Top Farmer Closing Commentary 6-12-19

CORN HIGHLIGHTS: Corn futures finished mixed today as front month contracts were 1 to 2 cents higher, and weakness in the deferred. Front month Jul corn was 2-1/4 cents higher to 4.30, and Dec corn was 1-1/2 higher to 4.48-1/2. Corn futures pushed to the top of the trading range in today's trade as Jul futures fell just short of previous highs at 4.34-1/2. Corn futures are building into a consolidation phase, and yesterday's strong move higher just moved prices to the top of the range. The market is still digesting and may be taking a breather after yesterday's favorable supply and demand numbers which saw a reduction of 3 mil planted acres, as well as 10 bu per acre off of forecasted yields. This brings carryout for the 2019/20 crop year to 1.675 bil bu, which was supported of price. The market may now be on a wait and see mode over the next couple of weeks to see if prices can push further through this barrier and challenge the next level on the range, which would have Dec corn possibly reaching to the 5.00 level. In the short term, competition from global corn exporters such as Argentina and Brazil, as well as ongoing south American harvest, may keep a lid on prices until a clearer picture overall of U.S. crop is clearly in view. Weekly export inspections will be closely watched to see if there's any more demand destruction, as last week's sales were net negative for the current crop year.

SOYBEAN HIGHLIGHTS: Soybeans were the strength of the grain markets today as contracts finished with strong gains ranging from 15 to 18 cents higher. Front month Jul beans were 18-3/4 cents higher to 8.78, while Nov beans finished 18-1/2 higher to 9.05-1/2. Short covering was the ruler of the day as managed money positions still holding a large relative short position in the bean market stepped to the sidelines on weather concerns. Yesterday, the USDA confirmed and increased carryout projections for both 2018/19 and 2019/20 crop years with both ranging to a record billion plus bushels. Today, the focus moved back to weather and potential loss of acreage due to weather conditions with approximately 30 mil acres of beans to be planted as of last Monday's crop progress numbers. In addition, the USDA Economist stated there was not enough data to make adjustments in this month's report for soybean acre and yield, but expected some adjustments to occur in the July Supply and Demand report. With longer range forecasts turning wetter, especially for the eastern Corn Belt, traders were concerned that bean acreage may come into question, which could cut into those record levels of carryout. Prices pushed to some key resistance levels today, but may be poised to move higher if forecasts dictate.

WHEAT HIGHLIGHTS: Chi wheat futures finished with modest gains up 8 to 10 cents in today's trade with front month Jul up 8-1/4 cents to 5.26-1/4, while Sep was up 9-3/4 to 5.31. KC hard red winter wheat saw gains of 5-1/4 cents in the Jul contract to 4.62-3/4, but weakness was noted in the Mpls spring wheat contract down 4-3/4 in Jul to 4.64-3/4. Wheat futures were likely supported by strength in other grains, as well as a close eye on weather forecasts over the next 7 days. Strength was noted in the KC hard red winter wheat contract as harvest is beginning and forecasts are calling for heavy rain to come across that regions, which could bring some concerns regarding crop quality, as well as any potential yield impacts. In addition, yesterday's USDA's supply and demand numbers did stay slightly supportive on the U.S. carryout with projections below expectations with an anticipated increase in use of wheat for feed given a potential shortage for corn this fall. Chi wheat futures did bring some additional follow through and closed above the 200-day moving average, which could bring some additional short covering, but did fail to break through resistance on the Jul contract at 5.30. Weakness was noted in spring wheat contracts with forecasts for rain to impact the Canadian prairies, helping a region that was deprived of moisture and could help benefit the crop which is already growing strong with high ratings in the U.S.

CATTLE HIGHLIGHTS: Cattle markets ended the day with moderate losses though closes were well off the lows of the day. Jun lives finished 1.02 lower to 109.65, Aug was down 1.62 to 105.20, and Oct lives were down 1.47 to 106.37. Aug feeders were down 32 cents to 137.80, Sep feeders were down 60 cents to 138.00. Choice beef closed 73 cents higher yesterday afternoon to 222.39, and was up 1 cent to 222.40. Today's Feb cattle exchange sales were reported at 113, and this was not enough to quell trader's fears that cash cattle could continue to drift. Retail values are also not likely to rally with grilling weather poor for the next two weeks. Low carcass weights continue to be a supportive factor, currently at their lowest levels since May 2017. Price action today was negative, though started out much worse. The bet traded Aug feeder cattle contract opened above yesterday's highs, but never traded higher, and ended up posting a low today of 104.30. Prices did rally a bit by the close, holding their 10-day moving average support levels, but prices did make a bearish key reversal today. The vest traded Aug feeder cattle contract fell sharply lower early in the session, trading as low as 134.52, but rallied back by the end of the day to hold its 10-day moving average support level.

LEAN HOG HIGHLIGHTS: Hog markets had mixed to mostly lower closes today, unable to stabilize under further selling pressure. Jun hogs were down 5 cents to 79.02, Jul hogs were steady at 84.37, and Aug hogs closed 45 cents lower to 82.52. The CME lean hog index was down 29 cents to 79.66. Carcass cutouts were down 30 cents at yesterday's close to 83.76, and were down another 1.02 this morning to 82.74. The lack of domestic retail demand is the culprit of cash markets that have been mixed to negative at best. Cash values have been trending lower for nearly a month and carcass values have been spinning their wheels. President Trump made comments today that he still feels a deal with China can be made and this would be very positive to the hog markets. However, the nearby contracts are now trading back within levels before the sharp rally to ASF. The best traded Jul contract closed below its 200-day moving average for the second session in a row. Jul hogs had not closed more than two sessions in a row below that level since early March.




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