Top Farmer Closing Commentary 2-8-19

CORN HIGHLIGHTS: Corn futures finished with small losses of 1/2 to 2-1/4 cents as Mar led today's drop closing at 3.74-1/4 with a trading range of 3.81-3/4 to 3.74. Today's close near the low is disappointing as was today's net results from the USDA reports, which did in fact show a decline in yield as we expected. Yield is now estimated at 176.4 bushels an acre, down 2.5 bushels from the November estimate. However, reductions in feed usage by 125 million bushels, as well as a 40 million bushel drop in food seed and industrial, weighed on futures. Within that context, ethanol dropped 25 million bushels. In the end, projected carryout dropped 46 million bushels to 1.735 billion as compared to last month's 1.781. However, projected world carryout rose above pre-report estimates and now sits at 309.8 million metric tonnes as compared the average estimate of 307.5 and the December estimate of 308.8. Increases in the Argentine crop by 3 million metric tonnes above expectations was the story there.

SOYBEAN HIGHLIGHTS: Soybean futures finished with small gains of 1 to 1-1/2 cents. For all the potential fireworks today's reports may have had, the market didn't get much to sink its teeth into. The big change may have been in Argentina where a decrease, or adjustment, to last year's production helped to tighten world carryout with projected stocks now at 106.7 million metric tonnes versus the pre-report estimate of 113.9 and the December estimate of 115.3 million metric tonnes. This was termed supportive. In the U.S., yield was as expected reduced from 52.1 bushels an acre to 51.6. Production dropped 56 million bushels while the crush picked up 10 million. However, exports were reduced by 25 million. Projected carryout is now 910 million bushels versus the December estimate of 955 million.

WHEAT HIGHLIGHTS: Mixed values were today's trademark with Chi gaining anywhere from 1/4 to 4 cents as Mar led today's higher on export news of sales to Egypt. Hard red winter wheat finished down 1-1/4 to 2-1/2 cents, while Mpls finished up 4 in Mar to down 1/4 leading today's gains. U.S. stocks came in slightly higher than anticipated at 1.010 billion versus the average pre-report estimate of 993. World projected carryout was about as expected at 267.5 million metric tonnes in line with the average pre-report estimate of 268. In summary, the USDA reports didn't have much to offer the market once supportive news coming from export sales today and being reflected in farmer soft red winter. U.S. winter wheat seedings came in at 31.3 million bushels below the 2018 32.5 million and in line with the pre-report estimate of 32.1 million.

CATTLE HIGHLIGHTS: Cattle markets made impressive moves higher today, closing out a week of strong gains despite last week's bearish key reversals. The nearby Feb live cattle contract closed 1.07 higher today and 1.92 higher on the week to 127.37, Apr closed 1.10 higher today and 1.65 higher on the week to 127.92, and Jun closed 95 cents higher today and 1.95 higher on the week to 118.10. Mar feeders gained 85 cents today and 1.57 this week to 144.10 and Apr feeders were up 1.02 today and 1.90 on the week to 145.90. Choice beef was down 86 cents yesterday afternoon to 216.71 and was down another 1.00 this morning to 215.71. Cash trade today has been quiet, but bids have gone up from $121 yesterday to as high as $123 by the time of this writing. Cash trade last week reached $124. Cold weather and snow for the next 5-7 days in many areas should keep feed lots in poor condition and cattle stressed. Today's USDA Supply and Demand report was slightly supportive. The USDA decreased 2018 beef production by 75 million pounds and decreased expected 2019 production by 175 million pounds from the December report. Technically, today's buying action was impressive, especially considering last Thursday's bearish key reversals. The Apr and Jun contract months still have yet to take out last week's bearish key reversals, but Feb was able to take out last Thursday's highs. Feeder contracts closed above nearby resistance levels, with the Apr contract making its highest close since January 8.

LEAN HOG HIGHLIGHTS: Hog markets moved lower yet again, capping off another negative outside week. The nearby Feb contract closed 22 cents lower today and 1.30 lower on the week to 55.05, Apr closed 1.17 lower today and 1.70 lower on the week to 58.42, and Jun closed 1.00 lower today and 1.67 lower on the week to 74.37. Carcass cutout values closed 44 cents lower yesterday afternoon to 65.17. This was the lowest carcass value since August 29. Carcass values were down another 94 cents this morning. Loins were down 1.78 to 65.71, ribs were down 9.44 to 116.71, and bellies were down 3.53 to 108.03. Butts and hams limited the downside today, with butts up 4.20 to 71.98 and hams up 1.42 to 45.49. Today's USDA report was very slightly supportive. The USDA increased 2018 pork production by 10 million pounds from the December report but backed off 2019 U.S. pork production by 75 million pounds from the December report. Technically, today's price action was negative and disappointing. Feb futures made their lowest close since August 13 and Apr futures made their lowest close since August 8. The Jun contract made new lows for the move again, making its lowest close since August 14.

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