Midday Update Tuesday, February 12, 2019

Corn: Corn futures are moderately higher in early trade this morning, attempting to retake some of the losses taken over the past two sessions. Mar corn is up 1-1/2 cents to 3.74-1/4, May corn is up 1-1/4 cents to 3.82, and Jul corn is up 1-1/2 cents to 3.90. New crop Dec corn is up 3/4 cent to 3.98-1/2. Most corn contracts made their lowest closes yesterday since mid-January and given the outlook for supply tightness this year and an optimistic tone to trade talks to China this week, buyers are re-entering the market. There was a USDA flash sale announcement this morning, showing over 122,000 tons of corn were sold to unknown destinations. So far today, Dec corn has tested, but has been unable to break through what is now trend line resistance after falling below on Friday’s session. Funds sold about 12,000 contracts of corn yesterday and are thought to be long about 30,000 contracts.

Soybeans: Soybean futures are up 2 to 3 cents this morning, with Mar up 2-3/4 to 9.07-3/4, May up 2-1/4 cents to 9.21-1/2, and Jul is up 2-1/4 cents to 9.35-1/4. New crop Nov beans are up 2-1/4 cents to 9.51-1/4. Brazil’s CONAB Agency dropped their 2019 soybean crop estimate to 115.3 million metric tonnes from 118.8 previously. The USDA currently has the Brazilian crop pegged at 117 million metric tonnes, so this development is supportive. Last year, Brazil raised 119.3 million metric tonnes of beans. Most traders though believe that Brazil’s production would need to fall to around 110 million metric tonnes to make a material impact on the global balance sheet. Brazil’s weather forecast shows moderate rains over the next 6-10 days with up to 90% coverage while Argentina’s forecast has turned dry until early next week. Nov beans closed below their 50-day moving average level yesterday for the first time since January 16 and are currently trading just below that level. Funds sold about 9,000 contracts of beans yesterday and are thought to be long about 7,000 contracts.

Wheat: Wheat markets are lower this morning, unable to follow through on yesterday’s very impressive closes. The nearby Mar Chi contract is down 3-1/4 cents to 5.15, Mar KC wheat is down 5-1/2 to 4.98-1/4, and Mar spring wheat is down 1-1/2 cents to 5.72-1/4. Most of the pressure today is likely tied to yesterday’s meeting between the Russian Ag Ministry and exporters. The market was hoping for news that Russia planned to curb exports as Russian domestic prices are very high. However, no such announcement was made. Winter wheat spreads have pushed to new lows this morning, with Mar KC wheat 26-3/4 cents below Mar Chi wheat and May KC wheat is 23-3/4 cents below May Chi wheat. Funds bought 1,000 contracts of wheat yesterday and are thought to be short about 10,000 contracts.

Cattle: Cattle markets are off slightly this morning, finding some selling resistance near contract highs. The nearby Feb live cattle contract is up 57 cents to 127.25, Apr lives are down 47 cents to 127.82, and Jun lives are down 37 cents to 118.00. Mar feeders are down 22 cents to 144.45 and Apr feeders are down 15 cents to 146.52. Feed lot conditions this week will be rough with major snowstorms on the way. However, with funds holding large speculative long positions and prices at or just off of contract highs, it may take a surge of bullish fundamental developments to keep prices tracking higher. Still, cattle prices remain above all major moving average support levels and have yet to capitulate after some significant bearish key reversals.

Hogs: Hog markets are sharply higher this morning, finding buyers near contract lows for the second session in a row. The nearby Feb contract is up 15 cents to 55.32, Apr is up 2.00 to 61.10, and Jun is up 2.12 to 77.77. Much of the recent jump in hog prices is likely due to a severely overbought technical picture. Both the Apr and Jun contracts gapped higher this morning which shows buying enthusiasm, but also gives the market a potential downside target. Pork prices have not risen enough to warrant today’s jump, so short covering is likely responsible for much of today’s buying. With hogs just off of recent lows and cattle near contract highs, keep an eye out for spread reversing.



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