TFM Midday Update 1-14-20

CORN

Corn futures are slightly down in early trade this morning. Mar is down 1 cent to 3.88-1/2, May is down 3/4 cent at 3.95-1/2, and Jul corn is down 1 to 4.01-3/4. Corn prices have been able to hold current levels despite good weather in South America and a sluggish export pace. While supply came in heavier than expected on Friday’s USDA report, resurveys in the spring could shift things down the road, and the demand side of the balance sheet was seen as supportive. The U.S. and China are still scheduled to sign the Phase 1 trade deal some time tomorrow, which should keep price action relatively muted until then. Mar corn has traded within a very tight range today of just 2-1/4 cents so far. While prices have been unable to hold onto early session gains, nearby support levels have not been tested. Speculative funds were thought to have bought about 12,000 contracts of corn on Monday.

SOYBEANS

Soybean futures are slightly higher this morning, with Mar up 2 cents to 9.44-1/4. May is up 1-1/2 to 9.57, and Jul is up 2 cents to 9.69-1/4. Non-threatening weather in Brazil and Argentina is keeping prices range-bound despite the signing of the Phase 1 deal scheduled for tomorrow. China has been issuing regular tariff waivers for commercial firms to buy U.S. beans lately, which covers the 30% retaliatory taxes. The South American soybean crop will be harvested soon, but China is expected to ramp up purchases of U.S. supplies in the meantime. Yesterday’s price action was a bit disappointing, with most bean contracts making their first close below the 20-day moving average support level since mid December. Closes were still within the recent range, and the anticipation of tomorrow’s trade deal signing is keeping buyers interested. Mar beans have so far tested their 10-day moving average resistance levels but are currently trading just above their 20-day moving average resistance level. Speculative funds were thought to have sold about 3,000 contracts of beans yesterday.

WHEAT

Wheat markets are showing solid gains so far this morning, with Mar Chi wheat up 9 cents to 5.71-1/4. Mar KC is up 5 cents to 4.97-3/4, and Mar Mpls is up 2-1/4 to 5.57-1/2. European wheat futures pushed to a new 7-month high this morning, as French railroad strikes are disrupting milling wheat mobility. Friday’s USDA Supply and Demand report showed record global wheat supplies, but exportable supplies are shrinking, and the U.S. ending stocks were seen at a 5-year low. Russian wheat crop estimates are beginning to drop, and there is talk that the warm start to the growing season may end up leaving the Russian wheat crop increasingly vulnerable to future cold snaps. Mar Chi wheat is trading at its highest levels today since June 28, and a close at the current prices would be the highest since December 2018. Mar KC wheat is trading at its highest levels since July 16, and Mar spring wheat tested and held nearby support at the 10-day moving average support level this morning. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.

CATTLE

Cattle markets are mixed this morning, with Feb lives up 32 cents to 126.87. Apr lives are up 17 cents to 127.70, and Jun lives are down 5 cents to 119.45. Jan feeders are down 20 cents to 145.82, and Mar feeders are down 7 cents to 145.77. Choice beef values have begun to stabilize lately, and though have not put in a massive rally, they are currently trading at their highest level since late December, though slightly lower than a year ago. The five-area weighted average cash prices for live steers is also rallying slowly and is about 70 cents above last year’s price. Weather forecasts are showing below normal temps and mixed precipitation probabilities for the Plains, which should be relatively neutral for futures markets. Feb live cattle tested and again held their 10 and 20-day moving average support levels this morning and are currently trading at the highs of the day. Prices have so far stayed within yesterday’s range, making the second inside session in a row. Mar feeder cattle tested and held support at the 10 and 20-day moving average levels and are trading near the highs of the day so far.

HOGS

Hog markets are trading sharply higher this morning following the recent technical breakdown, with Feb up 1.92 to 67.82. Apr is up 1.45 to 74.82, and Jun is up 1.45 to 86.92. Cash hogs in the U.S. are lower, and the pork cutout values have been sliding lately as well. Exports to China in recent months have been strong but have not been enough to boost domestic pork prices. The Phase 1 trade deal is expected to be signed tomorrow, which should in theory boost U.S. sales of pork to China, especially leading up to the lunar new year holiday. The Feb lean hog futures contract has rallied back into its Bollinger band range today, though it is still oversold according to Stochastics. Overhead resistance at the 10-day moving average has not yet been tested. Apr and Jun hogs have also jumped back into their Bollinger band range, and Stochastics are currently giving buy signals.

 

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