Top Farmer Closing Commentary 1-24-20

CORN HIGHLIGHTS: Corn futures gave back yesterday’s strong gains and then some with futures losing 5 to 6-1/2 cents with Mar leading today’s losses closing at 3.87-1/4. After reaching their highest price since early November, today’s downward close in futures was a disappointment. Spillover weakness from weaker commodities in general as soybeans, wheat, and energy prices all plummeted. Worries of the coronavirus spreading seems to have impact on trader’s minds as they head to the sidelines for safer ground. For the week, Mar corn lost 2 cents. Overall, bears have to be concerned that prices are consolidating on a lack of friendly news and good weather in South America. Bullish traders, however, also have to be concerned that futures are getting little friendly news and all hopes for something friendly out of the January Supply and Demand report were dashed as yield estimates went up rather than down as the market was expecting. It continued slow export pace as a concern as well. Today’s export sales figure, however, was supportive at just under 40 mil bu. Year to date, however, total sales are 799.5 mil, well behind last year’s 1.271 mil.

SOYBEAN HIGHLIGHTS: Export sales of 29 mil bu old crop and 4.4 mil new crop were considered solid but not enough to help bean prices as they continued their way down. Today’s losses included 7-1/2 cents in Mar closing at 9.02, and new crop Nov down 8-1/2 at 8.38-3/4. The plunge in bean prices comes on the heels of another good weather forecast for both Brazil and Argentina and perhaps more importantly, growing concern and fear that demand could be diminished because of the outbreak of coronavirus in China. To us, that’s a real stretch to try and equate the two, but China’s holiday weekend starts tomorrow and expectations are that demand for all products will be lessened as movement in the country could come to near a standstill. Nonetheless, we think the driver right now is good weather in South America and expectations for near record crops. Early harvest is underway in parts of Brazil and some feedback suggests high yield.

WHEAT HIGHLIGHTS: Wheat futures ended the day with losses of 6-1/4 in Mar KC closing at 4.86 to 7 cents in Mar Chi closing at 5.73-1/2. Mpls Mar led today’s markets lower closing 8-1/4 softer at 5.47-1/2. A weekly reversal was posted in the Mar Mpls contract and this might suggest a near term, if not longer term, top could be in place. As for KC, this week’s trade was noneventful from a technical perspective, nor was it for Chi as Mar Chi still finished with positive gains. Prices reached their highest level this week in more than four months, but only finished with modest gains of near 3 cents for the week. Commodities as a whole were under pressure today, primarily from a lack of new positive news, but also the coronavirus which has a negative impact to marketing trading often sending traders to the sidelines until more certainty is to be had. Traders don’t like uncertainty and right now this increasing concern over the virus could be responsible in part for today’s lower values, not only in grains, but also in energy and equities.

CATTLE HIGHLIGHTS: Cattle futures finished mixed as front month Feb was 17-1/2 cents higher to 124.85 and Apr also 12-1/2 cents higher to 124.30. Deferred contracts did see marginal weakness with losses from 17 to 30 cents. For the week, the Apr contract saw selling pressure led by yesterday’s technical break with prices down 2.95 for the week. Today’s cattle trade stayed relatively light and choppy as the market was anticipating cattle on feed numbers on Friday afternoon. Cattle on feed numbers brought little surprise and stayed in line with expectations. Total cattle on feed as of January 1st was 102% of last year, placements at 103% of last year, and marketings at 105% of last year. Again, all three numbers came in line with analysts’ estimates and comfortably within ranges. Next week’s cattle movement may bring some snap back without any surprise seen in those numbers, and Thursday’s selloff could be viewed as overdone and cattle futures could work back into its sideways trading range. Regardless, the close this week did bring some technical weakness into cattle charts and may bring some additional follow through if short term fundamentals stay weak. Cash trade was relatively steady week over week with most trade at 124.00 this week. Retail values stayed choppy this week, but choice carcasses did gain in value vs selects which may be an improving trend helping widen the choice select spread. As that spread widens, it’s usually reflective of feedlots becoming more current.

LEAN HOG HIGHLIGHTS: Hog markets made triple digit losses today in some disappointing pressure following yesterday’s gains. Feb hogs were down 1.27 to 67.22, Apr hogs closed 1.90 lower to 73.45 and Jun hogs were down 1.42 to 86.40. The CME lean hog index was up 27 cents to 61.29, its highest value since November 4th. Carcass cutout values closed 10 cents higher yesterday afternoon to 78.84, but were down 1.24 this morning to 77.60. The drop in product values today was likely due to questions about China buying as the government struggles with containing coronavirus. U.S. pork export sales for the week ending January 16th were reported this morning at just over 30,000 tons, down from 39,000 tons last week, but was the second highest weekly reading since December 19th. Mexico was the biggest buyer at 10,400 tons. China only bought 3,000 tons. Cumulative sales for 2020 have reached over 578,000 tons, more than double last year’s pace. Selling action today also took on technical characteristics after closes just below nearby resistance yesterday. The best traded Apr contract tested its 10 and 20-day moving average resistance levels at yesterday’s close and fell below the 10-day moving average support level today. The Feb and Jun contracts saw similar price action.

Market Commentary provided by:

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