TFM Midday Update 1-3-20


Corn futures are moderately lower today, with Mar down 3-3/4 to 3.87-3/4, May is down 4 cents to 3.94, and Jul corn is down 4 cents to 4.00. The lower corn trade today so far is a bit disappointing considering the strength in crude oil futures, with Feb reaching as high as 64.09. Geopolitical instability is shaking commodity markets today, and many traders are taking a risk-off attitude. Forecasts for drier weather in the corn growing areas of Brazil and Argentina are a bit supportive and China is expected to increase ethanol purchases once the Phase One deal is signed. The Mar corn contract has fallen below its 10-day moving average support level though has not yet interacted with its 50 or 100-day moving average levels and is still trading with an inside session. The U.S. sold about 531,000 tons of corn for the week ending December 26. Speculative funds were thought to have bought about 11,000 contracts of corn yesterday.


Soybean futures are sharply lower this morning, with Jan beans down 16-1/4 to 9.28, Mar beans are down 17-1/4 to 9.39, and May beans are down 17 cents to 9.52-1/2. Nov crush missed expectations this morning by about 1.25 million bushels which is negative, but the major bearish development today is a general sense of instability due to the U.S. attack on a major Iranian military official. As of yesterday’s close, Mar soybean futures had picked up nearly 75 cents since the low made in the first week in December. Soybean futures were sharply overbought according to a number of technical indicators and many traders are taking profits today. Mar beans have fallen below the 10-day moving average support level today and a close below would be the first since December 4. The U.S. sold just over 330,000 tons of soybeans for the week ending December 26, a marketing-year low. Speculative funds were thought to have bought about 3,000 contracts of soybeans yesterday.


Wheat markets are soft this morning with Mar Chi wheat down 5-3/4 to 5.54-1/2, Mar KC wheat is down 11-1/4 to 4.74, and Mar spring wheat is down 9 cents to 5.49-1/4. There are still expectations that China will purchase increasing amounts of U.S. wheat after the Phase One trade deal is signed, but a higher U.S. dollar and general risk-off added to the grains today is overpowering any short-term fundamental bulls. Mar Chi had a very poor close yesterday after making new highs for the move and has continued to attract sellers this morning. Mar KC wheat traded as high yesterday as 4.96-3/4, the highest since July 15, but ultimately made a lower close and possible blow-off top. KC wheat is still holding its 10-day moving average support level. Mar spring wheat also made a hook reversal yesterday and is currently testing its 10-day moving average support level. The U.S. sold nearly 313,000 tons of wheat for the week ending December 26, down sharply from the previous week and the previous 4-week average. Speculative funds were thought to have bought about 4,000 contracts of Chi wheat yesterday.


Cattle markets are slightly lower this morning, with Feb lives down 42 cents to 125.35, Apr lives are down 12 cents to 126.35, and Jun lives are down 47 cents to 118.22. Jan feeders are down 80 cents to 143.85 and Mar feeders are down 47 cents to 143.25. Cash beef values continue to slip to their lowest level since mid-October. Cash cattle trade has been very quiet so far this week but was noted towards the high end of last week’s range of 125.00. Many are still expecting China to increase purchases of U.S. beef after the Phase One deal is signed though China has been mum. Feb futures are still holding a wide premium to the cash market for this time of year which could introduce additional downside. Feb lives tested their 50-day moving average support level again today but have not stayed at that level very long, instead attracting buyers to limit losses. Jan feeders are trading in a quiet session so far and holding nearby support levels.


Hog markets are sharply lower this morning, with Feb down 2.97 to 68.57, Apr is down 3.00 to 75.00, and Jun hogs are down 2.62 to 86.92. Carcass values are at their lowest levels currently since early November and China canceled some U.S. purchases of pork on the latest report. The CME Index is also trending lower and many seem to think that increased China purchases may already be priced in. Feb hogs are trading limit lower currently and have fallen through moving average support where the 10 and 50-day averages converge. Feb, Apr, and Jun hogs are all trading at their lowest levels since December 12, taking some air out of the overbought conditions.


Carol Tillmann

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