Top Farmer Closing Commentary 6-19-19

CORN HIGHLIGHTS: Corn futures ended weaker today on a more conducive weather forecast, sell stops and long liquidation. We also believe farmer selling may have picked up over the last two to three sessions as prices reached their highest level for the year. The forecast beyond the next week looks warmer and drier, which is a recipe for improvement to crop conditions, which are not very good. A small corn plant and cool temperatures, along with prevent acres all contribute to less than expected production as compared to prior to the planting season. The numbers will be all over the map, as analysts try to figure out what yield might be and what the final prevent acres figure will be. Our best guess at this time is roughly 7 million acres of prevent plant and the yield likely lower than 166 bushels per acre, the same figure that was released on the USDA's report this month. Both bulls and bears may have an argument at current price levels. We also would argue that, if you have few or no cash sales made or have not gotten started, now is the time to get something done. Stranger things have happened than unexpected price drops. On the other hand, be cautious and cover cash sales with call options, as the stage is set for mid-summer weather to have significant impact to price.

SOYBEAN HIGHLIGHTS: Soybean futures followed the wheat and corn markets lower with losses of 8-1/4 to 11-1/2 cents as Nov led today's slide, closing at 9.28-3/4. Nearby Jul closed 10-1/4 lower at 9.03-1/4. After reaching their highest point yesterday in several months, prices seemed to take a breather today but certainly did not lead the way down. Beans appeared to be more of a follower of corn and wheat. Surprisingly, the market has held its ground well -- not due to concerns over excess inventory, but on continued concerns that forecasts for rain this week will likely put the final nail in the coffin for prevent acres in parts of Missouri, Illinois, Indiana and Ohio. The prevent plant date for these states, including the southern two thirds of Illinois, is June 20. Beans are at a critical crossroad from a pricing perspective. They have a good looking uptrend with pennant formations and gaps. These gaps can quickly be filled if prices move lower. Therefore, if you are behind on sales, get current with recommendations. World inventories, along with U.S. supplies, almost regardless of a shortfall in U.S. crop this year, could remain historically large. The market will focus on the trend of carryout, which presently is narrowing inward, as projected inventory numbers are likely on the decline due to expectations for lower yield and fewer planted acres.

WHEAT HIGHLIGHTS: Wheat futures were under pressure today for the second consecutive session, closing with losses of 9 to 11-3/4 cents in Chi, 7-3/4 to 9-3/4 in KC and 11 cents in Mpls. General selling, profit taking and hedge pressure on expectations for an increase in harvest pressure over the next couple of weeks all seem to be enough to weigh on wheat prices today. From an outside perspective, the dollar was lower today, but a recent recovery in the last four sessions may have aided in the start of a weaker wheat market. It looked to us like traders were also moving out of long positions.

CATTLE HIGHLIGHTS: Cattle markets closed with moderate losses again today, with Jun lives down 95 cents to 108.50. Aug lives were down 1.00 to 104.55, and Oct lives were down 95 cents to 106.10. Aug feeders were down 72 cents to 136.52, and Sep feeders were down 60 cents to 137.00. Choice beef values were down 1.29 at yesterday's close to 220.53. This is their lowest value since 5/22. Cash trade today was very quiet, and the online fed cattle exchange had just 315 head offered for sale and zero completed sales. Friday's Cattle on Feed report is expected to be supportive, with the average market guess for placements at 95.8%; marketings, 100.8%; on feed, 101.3%. Given the extremely light cattle weights lately, the marketings number could come in even higher than is expected. Price action today was disappointing after early tests of overhead resistance. The best traded Aug live cattle contract traded above its 20-day moving average but closed below it for the second session in a row. Prices also fell below their 10-day moving average levels and have held the recent uptrend beginning 6/3. Still, the recent uptrend could be considered a bearish pennant formation, which could attract sellers on a break. Feeder contracts had choppy, lower sessions as well, testing and failing overhead resistance.

LEAN HOG HIGHLIGHTS: Hog markets posted higher closes today, attempting to stabilize a long downtrend. Jul hogs were up 15 cents to 81.62, Aug hogs were up 30 to 83.00 and Oct hogs were up 85 cents to 77.45. The CME lean hog index was down 1 cent to 79.26. Carcass cutout values closed 1.82 lower yesterday afternoon to 81.15, their lowest value since 4/3. Carcass values were down another 80 cents this morning to 80.35. China's spot pig prices are rallying, up 6.3% for the week, 10.6% for the month, 24.5% year to date and 46.2% versus last year. This is especially supportive, given the much-anticipated meeting between President Trump and President Xi is scheduled for the G20 summit next week. At this time, the best-case scenario for the meeting would be that talks are restarted. Nonetheless, the market views this as supportive for the long term. The best traded Aug lean hog futures contract closed above its 10-day moving average today for the first time since 5/20. Now that Stochastics are crossing back up out of oversold levels, this could be considered a buy signal.

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