Stewart-Peterson Market Commentary

Closing Commentary - April 28, 2017

Top Farmer Closing Commentary 4-28-17

CORN HIGHLIGHTS:Corn futures moved lower today losing 1-3/4 to 4 cents, as May led today's drop, closing at 3.58. A 6-10 day outlook would suggest a better window for planting next week, along with a warm-up next weekend, seem to be enough to keep corn prices on the defensive today. For the week, May corn gained a penny, while new crop Dec gained 3-cents. In essence, prices held this week with planting delays, but gave away gains from earlier in the week when forecasters upped the chances for rainfall totals for this weekend. Export sales remain active, but other than that, news is lacking to provide direction. Domestically, corn use remains high, and a screech higher in cattle prices would suggest that cheaply priced corn will come into stronger demand as the cattle herd will continue to grow. Large daily slaughter numbers in hogs also indicate strong usage.

SOYBEAN HIGHLIGHTS:Soybean futures had a quiet session, ending with small losses as May was down a 1/2-cent, closing at 9.45-1/4 and new crop Nov was down 1-1/4 closing at 9.53-1/4. It was a quiet week for soybeans as Nov lost just over 5-cents and May 6-cents. Considering the higher volatility that beans often have associated with price movement, this week was somewhat of a dud. After dropping from higher prices this winter, attention focused on supply and the big numbers coming out of South America. That now appears to be old news. Export sales this week were outstanding and continue to suggest that demand is running better than USDA forecasts. This could imply a declining carryout on subsequent USDA reports.

WHEAT HIGHLIGHTS:Wheat futures ended mostly higher today with gains of 1 to 5-cents in Chi, while KC gained 2 to 4-cents, and Mpls 1 to 3 cents. Concerns of cold weather may have provided some underlying support for wheat, but any expectation for significant crop loss due to freeze damage, doesn't appear to have much relevance. Wheat prices are holding their own after punching into new lows on Tuesday. On Tuesday, prices posted a bullish key reversal, and have finished higher in three of the last four sessions. This would suggest to us that selling interest is minimal when prices move lower, and with funds record short, we do not believe there is a lot of reason to expect prices will continue to find significant new selling interest.

CATTLE HIGHLIGHTS:Cattle futures had another strong day with the nearby Apr contract going off the board 2.40 higher at 138. Jun closed 2.50 higher to 124.02, and Aug closed 2.27 higher to 120.05. Cash trade was quiet today, though trade as high as 140 yesterday was able to sustain buying interest today. This was as much as 10.00 above last week, and with the Apr futures going off the board today, Jun is at a discount of up to 16.00 below cash. Cattle are still being pulled ahead of schedule with weights dropping quickly to meet packer demand. Beef cutouts were looking very strong at midday with choice up 1.85 to 221, and select up 2.24 to 207.92. The fundamentals remain on the bull's side. Technicals, on the other side, seem to suggest a correction could be coming. All contracts are now significantly overbought, as the extraordinarily fast pace of this rally is likely too much too soon. However, with the massive discount of futures to cash, the market needs to close that gap.

LEAN HOG HIGHLIGHTS:Hog futures finished moderately higher on follow through buying interest from yesterday's gains and some positive supply and demand prospects. The nearby May contract closed 7 cents higher at 66.97, Jun closed 1.17 higher to 74.00, and Jul closed 1.20 higher to 75.22. The market continues to believe that consumer demand will increase as we move into May and the summer months. Chinese demand is also likely to increase with prices still at a relatively affordable level. Weekly slaughter levels, 4-6% ahead of pace during the month of March, have backed off to a 2-3 increase over last year. Weights have been relatively steady, and firmer cash trade in Iowa and Minnesota yesterday afternoon also added to the bullish feeling. Carcass cutout values closed 18 cents higher yesterday to 73.65 and were up another 2 cents at midday to 73.67. The technical price action was very friendly today with the near month contracts approaching their 50-day moving average resistance levels. We have not seen closes above these levels since mid-March. The fact that traders were willing to own hogs over the weekend is an overall friendly sign.

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