TFM Midday Update 1-8-20


Corn futures are drifting a bit lower this morning, with Mar down 1-3/4 to 3.82-3/4, May corn is down 2 cents to 3.89-1/2, and Jul corn is down 1-3/4 to 3.96. While most are still expecting the USDA to lower ending stocks on Friday’s USDA’s Supply and Demand report, a lack of volatility and new fundamental developments are allowing prices to drift. Weaker energy prices and a spurt higher in the U.S. dollar are also negative. CONAB is expected to increase their official corn crop estimate today to 101 million tons from 98.4 million tons in December. Mar corn briefly tested overhead resistance today at the 50-day moving average level but has since fallen lower and is now trading at its lowest levels since December 13. Stochastics are close to oversold readings. Speculative funds were thought to have sold about 3,000 contracts of corn yesterday.


Soybean futures are trading slightly higher today, stabilizing on recent support levels. Jan beans are up 3 cents to 9.38, Mar beans are up 1-1/2 to 9.45-1/2, and May beans are up 3/4 cent to 9.58. Brazil’s soybean crop appears to be getting bigger, with CONAB expected to increase their soybean crop estimate today to 123.6 million tons vs 121.1 million tons last month. Friday’s USDA Supply and Demand report is expected by many to show a smaller pile of ending stocks though the January report is notoriously volatile. The inability of soybeans to break following last Friday’s sharp move lower, as well as a strong U.S. dollar and continued Middle Eastern tensions is supportive. Mar soybeans tested their 20-day moving average support level for the second session in a row this morning and have tested their 10-day moving average resistance level for the third session in a row today. Prices are still trapped between the two moving average levels in range-bound trade. Speculative funds were thought to have sold about 2,000 contracts of soybeans yesterday.


Wheat markets are slightly lower this morning, with Mar down 1-1/4 to 5.49, Mar KC wheat is steady at 4.75, and Mar spring wheat is down 4 cents to 5.42-3/4. With Middle Eastern tensions potentially dying down, wheat futures are stabilizing after the recent selloff. A stronger U.S. dollar has been a major pressure point this week, especially as Friday’s USDA report is expected to confirm record global wheat supplies. Japan will tender for over 106,000 tons of milling wheat this week, with nearly 60,000 tons of that from U.S. origin. Mar Chi wheat has been trapped again today between its 10-day moving average resistance level and its 20-day moving average support level. Trade has been choppy and prices are currently in the middle of the day’s range. Mar KC wheat has tested its 10-day moving average resistance level today but has been unable to make much of an advance above it and Mar spring wheat is trading at the lows of the day and may test its 20-day moving average support later in the session. Speculative funds were thought to have stayed net even in Chi wheat yesterday.


Cattle markets are mixed to mostly lower this morning, with Feb lives down 22 cents to 126.30, Apr lives are down 52 cents to 126.85, and Jun lives are down 5 cents to 118.92. Jan feeders are up 25 cents to 146.15 and Mar feeders are up 75 cents to 145.87. Cash cattle traded yesterday at 124.00 in Kansas, just off the high end of last week’s range. Beef values closed very slightly lower yesterday and are at their lowest level since January 3. The drought and fires in Australia are likely to negatively impact Australian beef exports which would be positive for U.S. global beef sales. Feb live cattle are so far holding their 10 and 20-day moving average levels today in a very tight range of just 82 cents so far. Jan feeders are making an inside session as well after testing nearby support at the 10-day moving average.


Hog markets are slightly higher today, with Feb up 82 cents to 70.05, Apr is up 57 cents to 76.32, and Jun hogs are up 22 cents to 87.82. The CME Lean Hog Index is down slightly today and pork values have also corrected lower. Still, China pig prices are up 6% this month and traders are looking forward to the Phase One deal signing next Wednesday. This should increase China buying of U.S. pork, though China is already taking steps to repopulate their own herd. China’s sow herd was up 2.2% in December. The best traded Feb lean hog contract is currently testing its 10 and 50-day moving average level after pushing through its 20-day moving average resistance level. A close above the 10 and 50-day would be a positive technical development and the first move above since January 2.


Carol Tillmann

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