Top Farmer Closing Commentary 7-17-19

CORN HIGHLIGHTS: Corn futures ended the day quietly after a range of near 10 cents. Nearby Sep gained 3/4 of a cent closing at 4.36, while Dec corn gained 1/4 of a cent, closing at 4.41-1/2. Providing underlying support as uncertainty with this year's crop production, in particular with some private forecasters lowering yield expectations. There is no doubt there is a significant amount of corn that is late and behind schedule, and how this yields out will only be determined on weather from this point forward. Perhaps particularly in mid-September to avoid early freeze. Expect volatility to remain high from a long term perspective with prices poised to move higher if crop improvements are not noted soon. Crop ratings basically stayed unchanged from the previous week and given time of year and the much needed heat units that the crop received, we would view this as less than a vote of confidence that the crop is improving. On the other hand, charts are showing consolidation and a head and shoulders formation. This tells us the market is influx and at current prices levels we encourage you to get current with recommendations. This puts you at 50% forward sold for 2019 crop.

SOYBEAN HIGHLIGHTS: Soybean futures were choppy today trading both sides of steady, but eventually came under selling pressure late in the session as ideas of improved crop potential and a lack of demand news weighs on the market. Prices traded back above the 10 and 100-day moving average, but failed to hold these gains and by late in the session slid lower closing near the day's low. Nov closed 5-1/2 lower at 9.00-1/2, its lowest close since July 9. The technical picture looks iffy with today's close below the 40-day moving average and the right shoulder up an upward slanting head and shoulders formation fulfilled. If prices were to drop through this level, a move down into the 8.20 to 8.30 area is likely. It looks to us as though yield potential could be on the rise with beans with crop ratings holding steady, but with heat this week in areas receiving rain, we believe the crop should be improving. That being said, we've heard from numerous farmers and have also had firsthand accounts of very small bean plants, so one has to question the ability for plants to fully mature this late in the season, especially those that were planted as late as they were.

WHEAT HIGHLIGHTS: Wheat futures edged lower today losing 2 to 3 cents in Chi, 4 to 4-1/2 in KC, and 2 or more in Mpls. Sep Chi closed 2 lower at 5.05-1/2, and Sep KC 4-1/2 lower at 4.41-3/4. Both charts have less than stellar formations and would suggest potential downside is likely. In particular, the soft red winter wheat contract, which continues to hold a large premium to Chi, has more room to lose ground. The good news is the 50-day moving average again held as support today as it had yesterday and again last week. Therefore, technical traders seem to be buying the 50-day, but if that doesn't hold, look for the head and shoulders formation to push Jul Chi wheat potentially back down to contract lows near 4.30. New news of consequence is lacking. The market will focus its attention on world production with expectations of continued declines in major producing areas of Europe and possibly Australia and Canada.

CATTLE HIGHLIGHTS: Cattle markets found more pressure today as beef values continued to drift against expectations. Aug lives were down 10 cents to 108.12, Oct lives were down 50 cents to 108.75, and Dec lives were down 37 cents to 113.35. Aug feeders were down 47 cents to 140.57, and Sep feeders were down 1.10 to 140.77. Choice beef values were down 34 cents yesterday afternoon to 212.93, nearly 2.00 lower than the same time last week. Boxed beef was down another 49 cents this morning to 212.44. Slaughter is running slightly ahead of last year's pace, though production is likely to come in lower due to reduced weights. Hot and humid weather has made weight gain difficult in recent weeks. Today's online Fed Cattle Exchange had 243 head sold of 243 offered for delivery in 1 to 9 days at an average price of 111. For delivery in 1 to 17 days, 83 head of 83 head offered were sold at a weighted average price of 111. Much of the pressure today was likely technical in nature as futures are overbought. Momentum is turning lower, especially without support from the retail beef markets. Oct lives tested their 10-day moving average support level, but were able to rally and close above it. Aug feeders closed just below their 10-day moving average support level, though prices did test and hold their 50-day moving average support level.

LEAN HOG HIGHLIGHTS: Hog markets closed sharply higher today on a continued rally in China pig values. Aug hogs were up 2.95 to 82.00, Oct hogs were up 2.52 to 77.82, and Dec hogs were up 2.37 to 75.72. The CME lean hog index is down 11 cent to 70.62. Carcass cutouts made their highest close yesterday since June 24, up 2.90 to 75.80. Carcass values were up another 1.26 this morning to 77.06. China's spot pig prices were up 1.7% overnight, pushing prices up 5% for the week, 8.3% for the month, and up 40.2% year to date. There has been minimal, if any, progress lately when it comes to U.S./China relations, though a continued advance in Chinese pork values could increase pressure to make some progress or at least lower tariffs on U.S. pork products. Technically, today's session was very impressive. The Aug contract closed just one tick off of their limit higher. Aug hogs are currently trading at a premium of nearly 12.00 to the cash index, which is very wide for this time of year. If the CME lean hog index can turn higher soon, this would be supportive, though if the index cannot do so, Aug may see some pressure into expiration. Oct and Dec futures both gapped higher to make their highest closes since mid-June. Oct hogs closed directly at their 50-day moving average resistance level, and a close above would be the first since early May.

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