Top Farmer Closing Commentary 01-03-18

CORN HIGHLIGHTS: Corn futures ended quietly with little change. Nearby Mar lost 1/4, closing at 3.53 after reaching a high of 3.54-3/4. Once again, the 50-day moving average at 3.54-3/4 held prices in check today, just as it did on December 4. On October 25, prices moved through the 50-day moving average during the session, but ended up closing that day at 3.65-1/4, just below the 50-day moving average at 3.66. Prices also tested the 50-day moving average back in August, when Mar corn reached a high of 4.00-1/2, when at that time the 50-day moving average was at 4.01. New crop Dec closed 1/2 lower at 3.86, after reaching a high today of 3.87-1/2. Corn prices continue to trudge along, looking for news to provide direction. The January 12 Supply/Demand report may provide the market direction, but from a more macro sense we don't believe corn prices are currently buying acres for the year ahead. Consequently, while adequate now, carry-out will likely be narrowing inward from this year's record supply. Weekly export inspections at 27 million bushels were termed neutral.

SOYBEAN HIGHLIGHTS: Soybean futures traded steady to higher throughout the session and finished as such with futures gaining 4-3/4 in Jan closing at 9.59-3/4, while new crop Nov closed 3-1/4 higher at 9.85-1/2. We'll particularly watch new crop, as we feel the 10.00 plus level will offer good opportunity to initiate hedges if you haven't, or to initiate cash sales. Expectations are that bean acreage could slide higher in the year ahead, and with big South American production the world supply of beans could be on the rise in 2018, and we want to defend this. That being said, we like the demand underneath the bean market, and this year's price activity is testament that the world is gobbling up inventory.

WHEAT HIGHLIGHTS: Wheat futures edged higher today, as cold weather in the prolonged forecast continues to suggest some potential concerns with winter wheat. KC led today's rally gaining 5-1/2 to 6-1/4 cents with Mar closing at 4.41, its highest close since early November. Mar Chi gained 2-1/2 cents, closing at 4.36. On an interesting note, both Mar Chi and KC closed decisively above the 50-day moving average, something that has not occurred since late July. Mpls wheat gained 1-1/2 to 1-3/4 cents with Mar leading today's gains there, closing at 6.19-3/4. Spring wheat continues to trudge along in a sideway pattern, where both KC and Chi are beginning to edge upward. Lack of farmer selling is also viewed as supportive.

CATTLE HIGHLIGHTS: Cattle futures posted mixed closes today when conflicting technicals and fundamentals led to choppy trade all session long. The nearby Feb contract closed 40 cents lower to 122.95, Jun closed 17 cents higher to 115.35, and Aug closed 7 cents higher to 112.42. Feeder cattle futures were all mixed as well. Today's online Fed Cattle Exchange Auction led to no sales, but the market is still expecting cash trade to come in 1.00 to 2.00 higher than last week. Boxed beef prices were very strong for today's session, with choice cuts closing 2.24 higher yesterday afternoon to 205.14, and select cuts closing 3.59 higher to 196.57. By mid-session today, choice cuts were up another 3.52 to 208.66, and select cuts were up another 2.36 to 198.93. Extremely cold weather, particularly in the Plains, remains a supportive factor. However, there was a fair amount of market talk today that temperatures will begin to creep back to normal levels starting later this week. Thus, some of that support was likely diminished today. Much of the reason for choppy trade today was a somewhat negative technical picture. After this most recent bounce, and particularly yesterday's strong gains, prices were beginning to move into overbought territory. For the nearby Feb contract, both Bollinger bands and Stochastic oscillators were giving overbought readings a source of technical pressure.

LEAN HOG HIGHLIGHTS: Hog futures were able to find technical support today to close higher on the day despite a toppy looking price pattern. The nearby Feb contract closed 32 cents higher to 71.05, Apr closed 57 cents higher to 75.42, and May closed 17 cents higher to 79.97. Bitter cold weather recently had slowed down marketings, but with temperatures appearing to warm up late this week, some relief may be coming. The quicker the marketing pace, the better, as the major concern in hog markets is the shear amount of pigs in the country. Carcass cutouts closed 11 cents higher yesterday afternoon to 78.33, but were a penny lower at mid-session today. Butts, picnics, ribs, and hams were all higher today, but loins and bellies led the way lower to keep carcass prices relatively steady. Hog futures drew support today after trading down to touch their 10-day moving average levels. At that level, sellers were unable to push the market lower, and prices rebounded to close higher. That 10-day moving average level has been a source of support since the last close below it on December 19. Hog markets still do not look overly friendly, but the technical buying interest today was not insignificant.

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