Stewart-Peterson Market Commentary

Closing Commentary - November 15, 2018

Top Farmer Midday Update 11-15-18

Corn: Corn futures are up 3 to 4 cents this morning on a positive feeling for the entire grain sector. The Dec contract is up 3-3/4 cents to 3.70-3/4, Mar is up 3-1/2 to 3.81-1/2, and May is up 3-1/2 to 3.89-1/4. Crude oil is up about 70 cents, a supportive factor. The biggest reason for grain positivity this morning was news that China has delivered a written response to U.S. demands for trade reforms. This is seen as a step forward in trade negotiations. During yesterday's session, funds were net even in corn, keeping their net long position at about 16,000 contracts.

Soybeans: Soybean futures are up 8 to 9 cents this morning, with Jan up 8-1/2 cents to 8.92, Mar up 8-3/4 cents to 9.05-1/2, and May up 8-1/4 cents to 9.18-1/2. Positive trade news with China is the major supportive factor this morning, in addition to prices holding onto the 50-day moving average support levels yet again yesterday. China formally responded to some U.S. trade demands, leading many traders to believe that we are moving closer and closer to a trade deal. U.S. tariffs on 200 billion dollars of Chinese goods is set to increase from 10% to 25% on January 1, so the clock is ticking to make progress. Funds bought 3,000 contracts of beans yesterday and are now about 55,000 contracts short.

Wheat: Wheat futures are rallying this morning, with the Dec Chi contract up 4 cents to 5.07, Dec KC up 1-1/2 cents to 4.82-1/2, and Dec Mpls wheat up a penny to 5.77. Positive trade news is providing the majority of the lift this morning, in addition to wheat markets hopefully finding some technical support. Russia's export pace should slow in the second half of the marketing year, and many are expecting a steep drop in stockpiles for key exporters which could push prices higher into the new year. Rains in South America continue to cause issues for wheat quality. Funds sold 5,000 contracts of Chi wheat yesterday leaving their net position short about 56,000 contracts.

Cattle: Cattle futures are moderately higher today, finding some technical support in the front months and attempting to stabilize. The nearby Dec live cattle contract is up 75 cents to 115.35, Feb is up 37 cents to 118.97, and Apr lives are up 55 cents to 121.12. The Dec contract tested its 200-day moving average for the fifth session in a row this morning, and subsequently found buyers to push back above the 100-day moving average line. Feb lives have been unable to break through their 100-day moving average level, while the Apr contract tested and bounced back above its 100-day moving average for the third session in a row. After making a bullish key reversal earlier this week, prices appear to be stabilizing despite low beef values. Technical support levels are holding strong and keeping sellers on the sidelines.

Hogs: Hog markets are higher this morning, with the Dec contract up 45 cents to 57.45, Feb up 1.00 to 63.35, and Apr up 1.15 to 68.90. Similar to the grains, hogs are finding buyer support on positive trade news with China. If China does lose a significant amount of their herd to African swine fever, a trade deal could make U.S. pork available to Chinese buyers. Both the Dec and Feb contracts are making another test of their 200-day moving average levels, while the Apr contract is trading above its 20-day moving average for the first time since November 6. Summer month hogs retain their sharp premiums due to anticipated AFS problems coming to a head at that time.

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