Top Farmer Closing Commentary 3-13-19

CORN HIGHLIGHTS: Corn futures finished with gains of 1-1/4 to 4-1/4 cents as nearby Mar led today's gains closing at 3.61-1/2 with prices finishing higher for the third consecutive session. May closed 3-3/4 higher at 3.70-1/4 and new crop Dec 1-3/4 higher at 3.94. Bull spreading was noted. A lack of strong farmer selling, firmer wheat prices in recent sessions, and persistent rumors that China is in the market to buy up to 3 million metric tonnes of U.S. corn deliverable from the Pacific Northwest all help provide underlying support. Dampening upward price movement, or enthusiasm to be long corn, was a poor export sales figure today at 14.6 million bushels. The year-to-date total is 1.610 billion, which now lags behind last year's 1.717 billion.

SOYBEAN HIGHLIGHTS: Soybean futures ended the day quietly and mixed. Mar gained 1/2 cent closing at 8.89-1/2, while new crop Nov lost 3 closing at 9.32-3/4. The 10-day moving average acted as overhead resistance this morning as prices tried to move through this level but failed to close above it. We are concerned that new crop beans could be on a long slippery slope to lower prices, particularly we're not necessarily convinced farmers will move to more corn acres. The most recent USDA estimate has a 3 million acre increase for corn, coming primarily from soybeans. This creates an incentive for bean prices to hold for now but as spring planting goes well and the Southern Hemisphere crop becomes more readily available to the market as it finishes up harvest we are concerned prices may have further downside in front of them. Supporting prices today was an accent on the export sales figure at 70.3 million metric tonnes. Yet, this was anticipated and reflects nearly a million metric tonnes purchased by China. Year-to-date sales at 1.513 billion, while strong from a historical perspective, still trails last year's 1.810. Otherwise news of consequence, particularly the tariff front, was lacking today.

WHEAT HIGHLIGHTS: Wheat futures recent sporadic nature continued today with Chi gaining anywhere from 3-3/4 to 8 cents, while KC finished mostly unchanged, and Mpls up 2-1/4. Weekly export sales at 9.7 million bushels were a disappointment. New news of consequence is lacking. There's much out there but nothing that has strong directional trend biases. Indicators that parts of Africa, particularly the northern regions which are wheat producing areas, remain dry and is being viewed as supportive. On the other hand, expectations for larger inventories elsewhere, particularly India, seem to be enough to keep rally potential in check. We're still scratching our head as to why the market dropped as fast and far as it did, and we keep coming up with the same general conclusion which is export business was a disappointment and fund traders that were long moved out of positions and may have reversed. Technical sellers likely sold when support was violated on charts and continue to add to positions. Our point; look for the market to continue to correct but the idea of a strong turn to the topside is not likely and will likely only occur should prices reflect additional weather concerns. We'll be patient making sales, however. For now hold on the short futures.

CATTLE HIGHLIGHTS: Cattle futures made higher closes today, finding enough buyer interest on stressful feed lot conditions this week to again stymie speculative long liquidation. Apr lives were up 72 cents today to 127.40, Jun lives were up 1.02 to 120.35, and Aug lives were up 82 cents to 116.45. Mar feeders were down 45 cents to 141.10, Apr feeders were up 52 cents to 144.65, and May feeders were up 27 cents to 146.35. Choice beef values were up 2 cents yesterday afternoon to 228.24, their highest value since May 30. Choice beef was off slightly this morning, down 40 cents to 227.84. Short-term beef supply should stay relatively tight with incoming blizzard conditions for much of the Plains this week. This will worsen already muddy feed lot conditions and keep weights light. However, the 6-10 day forecast does get significantly drier. U.S. beef export sales for the week ending March 7 were reported this morning at 12,800 tons versus the previous 4-week average of 32,875 tons. Cumulative sales for 2019 have reached 270,000 tons, 7.5% behind last year's pace. Apr live cattle futures closed below their 50-day moving average today for the third session in a row. This is a negative technical development, and without surprise positive fundamental news soon, funds could continue to liquidate out of front month ownership positions. Deferred live cattle months posted a positive day technically, with Jun pushing through and closing above both its 10 and 20-day moving average resistance levels. Aug futures showed similar price action, closing just 77 cents off of contract highs.

LEAN HOG HIGHLIGHTS: Hog markets picked up triple-digit gains yet again today, with Apr up 2.32 to 65.80, Jun up 2.70 to 83.52, and Jul was up 2.30 to 86.37. CME Lean Hog Index was up 74 cents to 53.12, its highest value since February 25 and its largest daily jump since January 11. Carcass cutout values closed 23 cents higher yesterday afternoon at 67.85, their highest value since February 4. Carcass values were up another 72 cents this morning to 68.57. China's national average spot pig price dropped slightly last night, down 0.2%, but it is still up 8.87% for the week, 20.51% for the month, and 31.89% for the year. China's hog herd has taken enough losses that they have already begun to import foreign pork products. Brazil's pork exports in February were a record high and were up 14% from January led by a jump in exports to Asia. Though recent reports suggest a U.S./China trade deal may not be done until April, U.S. pork sales to China this week of 23,800 metric tonnes is plenty to show that China needs pork. Apr futures tested and failed for the second session in a row to break through their 100 and 200-day moving average resistance levels. Apr hogs have not closed above both of those levels Since December 17. Jun futures made their highest close today since December 7, and Jul made a new contract high today.

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