Stewart-Peterson Market Commentary

Closing Commentary - April 22, 2019

Top Farmer Midday Update 4-22-19

Corn: Corn markets are sliding lower in early trade today, with May down 2-1/4 cents to 3.56-1/4, Jul down 2-1/4 cents to 3.65, and Dec futures are down 2 cents to 3.84-1/4. U.S. weather appears to be clearing up for field work, quelling some fears that excessive precipitation earlier this spring would delay planting. Increasing South American supply could shift Chinese demand away from the U.S. in the immediate term, and Argentina FOB corn offers are 35 to 40 cents cheaper than U.S. FOB offers. Still, China corn futures are rallying despite the potential for lost demand due to African swine fever. For the week ending April 11, the U.S. shipped 1.182 million metric tonnes of corn versus 1.062 million metric tonnes the previous week and 1.576 million metric tonnes the same week last year. Shipments are currently running almost 4 million metric tonnes ahead of last year's pace. Jul and Dec corn futures have both traded within a 1/2 cent of contract lows while the Sep contract made new lows this morning at 3.72-1/4. Funds bought about 2,000 contracts of corn on Thursday and are thought to be net short about 312,000 contracts.

Soybeans: Soybean markets are drifting this morning, pulled lower by questions about future Chinese demand. May beans are down 2 cents to 8.78-1/2, Jul beans are down 2-1/4 cents to 8.92, and new crop Nov soybeans are down 2-1/2 cents to 9.11. There were rumors last week that China had bought up to 24 cargos, or 1.5 million metric tonnes, of soybeans from Brazil last week as crushers took advantage of strengthening margins. The U.S. will be sending another delegation to China next week, but with the Chinese hog herd being decimated by African swine fever, the extent that China demand will return is still in question. Record-ending stocks remain a burden to the soybean market as well. Jul and Sep soybean futures have both held last Thursday's lows while Aug and Nov soybean futures have traded at their lowest prices today since November 1. The U.S. shipped 461,000 tons of beans for the week ending April 11 versus last week's total of 889,000 and 446,000 tons the same week last year. Soybean shipments are running nearly 12 million metric tonnes behind last year's pace. Funds bought about 3,000 contracts of soybeans on Thursday and are thought to be net short about 95,000 contracts.

Wheat: Wheat markets are very soft this morning, breaking through Thursday's lows and trading at their lowest value since mid-March. Jul Chi wheat is down 5-1/4 cents to 4.42, Jul KC wheat is down 7-1/4 cents to 4.18-1/2, and Jul Mpls wheat is down 4-1/2 cents to 5.25. Favorable forecasts for the U.S. and Black Sea Region are keeping sellers active, and most are not expecting a downgrade of this week's Crop Conditions report. Russian export prices fell 1.8% last week to their lowest levels since September as speculative funds continue to sell wheat in the U.S. markets. Jul Chi wheat is trading at its lowest value since March 12 while Jul KC and Jul Mpls contracts are making new lows. Export shipments for the week ending April 11 were reported this morning at 511,000 tons versus 555,000 tons the previous week and 505,000 tons the same week last year. Cumulative shipments for the 2019 marketing year have been running almost a million metric tonnes behind last year's pace. Funds sold an estimated 2,000 contracts of wheat in Chi on Thursday and are thought to be net short about 63,000 contracts.

Cattle: Cattle markets are lower this morning despite strong fundamental cash markets. Jun lives are down 1.32 to 121.35, Aug lives are down 1.22 to 118.52, and Oct lives are down 1.05 to 119.05. May feeders are down 95 cents to 150.57 and Aug feeders are down 1.35 to 159.32. Cash trade last week reached as high as $130 in NE, and beef values are at their highest level since mid-May. Above-normal temperatures forecasted for the East Coast over the next week or so should keep retail demand strong. Sellers are active this morning on Thursday's bearish Cattle on Feed report and talk of active placements so far for the month of April. Jun and Aug live cattle are holding their 10-day moving average support level, and a close below would be the first since April 3. Feeder markets are also holding their 10-day moving average levels but may be showing reversal signs after new highs on Thursday.

Hogs: Hog markets are mostly lower this morning, with Jun down 80 cents to 95.95, Jul down 1.27 to 99.27, and Aug is down 1.32 to 100.45. Despite the pressure today, little to no technical damage has been done. Futures seem to be carving out a new trading range as the market waits for more trade news or active sales to China. Chinese pig prices have been choppy recently, also a pressure point in the U.S. futures markets. Carcass cutout values are at their highest level since late June, and with the U.S. sending a delegation to China next week, trade negotiations and export sales to China will be watched very closely.

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