Top Farmer Closing Commentary 2-21-20

CORN HIGHLIGHTS: Corn futures finished with losses of 1-1/2 in Mar at 3.77 to 2-1/2 in Dec at 3.86. Today was a new contract low close for Dec corn. A push through support today resumes the downtrend that has been in place since July, when prices peaked at 4.23. Export sales were supportive at 49.2 million bushels, a fourth time in the last five weeks that sales have been over 40 million bushels. Year to date sales, however, continue to lag significantly behind last year, which at this same time, were 1.508 billion bushels. This year’s total so far is 984.5. Continued concern that coronavirus may have more lasting impact and lack of purchases from China for commodities continue to weigh on corn. The USDA outlook forum indicated corn at 94 million planted acres, a yield of 178.5 bushels per acre.

SOYBEAN HIGHLIGHTS: Soybean futures finished steady, with Nov closing at 9.17-1/2 to down 2-1/4, as Mar led today’s slide, closing at 8.90-1/2. Prices, after trading firmer in the morning, gave way to weakness in the stock market, as well as commodities in general, and prices slid. By the close, prices posted a reversal on charts, suggesting that the near term recovery might be in jeopardy. Soybean meal lost over 3.00 in Mar with soybean oil in Mar a bright spot, closing 52 points higher at 30.64 cents, however still hovering near its lowest price since early fall. Export sales at 18.2 million bushels were termed neutral to negative, indicating a general slowdown in purchases, as today’s number was over 20% down from the prior 4-week average. Growing concerns from published reports that China could purchase fewer U.S. farm products than originally anticipated seem to be enough to keep commodities in general on the defensive late in the session. South American weather looks mostly conducive but could remain on the wet side, which could hinder harvest over the next 4-5 days. It was estimated that funds were net short 85,000 contracts coming into today, as well as net short 60,000 contracts of meal and 37,000 contracts of oil.

WHEAT HIGHLIGHTS: Wheat futures suffered losses of 6-1/2 to 9 cents in Chi, 4-6 cents in KC and Mpls down 1-3/4 to 3-1/2 cents. Mar Chi led today’s drop, closing at 5.51. Wheat prices did finish higher for the week, with Mar wheat closing 8-1/4 firmer with Tuesday a significantly higher day, as prices rallied through resistance and triggered buy stop orders on the heels of growing concern that locust infestations in east Africa and potentially India and Pakistan could be harmful to the wheat crop. Yet, the market didn’t seem to find much follow through after Tuesday, remaining choppy to lower. Export sales at 12.7 million were disappointing for old crop. New crop gained 2.2 million. Year to date, export sales at 18 million bushels are running ahead of last year’s 789 million. The U.S. dollar raced to its highest level in three years.

CATTLE HIGHLIGHTS: Cattle markets had a negative end to the week, though both live and feeder markets recovered from some worse mid-session losses. Feb lives were down 37 cents to 119.72, Apr lives were down 90 cents to 118.25 and Jun lives were down 65 cents to 110.27. Mar feeders were down 60 cents to 140.20, and Apr feeders were down 42 cents to 142.10. Choice beef values closed 1.07 lower yesterday afternoon to 204.50, their lowest since October 12, 2018. Choice beef bounced 25 cents this morning to 204.75. Cash trade so far this week has been seen at 120, up 1.00 from last week. It seems optimistic to expect this trend to continue, especially when beef values are collapsing. Average weights jumped six pounds last week to 903 pounds. This contradicts the normal seasonal trend for weights to fall this time of year, and 903 pounds is sharply higher than the 5-year average weight for this week at 887 pounds. Heavy weights indicate that cattle are likely backing up in the country, and this can also be related to the surplus of high quality meat that is keeping choice values under pressure. Apr live cattle briefly tested their lows today from February 12 but were able to rally back and close in the upper third of the day’s range. Today’s close below the 10-day moving average level was the first since February 13 and is a negative technical development. Mar feeder cattle had an inside session today and closed in the middle of the day’s range.

LEAN HOG HIGHLIGHTS: Hog markets were mixed to mostly lower, with Apr up 15 cents to 67.02. Jun hogs were down 10 cents to 81.85, and Jul hogs were down 35 cents to 82.72. The CME lean hog index was up 24 cents today to 55.78, making its first higher close since January 31. Carcass cutout values were up 43 cents yesterday afternoon to 64.44 in some impressive stabilization action, but the cutout was down 32 cents this morning to 64.12. Though China will be granting tariff waivers beginning in March to import U.S. ag goods tariff free, new outbreaks of coronavirus this week unsettled many markets and dampened expectations of major economic activity by the time Mar rolls around. This is likely some of the reason for pressure in the hog markets today, or at least a lack of buying in the hogs. The best traded Apr contract only posted a slightly higher close, but technically, it was a decent looking session. Apr hogs back-tested nearby support at the 20-day moving average and closed just 12 cents off of the day’s high. Momentum indicators are still pointing higher. Jun and Jul hogs also back-tested nearby support, and though closes were not positive, no technical damage was done.

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