Stewart-Peterson Market Commentary

Closing Commentary - April 26, 2018

Top Farmer Closing Commentary 4-26-18

CORN HIGHLIGHTS: Corn futures had a quiet session and ended as such with a tight trading range of 3 cents in May futures, which finally closed 1/2 cent lower at 3.86. New crop Dec closed down a penny at 4.11-1/4, still below the contract high for this calendar year of 4.16-1/2, but above the most recent low of 4.02-1/4. Prices, for the most part, are range-bound over the last 60 days with futures trading both higher and lower, but the majority of the time futures are trading within a nickel trading range where the market is today. Farmer selling remains light when prices dip and picks up when prices are strong. We note this through the Commitment of Traders report which indicates how short or long the commercial firms are. They have been aggressively short, with a note in increased positions when prices have rallied.

SOYBEAN HIGHLIGHTS: Soybean futures ended uneventful with May closing 1/2 cent higher at 10.28, while new crop Nov lost 1-1/2 closing at 10.23-1/4. Expectations that near-term demand continues to remain strong may have been in part responsible for today's upturn on old crop, as expectations are that light farmer selling and good exports provide support. Yet, the bean market continues to look somewhat tired. While we do see back and forth trade activity, we don't see the momentum the market had in recent weeks, and therefore, it looks tired. If you're holding old inventory, we continue to suggest you sell into rallies and get current with recommendations. While farmers' holdings may be light, the supply of beans available to the world will grow in the weeks ahead as the Brazilian crop continues to make its way toward port. Soybean oil continues to be a drag in the market as well, as it too continually pushes in the new contract lows.

WHEAT HIGHLIGHTS: Wheat prices gave back some of the recent gains, with Jul Chi losing 9-1/2 closing at 4.89-1/2, while Jul KC lost 5-1/2 closing at 5.21. The spread between KC and Chi is on the rise with Jul KC 31.5 above Jul Chi, the highest this spread has been since early April. Mpls wheat ended the day steady in May and down 3-1/2 in Sep. Better planting weather could be on tap for the spring wheat belt, and consequently prices struggled today. Overhead resistance was also triggered at the 10-day moving average (Sep Mpls).

CATTLE HIGHLIGHTS: Cattle futures ended the day with mixed closes, with all but the Apr futures putting in a very negative day. The Apr contract closed 60 cents higher to 122.52, Jun closed 1.22 lower to 104.35, and Aug closed 1.25 lower to 104.02. Weekly U.S. Beef Export Sales for the week ending April 19 were reported at 18,600 metric tons versus the previous 4-week average of 20,300 metric tons. While this number is not especially bearish, especially considering 2018 sales are still running 15.1% ahead of last year's pace, it was viewed as negative and was a primary reason for the selling pressure today. Beef prices continue to strengthen with the improving weather. Yesterday afternoon, choice cuts closed 88 cents higher to 218.53, and select cuts were up 1.04 to 203.15. This is the highest choice value since April 3. This morning, choice cuts were up another 1.22 to 219.75, and select cuts were up 1.76 to 204.91. Cash bids in the country were seen today at $121 in KS and TX, but no significant sales were reported. The Jun and Aug contract months put in bearish outside days today. The Jun contract was able to hold its 10-day moving average support level, but the Aug contract closed below its 10-day moving average. Prices are still in positive territory on a weekly basis, but the price action does not exactly look bullish. The best traded Jun contract is more than 2.00 off the weekly highs, and is 40 cents below the opening trades of the week.

LEAN HOG HIGHLIGHTS: Hog futures put in triple-digit losses today, unable to draw sufficient strength from strong export sales and higher trending pork prices. The nearby May contract closed 1.22 lower to 67.32, Jun closed 1.35 lower to 74.00, and Jul closed 1.12 lower to 77.30. Carcass cutout values were 41 cents higher yesterday afternoon to 68.49. This was their highest value since April 3. Pork prices improved by 61 cents this morning to 69.10. Belly prices were up 2.51 to 90.59, showing impressive strength since the bearish Cold Storage report. Weekly U.S. Pork Export Sales for the week ending April 19 were reported today at 26,400 tons versus the previous 4-week average of 20,025 metric tons. This leaves cumulative sales for 2018 at 551,100 metric tons, 2.5% ahead of last year's pace. For the week ending April 21, IA barrows and gilts were both a pound heavier than last week and 1.3 pounds heavier than the same week last year. Heavier weights and more hogs is not bullish. Price action yesterday was impressive as prices were able to rally above the 50% retracement of the early April bounce. The majority of today's price action was below that level, violating some major support. The Jul futures are still above their 50% retracement, but closed below the 20-day moving average level for the first time since April 6.

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