Top Farmer Closing Commentary 3-20-19

CORN HIGHLIGHTS: Corn futures ended the day once again with little change. Nearby May gained a 1/4 cent closing at 3.71-1/2, while new crop Dec gained a 1/4 cent closing at 3.95-1/2. Dec experienced a 3 cent trading range and May 3-3/4. Volatility remains historically low and prices continue to grind in a sideways pattern awaiting further news to provide direction. Sharply higher livestock prices, in particular pork, would suggest that pork production could likely be on the rise and that expansion over the 12-24 months on the increase. Ultimately, it means more feed supply. A rough weather environment the last 6 weeks too should increase feed supply. We believe corn prices are well supported.

SOYBEAN HIGHLIGHTS: Soybean futures edged higher with small gains of 1-2 cents as May closed at 9.06, gaining 2, and Nov at 9.40-1/4, also gaining 2 cents. Today's trading range was minimal with contracts within 7 cents from low to high. Strength in wheat helped provide underlying support, as did a positive comeback in corn. Otherwise new news of consequence was lacking. The market continues to hold its breath waiting for news on the tarrif front. Some think an agreement could be had by the end of the month. Others are suggesting that it will take until June or beyond. Whatever the case, the Brazilian and Argentine crops continue to chug along and have stabilized or improved. That along with continued competition for export business and the slow paced export sales this year continue to act as overhead resistance. Yet, bean prices have bent, but they don't break. Nov near 9.50 continues to hold, give or take 10 cents.

WHEAT HIGHLIGHTS: Wheat futures had an impressive showing today gaining between 6 and 8-1/4 cents in both Chi and KC with the nearby May contracts leading the way higher. Most impressive was a close above the 21-day moving average, something that has not occurred since early February. This might suggest that the tide of momentum is turning and wheat is beginning to pick up more buying interest on ideas that export activity will in fact pick up. By some accounts, U.S. wheat may be some of the cheapest, if not the cheapest, on the world market. Mpls gained 5 to 6 cents on continued concern that spring will be off to a late start. With a very impressive technical picture beginning to show if prices closed above the 40 and 50-day moving average today, for the first time since February 1. The 100-day moving average acted as overhead resistance. Positive relations between the U.S. and Brazil are noted as Brazil's president agreed to allow 750,000 tons of U.S. duty-free wheat into its country. This, well not a significant amount, nonetheless, is a positive event and something for which the market has been starving.

CATTLE HIGHLIGHTS: Cattle futures closed higher again today, extending their recent rally with impressive beef demand and poor feedlot conditions. Apr lives closed 45 cents higher today at 129.57, Jun lives closed 65 cents higher to 123.37, and Aug lives closed 60 cents higher to 119.32. Apr feeders were up 52 cents to 148.32, May feeders were up 1.60 to 152.12, and Aug feeders were up 1.95 to 157.52. Choice beef values closed 1.00 higher yesterday to 229.33, their highest value since May 23. Beef values slipped this morning, down 71 cents to 228.62. However, retail pork values have been rallying sharply with the African swine fever situation coming to a head, so we expect beef values to reflect the strength in meets. Flooding has been, and will continue to be, a major issues in cattle country. Not only are cattle stressed, but slaughter is also down. Slaughter last week was down 1.3% from a year ago, and beef production was down 2.3% from a year ago. Friday's Cattle on Feed report is expected to show placements down 4% from last year, marketings up .8% from last year, and on feed supply down .3% from last year. Apr and Jun futures traded within yesterday's ranges for all of today's session, they were still able to muster positive gains. The Aug contract matched yesterday's highs, while Oct and Dec made new contract highs. Feeder markets are surging out of their recent trading ranges, with the May contract making its highest close today since October 9, and the Aug contract making new contract highs.

LEAN HOG HIGHLIGHTS: Hog markets saw the second session this week with limit higher gains in all contracts from Apr 2019 to Aug 2019. Apr hogs closed at 73.82, Jun hogs closed at 90.25, and Jul hogs were at 93.07. The CME lean hog index is up 1.00 to 57.54, its highest value since January 31. Carcass cutout values closed 1.75 higher yesterday afternoon to 74.14, their best value since November 5. Pork values were up another 35 cents this morning to 74.45. Some estimates have been reported as high as 30% of the China hog herd has been destroyed in African swine fever containment efforts. Actual numbers are not known. Tomorrow's export sales report will be watched closely to see if China has kept up with their large purchases of U.S. pork products. The Apr hog contract closed at new highs today, eclipsing previous highs from November 20. Jun, May-July 2020 contracts also made new highs today.

Market Commentary provided by:

137 South Main Street, West Bend, WI 53095
Phone: 800-334-9779