TFM Mid-Day Update June 19, 2019


Corn futures are trading moderately lower early this morning, with Jul corn down 2 cents to 4.47-3/4, Sep corn is down 3-1/4 to 4.52-1/4, and new crop Dec corn is down 4-1/2 to 4.58-1/2. Similar to yesterday’s session, the price action today looks like risk-off activity. With Jul option expiration coming this Friday, and then Jul grains first-notice day and the Grain Stocks and Acreage report next Friday, many with good profit in long positions are likely exiting. Fundamentally, not much has changed. There is still a good chance that planted acreage comes down in future reports and yield as well. There is even talk lately that some of the reported planting progress may actually be due to farmers deciding on prevent plant. Planting progress is seen as a percentage of the intended acres. The intended planted acres can change week to week. Jul corn traded as low today as 4.43-3/4, still off the lows from yesterday. Dec corn traded as low this morning as 4.55-1/4 with nearby support coming in at the 10-day moving average at 4.51-1/4. Funds sold 18,000 contracts of corn yesterday and are thought to be net long about 193,000 contracts.


Soybean futures are trading slightly lower so far this morning, with Jul down 2-1/4 to 9.11-1/4, Aug beans are down 2-1/2 to 9.17-3/4, and new crop Nov soybeans are down 2-3/4 to 9.37-1/2. Nov beans traded as low overnight as 9.31-3/4, finding similar profit-taking liquidation to the corn market ahead of some increased volatility over the next week and a half. Still, above-normal precipitation for the next 6-10 days is supportive, along with news that President Trump and President Xi will be meeting at the G20 Summit next week. Trump even implied that the U.S. and Chinese negotiation teams could start working together again before the meeting. Chinese soybean meal futures were lower overnight, normally a negative factor, though most feel that the lower trade was due to Chinese traders fears that China soybean imports could increase soon. Nov beans are trading within yesterday’s range, only trading as low as 9.31-3/4 and as high as 9.40. Gaps from the beginning of the week are still holding and Nov beans would have to trade down to 9.11-3/4 to fill that gap. Funds bought 5,000 contracts of soybeans yesterday and are thought to be net short about 39,000 contracts.


Wheat markets are lower in disappointing trade so far, with Jul Chi wheat down 7-1/4 to 5.24-1/4, Jul KC wheat is down 6 cents to 4.59-1/4, and Jul spring wheat is down 9-1/2 to 5.42-3/4. Weather for the major wheat growing areas is not changing. Excessive moisture in the winter wheat growing areas of the U.S., particularly the soft red winter wheat growing areas, will likely harm yields. Very hot weather and a lack of moisture in the Black Sea will be stressing the spring wheat crop, and Australia remains hot and dry as well. The weather developments are not enough to stem recent losses, especially with the weak technical actions seen so far this week. Monday’s price action looked very toppy and yesterday’s selloff was bearish follow through. Chi wheat is holding its nearby support after a test this morning at the 10-day moving average levels. KC wheat futures are also holding some nearby support and the spring wheat futures have broken below their nearby support. Stochastics are giving a sell signal at this time. Funds sold 7,000 contracts of Chi wheat yesterday and are thought to be net short about 39,000 contracts.


Cattle markets are lower this morning, with Jun lives down 75 cents to 108.70, Aug lives are down 65 cents to 104.90, and Oct lives are down 57 cents to 106.47. Aug feeders are down 75 cents to 136.50 and Sep feeders are down 67 cents to 136.92. Live cattle futures briefly tested some overhead resistance today, but given the lack of retail demand lately, futures quietly drifted back below the resistance levels. Feeder markets also tested overhead resistance early in the session, but just briefly before sellers were active pushing prices lower again. The live cattle markets are still in a bear-flag formation that could spell lower prices especially if Friday’s Cattle on Feed report comes in heavy.


Hog markets are showing gains so far this morning, with Jul up 30 cents to 81.77, Aug hogs are up 1.10 to 82.80, and Oct hogs are up 90 cents to 77.50. All three nearby contracts are trading directly at their 10-day moving average overhead resistance levels. Closes above that level would be significant considering this has been the nearby resistance for nearly a month. In addition, Stochastics are currently reading oversold and are close to crossing back up which would create a buy signal. Still, pork demand is lack-luster, especially given the seasonal tendency for pork demand to pick up this time of year. Production has been very heavy lately, making the supply situation even worse. Progress with China, though still a long way away, is still on the market’s mind.



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