Stewart-Peterson Market Commentary

Closing Commentary - October 15, 2018

Top Farmer Midday Update 10-15-18

CORN: Corn futures are starting the week up two cents in Dec and Mar to 3.75-3/4 and 3.87-3/4 respectively. Both contracts have pushed above their 100-day moving average, a level not seen since 6/6. As of last Tuesday, funds were still holding a net short position, so short covering has likely been a positive force since then. On Friday, funds bought an estimated 16,000 corn contracts, leaving their net position near short 3,000 contracts. While the weather has cleared up in recent days, the ground is still wet and cold, which is holding back some harvest activity.

SOYBEANS: Soybean futures are surging this morning, up 9-10 cents. The Nov contract is trading at 8.77-1/4, and Jan is trading at 8.91-1/2. Futures initially traded lower during the overnight session, testing and holding their 10-day moving average support level. Short covering in soybean oil futures has added to the technical strength on the recent pop, and funds have been steadily adding to their net long position in the soybean meal contracts. Snow in the Dakotas and Minnesota has been a cause of concern, delaying harvest and potentially impacting quality. On Friday, funds bought an estimated 6,000 contracts, leaving their net position around 38,000 contracts short.

WHEAT: Wheat futures are mixed this morning, with the Dec Chi contract up 1-1/2 cents to 5.18-3/4. Dec KC is steady at 5.24-1/4, and Dec Mpls is down 1-1/4 to 9.95-3/4. Russian wheat quality concerns persist with India announcing that they will begin to re-export cargoes contaminated with thistle starting 11/1. Late harvest in Canada and Russia has been slowed by rain and snow, which could also harm quality. Planting in the U.S. has likely fallen behind, also due to excess rain in the Plains. Funds bought an estimated 5,000 contracts of wheat on Friday, leaving their net position short around 20,000 contracts.

CATTLE: Cattle futures are mixed this morning in quiet trade, with Oct lives down 7 cents to 112.25. Dec lives are up 37 to 116.55, Oct feeders are down 70 to 154 and Nov feeders are down 32 to 154.30. Cash trade was seen as high as 111 last Friday, so with the recent downtrend in Dec live cattle futures, the premium is slowly shrinking to more normal levels. Technical buyers are likely keeping prices supported this morning, with Dec lives holding their lower Bollinger band support as well as beginning the session in oversold stochastic territory. Feeder cattle contracts have fallen below their Bollinger band range and are currently oversold.

HOGS: Hog futures are sharply higher this morning, with Dec up 1.80 to 56.80 and Feb up 1.70 to 63.92. Africa swine fever issues in Canada continue to dominate headlines, and reports of ASF have spread to a number of villages in northeast Hungary. Pork prices are still relatively expensive, but traders are keeping focus on potential supply issues down the road. The recent dip in prices also left hog futures oversold, adding to the sensitivity of ASF headlines.

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