Top Farmer Closing Commentary 6-25-19

CORN HIGHLIGHTS: Corn futures finished mixed with bull spreading noted. Nearby Jul closed 3/4 higher at 4.47-1/2, well off its high of 4.53, while Dec corn closed 1/4 higher at 4.57-1/2, a penny off its low. Dec reached a high today of 4.63, getting close to challenging Friday's high of 4.64-1/4. Prices continue to consolidate and may likely do so until Friday. It will be a big day as the Acreage and Stocks reports are released, but also it is the end of the month and end of the quarter. From a historical perspective, it's close to a turning point when prices either seem to be trying to find a bottom in late June or early July, or a top. This year is so different from a growing perspective with much of the crop well behind normal that we doubt the market is trying to find a top, at least not yet. The 10-day moving average continues to act as support, however, as prices continue to consolidate, this line will begin to flatten and offer less support. The 10-day moving average is at 4.57, while the 21-day moving average, the next level of support in line with last week's low, is 4.48-1/2. The most recent 6 to 10 day forecast has something for everybody as most of the Midwest stays above normal in precipitation, but also above normal in temperature. With the crop behind schedule the heat units are welcome, but in areas that are saturated too much rain is already an issue.

SOYBEAN HIGHLIGHTS: Soybean futures ended on a soft note losing 5-1/2 and 6-1/4 in Nov, closing at 9.26-1/2 after reaching a high today of 9.41-1/4. Today's outside trading range and negative close doesn't look so supportive on charts. However, last week's low did hold and prices held near the 10-day moving average. Therefore, the market is consolidating, but a poor finish today could lead to additional selling interest. The 6 to 10 day forecast would suggest better weather for crop growth. However, there is too many question marks as to acreage and what may be prevent, or needs to be replanted. The majority of the Midwest is either beyond or well beyond the preventative plant date. We don't expect Friday's USDA reports, which are Acreage and Stocks, to give us much new direction. In fact, the USDA indicated that acreage will be updated on the July 11 Supply and Demand report. There is just too much uncertainty with such a copious amount of moisture this year either prohibiting or delaying planting. A slide in the dollar this past week has been supportive, but the dollar did make a reversal upward today, which may have been enough to send traders to the sidelines.

WHEAT HIGHLIGHTS: Wheat futures finished mixed in all three exchanges with Jul Chi losing 2-1/4, while Jul KC lost 1/4, and Jul Mpls gained 5. The spread between KC and Chi continues to run at historically wide levels as wet weather has continued to be a plague on soft red winter wheat as acres were reduced last fall due to wet conditions, and continued wet conditions this spring are hampering harvest, in fact, some fields are said to be sprouting wheat in the head of the plant. As far as KC expectations for solid yields are keeping prices in check and consequently, traders have been buying Chi and selling KC. Spring wheat acres will get revamped on Friday's acreage report. Expectations are that not all acres were planted, but compared to estimates in late April, acreage will be up from what that window of planting opportunity looked like in late April or May. We continue to believe that the Mpls wheat will be limited in supply and with dryer conditions in the Canadian Prairies, along with elsewhere in the world, this market in particular looks as though it's establishing an uptrend with a low established in early May, followed by a recovery and now a setback and a solid close back above the 100-day moving average today. New news of consequence was lacking. Winter wheat harvest is at 15% complete, vs a 5-year average of 34%, not a surprise given the wet conditions. The wheat ratings indicated that 61% of winter wheat is good to excellent, vs 64% last week. Spring wheat ratings are 75% good to excellent, down from 77% last week.

CATTLE HIGHLIGHTS: Cattle markets made mixed closes today, with the live contracts still consolidating near recent lows. Jun lives closed 82 cents lower to 107.75, Aug lives were up 82 cents to 103.25, and Oct lives were up 82 cents to 104.85. Aug feeders were down 45 cents to 131.32, and Sep feeders were down 47 cents to 131.87. Much of the stabilization in recent sessions has been due to the supportive Cold Storage report released last week. Frozen beef supply as of May 31 was seen at 403.5 mil pounds, 13.1% lower than last year, and 6.2% lower than frozen beef supply as of April 30. Frozen beef stocks normally fall 2.9% for the month, so this 6.2% drop is supportive. Traders are also expecting to see slower placements ahead which should keep the production pace in control. Choice beef values were down 8 cents at yesterday's close to 219.74, their lowest value since May 21. Choice cuts fell another 36 cents this morning to 219.38. Hog markets also found some bounce today, providing some overflow support to the live cattle markets. On the other hand, higher corn prices for most of the day's session kept feeder cattle buyers away. The live cattle contracts recent consolidation near the lows could begin to base build before moving higher. Still, there is strong overhead resistance at the 10 and 20-day moving average levels that will need to be breached in order to restart a move higher. Feeder contracts have been under sharp pressure with rallying corn and expectations of lower placements later this year.

LEAN HOG HIGHLIGHTS: Hog markets ended with mostly triple digit gains today, with Jul up 1.55 to 74.40, Aug was up 1.95 to 76.17, and Oct was up 85 cents to 65.90. The CME lean hog index was down 49 cents today to 78.65. Carcass cutout values were up 60 cents at yesterday's close to 77.33, but were down 50 cents this morning to 76.83. Despite the enormous production pace recently, yesterday's selloff left futures oversold. Today's bounce was likely technical in nature, with both short covering after the recent drop, as well as traders attempting to bottom pick this market. The highly anticipated meeting between President Trump and President Xi we watched extremely closely this week, even though no deal is expected at this time. Even new meeting dates would be seen as positive. Though prices found a good bounce today, technically, today's price action did not constitute a reversal. Prices never traded past yesterday's lows, which does not necessarily signal the end to the downtrend. Nonetheless, hogs have not been able to find much of a bounce lately so today's price action is welcome.

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