TFM Midday Update 1-13-20

CORN

Corn futures are trading slightly higher so far today, with Mar up 2-1/2 to 3.88-1/4, May up 2 cents to 3.94-3/4, and Jul corn up 1-1/4 to 4.00-3/4. Friday’s USDA Supply and Demand report was considered mostly neutral, with higher ending stocks than anticipated, but world ending stocks were shown to be down 7% from last year. The report also indicated that producers in five northern states would be resurveyed in the spring which could potentially change harvested acres, yield, production, and stocks if warranted. The U.S. and China are expected to sign the Phase One deal on Wednesday which is keeping prices supported even though China is not a major buyer of U.S. corn at this time. The Mar contract opened directly at its 10, 20, and 100-day moving average levels today after failing to break above on Friday. Prices traded lower early in the session but have since rallied above those levels, and a close above would be the first since January 2. Speculative funds were thought to have bought about 13,000 contracts of corn on Friday.

SOYBEANS

Soybean futures are drifting towards the lower end of their recent range so far today, with Jan down 4 cents to 9.31, Mar down 6 cents to 9.40, and May down 6 cents to 9.53. With Friday’s Supply and Demand report behind us with identical U.S. ending stocks and usage as the December data set, the focus is shifting towards Wednesday’s Phase One trade deal signing. South American weather is still non-threatening with rain systems in both Argentina and Brazil coming through over the next 6-10 days. The Mar soybean contract opened above its 10-day moving average resistance level today but has since fallen back below, and fallen through its 20-day moving average support level as well. Still, Mar beans are about 6 cents off of the recent lows as traders appear hesitant to take beans out of the recent range ahead of the deal signing and subsequent fact sheet scheduled for Wednesday. Speculative funds were thought to have bought about 3,000 contracts of soybeans on Friday.

WHEAT

Wheat markets are drifting lower this morning, with Mar Chi wheat down 4 cents to 5.60-1/2, Mar KC wheat trading 4-1/2 cents lower to 4.90-1/4, and Mar spring wheat down 4-1/4 cents to 5.54. The USDA confirmed estimates on Friday that the U.S. will plant its lowest winter wheat acreage since 1909 this year. U.S. ending stocks were also moved to a 5-year low and exportable supplies are tightening despite plentiful global overall inventories. Mar Chi wheat made its highest close on Friday in six months but has set back a bit so far today. Prices have remained inside of Friday’s range and have not yet tested nearby support. Mar KC wheat made its highest closes on Friday in 5-1/2 months and are correcting a bit today. Mar spring wheat futures have tested and held nearby support today at the 10-day moving average after making a solid close higher Friday afternoon. Speculative funds were thought to have bought about 3,000 contracts of Chi wheat on Friday.

CATTLE

Cattle markets are lower this morning, with Feb lives down 62 cents to 126.80, Apr lives are down 52 cents to 127.42, and Jun lives are down 27 cents to 119.50. Jan feeders are down 1.22 to 146.37 and Mar feeders are down 1.25 to 146.20. A few live cattle traded in Nebraska on Friday afternoon very slightly higher than the previous week’s average. Still, the numbers were light enough to not attract a wave of new buyer interest. Beef values have been in a choppy trend lately, making their highest close on Friday since December 26. Feb live cattle traded so far within Friday’s range and briefly tested support at the 10 and 20-day moving average levels. A close below that level would be the first since January 3 though the trend still looks sideways to higher. Mar feeders are still trading inside of Friday’s range as well, and Stochastic indicators in both the live and feeder markets are getting overbought readings.

HOGS

Hog markets are showing triple-digit losses to start the week, with Feb down 1.45 to 65.80, Apr down 1.10 to 73.02, and Jun down 1.02 to 85.15. The negativity is somewhat disappointing going into the Phase One deal signing on Wednesday. China pig prices are up over 7% for the month so far, and coming into the Lunar New Year holiday, most are expecting Chinese purchases to increase. Still, near-record production due to heavy weights and high slaughter is keeping domestic supply extremely heavy. Feb lives are trading at their lowest levels since December 3 and are drifting into oversold territory. Apr hogs are also moving to their lowest levels since December 9 and Jun hogs have broken support on a trendline started August 5.

 

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Carol Tillmann

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