Stewart-Peterson Market Commentary

Closing Commentary - June 23, 2017

Top Farmer Closing Commentary 6-23-17

CORN HIGHLIGHTS:Corn futures stumbled for the fifth consecutive day, as prices finished 3-5 cents lower. Front month Jul was down 5 cents to 3.57-3/4, while Dec corn finished 5-1/2 cents lower to 3.75-1/4. This ended a difficult week for corn futures as the Jul contract posted a 26-1/4 cent loss, while Dec lost 26-3/4 cents. A combination of overall weakness in the grains, Jul options expiration and a wet weather forecast kept selling pressure active in corn markets this afternoon as the Jul contract posted its lowest close since 12/1/2016. This afternoon, Jul options expired. Prices have a tendency to gravitate toward the largest area of open interest, which on Jul corn was the 3.60 put level. Weather forecasts across the Midwest have stayed unsupportive as rain fell across the majority of the northern Corn Belt to the eastern half this afternoon. The amount of rain in the eastern Corn Belt has Indiana and Ohio already lagging in crop conditions. Problematic wet conditions may show up on Monday's crop progress numbers, but with most forecasts lacking extreme heat and dryness, it may be difficult to find buyers in the grain markets.

SOYBEAN HIGHLIGHTS:Soybean futures finished mixed to mostly lower as front month Jul finished 1/2 cent higher to 9.04. Nov beans were down 2-1/4 cents to 9.11. Like corn, it was a difficult week for the bean market as Jul beans lost 34-1/2 cents, and Nov posted a 39-cent drop. Like corn, beans suffered 5 consecutive days without any major buying support, while weather forecasts remained the most negative influence over the marketplace. Forecasts for a wet and cool pattern over the next week moving into July would be overall supportive of this year's developing bean crop, which could add to an already burdensome supply. Along the Ohio Valley River heavy rain could create flooding, which could effectively limit this crop and show up on Monday's crop condition numbers. This was not enough bullish mindset to overcome sellers in the marketplace. With today's close, Jul beans tested and held the 9.00 support level but posted its lowest close since March 2016. Nov beans, following suit, posted its lowest close today since 8/2/2016. The technical picture looks weakened, as weekly charts posted outside negative signals, which could follow through with additional selling into next week. With additional acreage and favorable weather, the path of least resistance for prices is sideways to lower.

WHEAT HIGHLIGHTS:Wheat futures maintained buyer interest early but eventually fell to selling pressure in the grain market, led by the corn market. Front month Jul Chi wheat was down 1-1/2 to 4.59-3/4, while Sept was down 1-3/4 to 4.73. Front month Jul KC wheat contract was down 3-1/2 cents to 4.64-1/4, while spring wheat stayed supported at 6.61-1/4 but still traded 12 cents off of today's intraday high. For the week, Jul Chi posted a 5-1/2 cent loss, while Sept dropped 8 cents. Wheat futures were in a tug-of-war this afternoon, as the strong bullish influence from the spring wheat drought issues in the northwestern Plains was outweighed by the favorable weather conditions for the majority of the Grain Belt and this year's corn crop. KC wheat harvest had a week of progress and will be mostly dry looking forward, which could add selling pressure. Current yields at this time for this year's HRW harvest have been running relatively in line with last year's numbers with no dramatic surprises despite difficult weather conditions earlier this spring. The 7-day forecast for the northern Plains continue to run drier overall, which should stay supportive underneath the spring wheat markets and will likely be reflected in Monday's crop condition scores.

CATTLE HIGHLIGHTS:Cattle futures closed slightly higher today, further consolidating before this afternoon's Cattle on Feed report and likely some short profit-taking as well. Marketings were reported this afternoon at 109%, versus the average guess of 108.5% and within the range of guesses from 103.4% to 111%. Placements were reported at 112% versus the average guess of 110.4%, again within the range of guesses from 106.5% to 114%. The on feed number was pegged at 103% versus the average guess of 102.4% and very close to the high end of range of guesses from 101.7% to 103.6%. This is an overall bearish report and will likely pressure prices on Monday and through the week.

LEAN HOG HIGHLIGHTS:Mostly negative closes in hog markets today were a continuation of the selloff yesterday and a reaction to a mixed Cold Storage report. The nearby Jul contract closed 27 cents lower to 85.30, Aug closed 1.22 lower to 78.65, and Oct closed 67 cents lower to 68.20. Compared to the normal seasonal decline in frozen pork stocks of 5%, a drop of just 0.5%, means that there is a fair amount of pork supply backed up in freezers. Hog slaughter today was reported at 419,000 head, versus 417,000 head last Friday and 401,000 head a year ago. Yesterday afternoon, carcass cutouts closed 1.57 lower to 99.52, but cracked the 100.00 barrier by midday, up 1.42 to 194.00. Carcass cutout values above 100.00 going into next week would be a supportive fundamental factor. Both the Aug and Oct futures traded down to their 50-day moving average levels and subsequently bounced back up. Both of those contract months, however, remain well below their 10 and 20-day moving average levels. It is also likely that much of today's selling was profit-taking. The Jul contract picked up 2.97 this week, Aug lost 47 cents, and Oct gained 1.42. Depending on when long traders entered the market, big profits were possible.

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