Top Farmer Closing Commentary 9-18-20

CORN HIGHLIGHTS: Corn futures finished the week with three consecutive positive closes, as December futures closed 3 1/4 higher to 378 1/2 and March gained 3 1/2 cents to 387 1/2. For the week, December futures traded to their highest levels since early March, gaining 10 cents on the week and finishing near the top of the weekly trading range. The strong technical picture has corn trading near the top end of the daily trading range the past three sessions, as buyers have stayed active into the close. The overall strength in the grain markets helps support corn futures despite the current view of a heavy U.S. corn supply with a projected corn carryout at 2.500 billion bushel for the marketing year. Those final carryout numbers are still possibly elevated as yield potential may still decrease, and demand remains strong. A new Chinese purchase of corn at 210,000 MT or 8.3 mb on Friday morning helped support prices. Friday’s purchase was the third reported purchase over the last 5 days by a U.S. corn importer.

SOYBEAN HIGHLIGHTS: What a week in the soybean market! November finished with gains of 15 cents, closing at 10.43 1/2 and up 16 cents in January, closing at 10.47 1/4. November soybeans have gained 47 1/2 cents on the week, and January still posted an impressive 35 1/2 weekly gain. China posted ANOTHER soybean sale this morning, which is the 11th consecutive export sale, total of 4.5 million bushels. Exports are 22% ahead of average pace, and we have already booked over half of what the USDA predicted for export sales for the entire 20-21 marketing year. Soybeans had carry over support from the soybean meal market, which finished up at a 2-year high of $342.10. Today, the USDA provided details of another aid payment to farmers that amounts to roughly 31 cents per bushel on 2020 soybeans production, which could ease farmer selling in the short term. Ultimately, soybeans are in jeopardy of being in short supply for 2020-21 pending how much China’s demand ends up being and South American weather. USDA ending stocks estimate of 460 million bushels is much lower than the 1 billion bushel surplus soybeans of two years ago and could get smaller. With weather being favorable, Monday’s Crop Progress report may show beans off to a stronger start than normal regarding harvest progress.

WHEAT HIGHLIGHTS: Despite the USDA predicting a record wheat crop last week, Dec Chi futures and Dec KC wheat both posted a 33 cent gain for the week. Dec Chi up 18 3/4 cents, closing at 5.75 and Mar up 18 .3/4 cents, closing at 5.82 3/4. Dec KC wheat was up 16 3/4 cents, closing at 5.04 1/4, and Mar was up 16 3/4 cents, closing at 5.15. The story behind the rally today and yesterday resides mostly on global weather concerns for next year’s crop both in the Ukraine and Black Sea region. In the U.S., planting progress should be moving right along with most of the country experience mostly warm temps and dry conditions. However, in some areas, they are too dry as drought has plagued key growing areas in Texas, Colorado, and Oregon. It is also believed that weather could be extended from La Nina later in the year. Seasonal Drought Outlook expects drought to expand into the southern plains and Mississippi Delta from mid-September until the end of the year. If that were to come to fruition, that is very concerning for our domestic hard red winter crop, which was already a small crop to begin with.

CATTLE HIGHLIGHTS: Cattle markets made slightly higher closes today with October lives up 0.57 to 107.35, December lives were up 0.52 to 111.85 and February lives were up 0.32 to 116.07. September feeders closed 0.95 higher to 140.87. Choice beef values made their 12th consecutive lower close yesterday, down 0.33 to 215.05, the lowest beef close since August 14. Choice cuts bounced 0.57 this morning to 215.62. Cash markets have continued to firm up, finding some follow-through on trade seen late last Friday. Trade in KS was seen yesterday at 103.00-105.00 vs 101.00 last week, and trade was reported in NE at 103.00-103.50 vs 101.12 last week. The cash market will need to see beef prices firm up to justify the strength. Stock market optimism may help, but heavier weights and increasing daily kills will add to supply. October lives made another successful test of the 50-day moving average support level this morning and made its highest close since August 25th. Stochastics may be a bit overbought, but today’s close could open up some more room to rally. October feeders again traded between the 20-day moving average support level and the 50-day moving average resistance level.

LEAN HOG HIGHLIGHTS: Hog futures made mixed closes today, with October down 0.02 to 66.50, December was down 0.10 to 63.52 and February was up 0.35 to 68.55. The CME Lean Hog Index was up 1.42 to 67.84, the highest level since May 15. Carcass cutout values were up 3.91 yesterday to 86.48, the highest close since May 29. Carcasses closed 0.50 higher to 87.53 this afternoon. Export sales this week were the second highest since April, likely finding strength on the German ASF situation. China was previously a huge customer of Germany’s but has since suspended German pork imports. Weekly slaughter is running behind last year’s pace which is also giving product prices a boost. Going along with today’s choppy closes, prices have not been able to break outside of the recent ranges. Stochastics on all three of the nearby contracts are still overbought, but the lack of selling interest at these prices seems to validate the fundamental strength, especially the possibility of strong exports moving forward.




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