Top Farmer Closing Commentary 2-22-18

CORN HIGHLIGHTS: Corn futures edged higher, gaining 3/4 to 1 cent as Mar led today's gains, closing at 3.66-3/4. General consolidation continues as it has over the last two weeks with small daily trading ranges as exhibited by most futures trading less than 4 cents today. Prices edged higher into the close on the heels of firmer soybean prices as well as a stronger stock market and weaker U.S. dollar. Soybean futures acted in a non-directional manner today, eventually losing 2 cents. New news was again lacking. News in general suggests that Argentina's corn crop will be diminished from expectations just a few months ago. It is still early to talk about significant concerns with their corn crop. Today's outlook forum, a baseline for budgetary numbers, expects 90 million acres of corn.

SOYBEAN HIGHLIGHTS: Soybean futures edged lower with a loss of 1/4 cent in Nov, closing at 10.27-3/4 to 2-1/2 lower in Jul, closing at 10.52-1/2. Today's trading ranges were near 10 cents for most futures contracts. While volatility has picked up, today's activity was rather subdues. Soymeal finished with losses of near 1.00 on most futures, while soybean oil finished close to steady. It appeared to be a day when the market was marching in place, waiting for further news to provide direction. That will likely come in the form of weather over the next 1-3 weeks, in particular where conditions in Argentina have been generally dry and warm. There is more rain in the forecast, however, and that may have tempered today's price activity when futures did try to turn higher. The grain exchange in Argentina lowered soybean production estimates from 52 million metric tons to 46.5 million. The futures market appeared to already have this factored in. Today's USDA outlook forum estimated soybean acres at 90 million. Today's figure is not an estimate of farmer surveys but simply a number used for budgetary reasons. As markets move in the weeks ahead, this will solidify whether soybean acreage is on the rise.

WHEAT HIGHLIGHTS: Wheat futures gained 4 to 6 cents in Chi and KC, while Mpls gained 1 to 3-1/2. Mar Chi gained 4, closing at 4.51-1/4, and Jul gained 4-1/4 at 4.79, helping to erase losses from yesterday. Jul Chi traded through the 21-day moving average earlier in the session but managed to bounce back above this level, finishing near the day's high. Weather adversity and general net drying in the Midwest will continue to provide underlying support. Overhead resistance will likely be stout near 5.00 as big world inventories will likely keep rally potential in check. We believe that wheat, due to poor crop conditions, has room to try and move higher. If you are behind on cash sales, get current with recommendations. For new crop, we will continue to look for pricing opportunities above the current market.

CATTLE HIGHLIGHTS: Cattle futures fell lower, under pressure from the surprising instability during yesterday's session. The nearby Feb contract closed 1.30 lower to 128.35, Apr closed 85 cents lower to 125.37, and Jun closed 1/4 lower to 116.80. Cash trade in the country was centered near 128, 2.00 lower than last week. With beef prices surging this week, packers will likely want to slaughter all the cattle they can get their hands on to maximize profits. Speaking of beef values, retail choice cuts closed 1.45 higher yesterday afternoon to 217.37 and were up another 4 cents at midday to 217.41. Beef production this year is running 4-5% ahead of last year, but demand has been so strong that beef prices are almost 12% higher than the same time last year. The best traded Apr contract was unable to hold its 10-day moving average today but still closed above its 20-day moving average. The losses do not look very significant on charts, and the inside session has not soured the charts much from a technical perspective. Jun futures saw similar price action, while the nearby Feb contract has begun a long liquidation phase for LTD next Wednesday.

LEAN HOG HIGHLIGHTS: Hog futures put in triple-digit bounces today, continuing with the theme of choppy and unpredictable trade. The nearby Apr contract closed 1.37 higher to 71.27, May closed 1.27 higher to 77.42, and Jun closed 1.65 higher to 82.95. The CME lean hog index closed 2.71 lower to 70.78, leaving futures now at a premium to the cash market. With steady to higher pork values, the massive drop in cash prices has been very supportive of packer margins. Carcass cutouts closed 99 cents lower yesterday afternoon to 78.73 but were up 88 cents at mid-session to 79.61. This was led by a 2.21 increase in picnic values, 1.62 cent rally in ham values and a bounce of 1.91 in belly values today to 133.70. Bellies have gained over 6.00 since last Thursday. Following suit with the recent volatility, today's bounce was most likely technical in nature. Prices are still fighting their way out of oversold levels, and shorts may be looking to exit the market with profits. The Apr contract closed directly on its 20 and 200-day moving average levels, while the May contract closed higher than its 50-dayy moving average for the first time since 2/2.

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