TFM Midday Update 1-16-20


Corn futures are trading sharply lower this morning in some long liquidation after yesterday’s deal signing. Mar corn is down 8-1/4 to 3.79-1/4, May is down 8 cents to 3.86, and Jul is down 8 cents to 3.92-1/2. Yesterday’s phase 1 deal signing did not include any specific language about purchases of U.S. corn or ethanol, though DDG’s were a highlighted product. Though China was not previously a major buyer of U.S. corn, traders are still disappointed by China’s lack of commitment to purchases and even their ability to reach lofty goals. Mar corn futures have fallen below major moving average support levels and have tested and held major trendline support today at 3.77-3/4. With yesterday’s drifting prices and today’s move lower, momentum may pull prices lower. The U.S. sold nearly 785,000 tons of corn for the week ending January 9th, up sharply from last week and up 4% from the previous 4-week average. Speculative funds were thought to have sold 9,000 contracts of corn yesterday.


Soybean futures are moderately lower this morning, though are holding support levels so far. Mar beans are down 5-1/2 to 9.23-1/4, May is down 5-1/4 to 9.36-3/4, and Jul is down 5 to 9.49-1/4. Soybeans were the main focus of U.S./China trade talk lately, and the fact that soybeans were not specifically mentioned in the documents was seen as a bearish factor. Traders are also distrustful of China purchases as they will make purchases based on “market conditions”. This could mean that if China can buy soybean supplies cheaper elsewhere, they intend to do so. Mar soybeans have fallen below nearby support at the 50 and 100-day moving average levels, but have so far held the 200-day moving average support level. Mar beans have not closed below this level since December 12th, so a break below would be bearish. Stochastics and Bolinger bands are both giving oversold readings, so if beans can hold here, this could prove to be a buying opportunity. The U.S. sold nearly 712,000 tons of beans for the week ending January 9th, up sharply from last week and up 3% from the previous 4-week average. Speculative funds were thought to have sold about 11,000 contracts of soybeans yesterday.


Wheat markets are down sharply from yesterday with Mar Chi wheat down 8-1/4 to 5.65, Mar KC wheat is down 11-1/2 to 4.85, and Mar spring wheat is down 4 cents to 5.52-1/4. Yesterday’s phase 1 deal did not do much to settle skepticism that China would become a major buyer of U.S. wheat. Still, global demand is strong and proposed Russian export quotas are supportive. The U.S. dollar is also reaching a 1-week low which should keep U.S. supplies competitive on the global export front. Mar Chi wheat tested nearby support at the 10-day moving average today and has so far held it. Mar CKC wheat has fallen below the 10-day moving average support level and Mar spring wheat is holding support at the 200-day moving average level. The U.S. sold about 651,000 tons of wheat for the week ending January 9th, up sharply from last week and up 32% from the previous 4-week average. Speculative funds were thought to have bought about 6,000 contracts of Chi wheat yesterday.


Cattle markets are showing triple digit losses so far today with Feb lives down 1.10 to 125.50, Apr lives are down 1.47 to 126.02, and Jun lives are down 1.27 to 118.15. Jan feeders are down 1.60 to 143.82 and Mar feeders are down 2.07 to 143.10. U.S. beef was a featured item on yesterday’s U.S./China phase 1 deal signing, and though China has yet to commit to any specific amount of purchases, it appears that beef will be on the shopping list. Beef values were choppy yesterday after a solid close on Tuesday and cash trade has been steady to slightly higher than the high end of the previous week’s range. Price charts today do not look so positive with the best traded Feb live cattle contract moving below its 50-day moving average support level. Feb lives have only made one close below the 50-day moving average since September 20th, so a break below appears to be a bearish signal. Mar feeder cattle are also trading below their 50-day moving average support level, and that contract has only made one close below that level since December 5th. The U.S. sold just under 18,000 tons of beef for the week ending January 9th.


Hog markets are showing triple digit losses this morning with Feb down 1.07 to 66.80, Apr hogs are down 1.45 to 73.52, and Jun hogs are down 1.42 to 86.07. With the phase 1 deal officially signed, the U.S. should begin to ship more pork to China, but there has not been any official confirmation of just how much pork China intends to buy. Record production in recent weeks has kept domestic supplies heavy, though China’s spot pig prices continue to rally as well. The index is also higher today, which is supportive. Feb hogs briefly tested their 10-day moving average resistance level this morning, but have since drifted lower. Apr hogs also tested and failed to break though the 10-day moving average level and Jun hogs have fallen back below their 10-day moving average after closing above yesterday afternoon. The U.S. sold nearly 39,000 tons of pork for the week ending January 9th.


Kelly Rubisch

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