Top Farmer Closing Commentary 7-11-19

CORN HIGHLIGHTS: Corn futures finished with lighter gains as contracts were 6 to 9 cents higher with Sep corn up 9-1/4 to 4.44-1/4, while Dec was up 8-1/2 to 4.48. Today was all about the USDA WASDE report and what the world board was going to do with the June 28 planted acreage numbers. As numbers were released, the world board incorporated the 91.7 mil acres of planted corn into the USDA report, but followed that with a note that corn acres were being severely affected due to wet conditions and planting difficulties and would be resurveyed before a release on August 12 supply and demand numbers. This basically moved caution out of the market regarding overinflated numbers that at this stage are well in question. Key takeaways from the numbers was the USDA leaving yield unchanged at 166 bu per acre. The market was expected that number to come down 1 bu. In addition, the USDA did make some adjustments regarding feed and residual use, as well as demand, mostly on carry-in for the 2019/20 marketing year by raising ending stocks from last year 145 mil bu. That was reflecting lower corn shipments to this date, as well as disappearance during the first three quarters of the marketing year as noticed in the June 20 Grain Stocks report. While today's Supply and Demand report rejected carryout to be back over the 2 bil bu level, the markets shook off those numbers as being inconsistent and inconclusive given weather conditions to rally to its closes today. One outside factor eliminating rallies may be the impact of foreign competition, which the USDA noted outlook for larger production in trade competition as we move further into the marketing year.

SOYBEAN HIGHLIGHTS: Soybean futures saw two sided trade after today's supply and demand numbers maintained modest gains with the Aug contract up 4-1/2 cents to 8.99, while Nov beans were up 4-1/2 to 9.17-1/4. While the USDA incorporated the NASS June acreage number at 80 mil acres and lowered yield to 48.5 bu per acre for this year's bean crop, this moved ending stocks down 305 mil bu to a projected carryout of 795 mil bu, down from 1.045 bil in June. This move was supportive on price, but like corn, the resurvey on acres brings that final adjustment in doubt, which may have limited the rally in the market today. Globally, soybean supplies saw lower production and stocks compared to last month, and while the USDA made adjustments by lowering U.S. export numbers by 75 mil bu, that lower export demand would be easily absorbed by increases out of South America. Because of slow U.S. production, global soybean ending stocks for the 2019/20 marketing year were reduced by 10.7 mmt, which was below expectations and provided some support in today's price.

WHEAT HIGHLIGHTS: Wheat futures were the strength of the grain markets today as contracts finished with strong gains with Chi gaining 14 to 16 cents. Front month Sep Chi wheat was up 16-3/4 to 5.21-1/2, while Dec was up 16 to 5.32-3/4. KC hard red winter wheat was the strength of the wheat markets with the Sep contract gaining 20 cents to 4.61-1/2 and spring wheat followed suit with the Sep contracts up 12-1/2 cents to 5.41-1/4. Wheat was supported by a combination of lower supplies in anticipation of larger exports and domestic use while seeing reduced stockpile. U.S. wheat production was raised by 18 mil bu to 1.72 bil bu, but with increases seen in demand for additional use on the export front, as well as feed usage with the strength in corn prices, ending stocks were below expectations at 1 bil bu. This was 28 mil bu under analysts' expectations and down 72 mil bu from last month. In addition, the USDA lowered global wheat supplies dropping ending stocks by 7.9 mmt as the USDA dropped production in several major exporting countries will total world supplies down 10.5 mmt. Due to hot weather during the month of June, production in the Ukraine, European Union, Canada, and Australia saw reductions on today's numbers. Wheat markets rally may see some resistance in the short term as harvest continues to build across the southern Plains, and overall weather at this stage is favorable for that harvest to progress.

CATTLE HIGHLIGHTS: Cattle markets closed slightly higher today in further consolidation action near the highs of the recent range. Aug lives closed 25 cents higher to 107.87, Oct lives closed 35 cents higher to 109.32, and Dec lives closed 30 cents higher to 113.77. Aug feeders were up 27 cents to 142.62, and Sep feeders were up 42 cents to 143.27. Choice beef values closed 31 cents lower yesterday afternoon to 214.42 and were down another 24 cents this morning to 214.18. A few dressed cattle were sold in NE today at 185.00, but live cash trade has so far been quiet. Cattle traded lower for most of the session and were unable to break through the recent highs likely due in part to a lack of confirmation of increasing consumer demand. U.S. beef export sales for the week ending July 4 came in today at 21,400 tons vs a previous 4-week average of 17,050 tons. This brings cumulative sales for 2019 up to 589,910, 1.8% ahead of last year's pace. Today's price action was mostly quiet from a technical standpoint today. The best traded Aug live cattle contract was unable to trade through yesterday's highs, but the Oct contract had a bullish outside session. Oct lives also made their highest close today since May 7. Feeder contracts traded above their recent highs, but were mostly unable to make much progress higher.

LEAN HOG HIGHLIGHTS: Hog markets moved sharply lower today after a disappointing export sales report and a lack of further rally in cash markets. Jul hogs were down 15 cents to 71.60, Aug hogs were down 2.55 to 79.17, and Oct hogs were down 1.65 to 71.60. The CME lean hog index was down 48 cents to 70.77, its lowest value since March 29. Carcass cutout values have been drifting despite talk of increased retail demand. Carcass values closed 2.17 lower yesterday afternoon to 71.60, their lowest value since March 15. Pork values were down another 1.40 this morning to 70.20. China's national average spot pig price today was up 1.25% from yesterday. For the week, prices are up 3.72%, up 1.31% for the month, and up 31.15% year to date. U.S. pork export sales for the week ending July 4 were released this morning showing just 11,3000 tons were sold vs a previous 4-week average of 24,000 tons. Cumulative sales for 2019 have now reached 935,5000 tons, 27.8# ahead of last year's pace. Mexico bought 9,800 tons of pork and China bought no pork, but did take delivery of 8,100 tons. The best traded Aug contract made an inside session today, but was able to hold onto nearby support at its 20-day moving average level. Oct hogs fell back below their 20-day moving average, but held their 10-day moving average support level. Aug hogs will need to close above 77.05 tomorrow in order to keep the weekly bullish key reversal intact.

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