corn finished 17 cents higher. As the market moved off of yesterday's USDA supply and demand numbers, which were overall bearish but still stated about the resurvey of acres for the August report, end users and commercials stepped in to secure corn supplies. Today's trade was strongly supported by technical action, as well as weather forecasts over the next couple of weeks. Afternoon weather models showed the building of a heat ridge over the heart of the Corn Belt for the next 6-10 days, with strong heat forecasted well into next weekend. Rain chances will be minimized, but the movement of Hurricane Barry from the Gulf Coast could provide some short-term relief. Regardless, this year's corn crop is in various states of maturity and has been dealing with stress from a difficult planting season, and now with heat being brought into the forecast, plants may be more susceptible than usual at this time. A concern regarding final outcomes due to acres and crop quality is that additional stresses will likely bring premium quickly into the market. On the demand front today, Panama was a purchaser of 2019/20 corn picking up 4.1 million bushels on the overnight.

SOYBEAN HIGHLIGHTS: Soybean futures held strong gains throughout the day with contracts 10 to 14 cents higher. Front month Aug beans were 14-1/4 cents higher to 9.13-1/4, while Sep was up 14 to 9.19. The Jul contract finished trade this afternoon as it settled its final price at 9.06-3/4. For the week, Aug beans gained 37-1/4 cents, while the Nov contract finished 37 cents higher. Prospects of hot weather across the Plains in extended forecasts provide fuel underneath the soybean market as it finished a very strong week in overall trade. After posting early week lows, soybean prices have rallied posting hook reversals on weekly charts which could bring some additional short covering next week. With long-range weather models bringing heat across the Plains, the soybean crop has been already been struggling with crop conditions and crop ratings, and those numbers will likely stay unchanged or even deteriorate on next week's crop progress numbers. Though the global bean supply picture is relatively plush with beans, concerns regarding the quality and quantity of the U.S. crop developing this summer are enough to bring momentum into prices as Nov beans posted their highest weekly close since early April. If the long-range forecast materializes, additional short covering could ensue as managed money positions may be on the wrong side of the soybean market if the supply pile is a concern. Regardless, weather markets will show a high amount of volatility, and if forecast models change, prices could quickly erode.

WHEAT HIGHLIGHTS: Wheat futures finished with mild gains as prices saw some follow-through buying after yesterday's strong trading session. Front month Chi Sep wheat finished 1-1/2 higher to 5.23, while Dec was 2-1/4 cents higher to 5.35. Jul Chi wheat finished its trading life this afternoon with a settled price of 5.36-1/4. For the week, Sep wheat futures gained 8 cents, while the Dec contract moved 9-1/2 cents higher. Strength was also noted in other wheat classes with the Sep KC hard red winter wheat contract up 5-3/4 to 4.67-1/4 and spring wheat gained 1-1/2 cents in Sep to 5.42. Yesterday's rally in the wheat market was reflective on the global wheat supply and may have a shorter term impact on prices than even current conditions in the U.S. The USDA cut 10.5 million metric tonnes of production out of key global exporters of wheat, and reduced carryout levels on the global scale. In addition, the USDA adjusted wheat demand slightly higher for U.S. bushels which helped bring money flow into the wheat market with yesterday's strong rally. Today, wheat futures were more of a follower to other grains but still managed some positive gains by the end of the day. Today's prices were more of a consolidative nature with some spreads being traded between KC and Chi given the strength of those two markets. As we move forward, weather forecasts will likely stay supportive for harvest progress to continue which keep rallies limited in the short term. World stocks are still relatively full and will likely keep wheat prices in a consolidative fashion unless other grains push aggressively higher in the short term.

CATTLE HIGHLIGHTS: Live cattle futures saw strength today as contracts were 20 to 60 cents higher. Front month Aug cattle was up 60 cents to 108.47, while Oct cattle gained 65 cents to 109.97. Today finished a solid week for cattle as the Aug contract gained 1.47 and Oct cattle finished 1.90 higher for the week. Despite weakness seen in the feeder cattle market as contracts ranged from 50 cents to 1.00 lower due to strength in grain prices, live cattle futures saw support throughout this trading session today. Optimism about cash cattle trade being steady to hopefully higher helped bring buyer support into the cattle market. At the end of the day, cash trade was still relatively undeveloped with scattered business starting to develop. The bids for live cattle were at $114, which was higher than last week's numbers, while scattered dress trade was $182 to $183, $2 higher than last week's weighted average in Nebraska. Boxed beef values showed weakness throughout the week but were mixed in today's trade with choice carcasses 11 cents higher at midday to 213.88 and select carcasses down 17 cents to 190.62. In addition to potential improvement in cash trade, the cattle market may be looking towards recent weather forecasts calling for heat across cattle country over the next couple of weeks. Strong heat can limit gains and slow cattle movement, which could be supportive to cash prices in this time frame.

LEAN HOG HIGHLIGHTS: Lean hog futures finished mixed today with front month Jul down 55 cents to 71.05, but deferred contracts from Aug thru Feb saw triple-digit strength. Aug hogs were up 1.47 to 80.65. For the week, Jul hogs stayed relatively quiet, but did post a 1.07 loss, while Aug hogs showed good technical strength and traded 3.60 higher. Hog futures saw buying strength come back into those deferred contracts after triple-digit losses yesterday as the market was disappointed with export sales not showing additional sales of pork to China. Hog markets finished the week strong, as the Aug contract posted its highest close since mid-June and settled above the key 80.00 psychological level. Cash prices have stayed relatively choppy and have been lacking support. Retail values have also seen prices fall this week. At midday, pork carcass values fell an additional 1.81 to 70.36 wrapping up a difficult week in those carcass values. This kept pressure on the Jul contract as the market is moving away from an area of heavy supply of slaughter animals and a buildup of product to a window of more manageable slaughter numbers. In addition, forecasts for high temperatures across the Plains over the next couple of weeks may add support as weight gains and hog movement could be hindered due to high temperatures.




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