Top Farmer Intelligence 10-3-18
Stewart-Peterson Commentary - SPC - Wed Oct 03, 4:21PM CDT

CORN HIGHLIGHTS: Corn futures finished with losses of 2-1/4 to 2-3/4 cents, as nearby Dec led today's drop, closing at 3.64-3/4. After a strong showing on Monday and follow through buying yesterday, prices ran out of steam at the 50-day moving average today, as futures traded through this level but failed to hold gains. Softer wheat and soybean prices, along with what may be termed a light volume day seemed to be enough to allow prices to drift into the close. From a technical perspective, the inverted head and shoulders formation continues to point higher, and today's setback may be very little, if in fact the market does move upward. On the other hand, for the second day in a row, prices probed through the 50-day moving average but failed to get through this level, which consequently leaves the market vulnerable to a near term setback, with Dec targeting 3.54-3/4. Export sales to Japan were noted, which is a good sign.

SOYBEAN HIGHLIGHTS: Soybean futures finished with losses of 2-4 cents. Front month Nov beans lost 4-1/2 to 8.61-1/2, while Jan was down 4-1/4 to 8.75-3/4. Over the past couple of trading sessions, soybean futures have seen support as weather forecasts have been concerning with the prospects of heavier rains moving across large portions of the Grain Belt. As the remnants of Hurricane Rosa meet strong weather fronts, forecasts for potential rainfall ranging from Wisconsin to Texas Panhandle may start bringing up questions of harvest delays, as well as crop quality. Regardless, bean futures on the intraday high traded nearly 60 cents off the most recent lows, and charts seemed to look tired this afternoon. As we move toward next week's USDA supply and demand numbers, yield reports have stayed strong on beans, and the prospects of increasing both yield potential and carryout projections for next year may be squarely facing the market. With ongoing trade concerns staying as a bearish influence over the market, the bean market may be poised for softening in the short term.

WHEAT HIGHLIGHTS: Wheat futures saw two-sided trade before contracts finished softer with Chi wheat futures posting 2-4 cent losses. Front month Chi Dec wheat was down 4 cents to 5.14-1/4, while Mar was down 3-1/4 to 5.34-3/4 cents. Weakness fell into the other contracts as Dec KC HRW was down 3-3/4 to 5.18-3/4, while Mpls spring wheat dropped 1-3/4 in Dec to 5.89-3/4. Wheat futures pared some of yesterday's gains on the prospect of Russian wheat exporters suspending shipments of 30 grain loading export bins based on potential quality issues. Wheat futures challenged key resistance levels, as the Dec contract pushed to the 200-day moving average near 5.27. With the negative close, charts turned short term negative on the technical front and may be poised to rechallenge nearby lows. Despite news that has markets questioning potential limits in Russian wheat exports, until that business shifts to U.S. shores, wheat futures will be lacking momentum to the upside. Currently, wheat export inspections and sales are well below USDA expectations for next year. In addition, favorable weather across the Plains has allowed winter wheat planting to progress and is nearly half complete for next year's crop. In the short term, the world still seems to have ample supplies of wheat, which will limit rallies until we have a clearer signal that the demand is shifting to the U.S.

CATTLE HIGHLIGHTS: Cattle futures closed moderately lower today, holding onto some technical support levels despite remaining overbought. The nearby Oct live cattle contract closed 77 cents lower to 113.20, Dec closed 1.07 lower to 118.40 and Feb closed 97 cents lower to 122.75. Feeders were also weak today, with Oct down 1.20 to 157.87 and Nov down 80 cents to 158.77. Beef values remain choppy with choice cuts closing 19 cents lower yesterday to 204.89 and down another 8 cents to 204.81. Today's online fed cattle exchange had zero heads sold and 358 offered. One lot was passed over at 111. Despite the early week cash trade at 112, expectations are for softer trade later this week, especially considering the lack of positivity from the fed cattle exchange. With this in mind, the current premium of Dec futures to the cash markets is a negative setup, especially given the expectations for a surge in production for quarter 4. Technically, stochastics are still reading overbought for the nearby live cattle contracts. Oct, Dec and Feb contracts all held their 10-day moving average levels today, but it may not take much to fall through later this week.

LEAN HOG HIGHLIGHTS: Hog futures put in mixed closes today, spreads continuing to widen in the face of mixed fundamentals. The nearby Oct contract closed 1.05 higher to 67.47, Dec closed 2.00 lower to 57.15 and Feb closed 1.55 lower to 66.25. The CME lean hog index was up 67 cents today to 67.93, its highest point since 8/3. The index has moved past its 100 and 200-day moving averages, but the shrinking gains may be indicating that momentum higher is waning. Carcass cutout values closed 57 cents lower yesterday afternoon to 80.48 but bounced 1.46 higher this morning to 81.94. Bellies led the way higher today, up 3.52 to 126.27. While improving pork values are positive, some are beginning to wonder if the increase has been too much too soon. Such a spike in pork prices could make it difficult for retailers to feature pork products, which could shift the onus on the export front to move pork products. The newly announced U.S.M.C.A. deal should in theory help clear product. Mexico has not yet lifted tariffs on U.S. pork products, and the deal still has to pass Congress in the coming months. Technically, the Oct contract is very overbought according to stochastics and Bollinger bands. The deferred contracts have relieved some of their overbought conditions while holding onto some moving average support levels. Dec was able to close above its 20-day moving average today, and the Feb contract held its 10-day moving average support.

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