Top Farmer Closing Commentary 3-25-19

CORN HIGHLIGHTS: Corn futures finished 1 to 2 cents higher on today's trade with the May contract up 1-1/2 cents to 3.79-3/4, while Jul corn was up 1-3/4 to 3.89-1/4. Contracts were seeing some short covering on today's trade as the technical picture and trend is working higher against an extremely large managed money short position. Last week's Commitment of Traders report saw managed money grow their short position to 261,000 contracts as of Tuesday, March 19. This position obviously adjusted with buying strength towards the end of the week, but the market is still estimated to be short approximately 240,000 contracts overall. This is a massive short position for this time of year, and with Friday bring us the Perspective Plantings, as well as the Grains Stocks report, the market may be poised to additional hard covering as positions are squared going into those key numbers. The overall news front stayed relatively quiet with the exception of weekly export inspections. For the week, the USDA showed 39.2 mil bu of corn expected for export last week, which is below expected levels needed to reach the USDA's estimate of 2.375 bil bu by the end of the marketing year. Overall, inspections are 23% ahead of the pace a year ago, but with sales slowing, this may be a pause for concern regarding the overall demand for U.S. corn against global competition. South American weather is looking relatively favorable, and the anticipation of larger crops in that region of the world may limit many rallies in the near term on U.S. corn.

SOYBEAN HIGHLIGHTS: Soybeans future finished with mild gains today as the front month May contract is up 2-3/4 cents to 3.60-1/2, while Jul beans gained 2-3/4 cents to 9.20. Like corn, the soybean market was poised to short covering as the market is squaring its positions as we move towards Friday's Grains Stocks and Perspective Plantings report. In addition, strength across the entire grain complex helped bring some buyer's support into the soybean market as well today. The USDA's weekly export inspections showed 31.5 mil bu of soybeans expected for last week, which is still below the anticipated pace to meet the USDA's export goal by the end of the marketing year. Demand concerns are still in the forefront for U.S. beans given competition from large supplies being harvested in South America, as well as potential demand pullbacks due to African swine fever effecting countries of China and Vietnam. South American harvest is approximately 67% complete, and Brazil is on its usual pace. The overall fundamental picture for beans is staying extremely bearish given the record supplies, as well as uncertainty regarding demand. The market may be in check as we have news on the trade front with U.S. representatives meeting with Chinese officials towards the end of the week, which may be supportive and bring headline risk into the market in general.

WHEAT HIGHLIGHTS: Wheat futures were the strength of the grain markets today as the Chi contracts gained 3 to 4 cents. Front month Chi May wheat was up 3-1/2 to 4.69-1/2, followed by Jul 4-1/4 cents higher to 4.75. KC hard red winter wheat contracts also saw 4 to 5 cents of strength as the front month May contract gained 4-1/4 to 4.49-1/4, and spring wheat was mixed, with the May contract 1 cent higher to 5.73-1/4. With the technical picture improving, the trend working higher overall in wheat market, wheat futures are supported by short covering in today's trade. With managed money holding large short positions and near record short positions in KC wheat, the overall strength in the grain market is moving short sellers to the sidelines after Chi contracts challenged multi year lows just a couple of weeks ago. USDA weekly export inspections saw a shipment of 12.5 mil bu of wheat to importers, which is below the pace needed to meet the USDA's 965 bil bu export target by the end of the marketing year, which is May 31. Fundamentally, the supply picture still remains relatively heavy and may be difficult for wheat prices to rally with supplies being plentiful and exports still remaining sluggish. As we look towards new crop, current crop conditions are relatively favorable, but with a large diversity and extremes of weather so far this spring, the condition of this year's crop may be more clear in the weeks ahead. Wheat futures have grown more competitive on the export front, which has allowed for more movement of U.S. grains, but the market is still anticipating or needing to see a stronger sense of demand as we move into the last stages of the marketing year.

CATTLE HIGHLIGHTS: Cattle markets closed sharply lower today on follow-through selling from Friday's bearish technical price action. Apr lives closed 2.15 lower to 127.57, Jun lives closed 2.37 lower to 121.12, and Aug lives closed 2.05 lower to 117.97. Mar feeders were down 82 cents to 142.17, Apr feeders were down 2.60 to 146.20, and May feeders were down 3.35 to 150.70. Choice beef values closed 64 cents higher on Friday afternoon to 229.31. This is their highest value since late May. Choice values were off 27 cents this morning to 228.82. With Friday's bearish Cattle on Feed report and supportive Cold Storage report, today's price direction was unclear going into the day. However, the placements estimate, coming in over 4% above expectations, was too much for cattle bulls to overcome, and was likely much of the reason for today's pressure. 6-10 and 8-14 day forecasts are still supportive, showing elevated chances for greater-than-normal precipitation. Lean hog futures were also choppy to lower today, limiting outside market support. On Friday, the best traded Jun live cattle contract made a bearish key reversal on new contract highs, and this morning the Jun contract gapped sharply lower. Prices did rally up mid-morning to close the gap, but ultimately closed just above their 20-day moving average support level. Aug lives also gapped lower, filling a gap then closing just above their 10-day moving average support level. Both the live and feeder cattle contracts have returned within their Bollinger band ranges.

LEAN HOG HIGHLIGHTS: Hog markets had a quiet and choppy session compared to the recent rally, with mixed to moderately lower closes. Apr hogs were up 32 cents to 78.65, Jun hogs were down 12 cents to 95.55, and Jul hogs were up 7 cents to 98.65. The CME Lean Hog Index was up 1.66 to 62.41, its highest value since November 12. Today's index close above the 200-day moving average was the first since late October. Carcass cutout values closed 1.54 higher on Friday afternoon to 77.79, their highest value since October 22. This was also an increase of almost 9.50 from the previous week. Pork values were up another 1.21 this morning to 79.00. China's spot pig prices were down 1.1% overnight, lending a bit of pressure to the U.S. futures market. Friday's Cold Storage report was also bearish, showing frozen pork stocks in February up 9.5% from the previous month versus the normal increase of 6.3%. While African swine fever newswires were quiet today, the situation is still developing which should keep prices supported. Technically, futures are sharply overbought, especially compared to the CME Lean Hog Index. Today's trading ranges were well inside of Friday's and look as though the market is taking a short break from volatility.

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