TFM Midday Update 10-1-19


Corn futures are moderately higher so far this morning. Dec is up 2-3/4 to 3.90-3/4, Mar is up 2-3/4 to 4.02-1/4 and May corn is up 2 cents to 4.07-1/4. Yesterday’s quarterly Grain Stocks report showed that corn stocks as of September 1 were below last year’s corn stocks as at the well as the low end of estimates. This seems to imply that last year’s production was overstated, and the balance sheet has been tighter than previously anticipated. The U.S. sold 20,000 tons of corn to Mexico yesterday, and many sources reported they were still actively pricing cargoes throughout the day. Yesterday’s Crop Progress report showed that corn conditions were steady with last week at 57% good to excellent. Corn maturity is at 43%% versus 84% last year and an average of 73%. The Dec corn contract closed above its 50-day moving average level yesterday for the first time since July 19, and today corn tested that level as support and has since rallied higher. Technicals are indicating that corn is overbought, but the trend is still higher. Speculative funds were thought to have bought 55,000 contracts of corn yesterday.


Soybean futures are showing solid gains so far today with Nov up 8 cents to 9.14. Jan beans are up 6-3/4 to 9.26-1/4, and Mar beans are up 5 cents to 9.35. Yesterday’s quarterly Grain Stocks report came in at 913 million bushels, versus the average estimate of 981 million bushels and the lowest guess of 940 million bushels. While this is still sharply higher than last year’s stocks of 438 million bushels, this does lighten the balance sheet considerably. Rumors were swirling yesterday that China was buying several cargoes of U.S. beans for a national holiday began today. State and private crushers received new waivers to buy 2 million tonnes of tariff-free beans. Nov soybeans have pushed through their 200-day moving average resistance level today for the first time since July 15. A close above would be the first since July 14, and it looks as though the bull flag continuation pattern has materialized. Speculative funds were thought to have bought about 17,000 contracts yesterday.


Wheat markets are correcting lower today, with Dec Chi wheat down 3-3/4 to 4.92. Dec KC wheat is down 4 cents to 4.11, and Dec spring wheat is down 5-1/2 cents to 5.39. Yesterday’s quarterly Grain Stocks report was considered mostly neutral for the wheat markets. Winter wheat production came in lower than expected, and there is a special note in a small grains report stating that there will be a significant amount of spring wheat acreage not harvested. Adverse weather in any northern Plains has made harvest difficult and has severely impacted spring wheat quality. The Dec Chi contract tested its upper Bollinger band this morning and has since found selling pressure. Dec KC wheat found sellers at its 50-day moving average resistance level, and Dec spring wheat has fallen below its 100-day moving average support level and is currently testing its 10-day moving average support level. A close below this would be the first since September 9. Speculative funds were thought to have bought about 7,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower this morning with Oct lives up 10 cents to 104.67. Dec lives are down 2 cents to 110.07, and Feb lives are down 7 cents to 116.55. Oct feeders are down 97 cents to 141.42, and Nov feeders are down 1.05 to 140.87. Beef values are at their lowest levels since late July, while cash markets rallied 2.00 to 3.00 last week. Poor weather in the Plains forecast for this week should keep weight gain at a minimum. Today’s selling pressure appears mostly technical in nature, with both the live and feeder markets sharply overbought. Still, Dec lives are holding their 100-day moving average support level, and Nov feeders are still holding their 10-day moving average support level. Momentum may be turning lower, but the fundamental picture is still positive.


Hog markets are sharply lower this morning, with Oct down 2.00 to 63.45. Dec hogs are down 2.47 to 70.12, and Feb hogs are down 1.95 to 76.05. Pork values and cash index values are rallying, which is a major source of support, but futures are still holding a very high premium to the index this time of year. Exports are beginning to pick up, and momentum indicators are pointing sideways to lower. The best-traded Dec contract is currently trading below its 100 and 200-day moving average levels after futures closed above those levels yesterday. With overbought technicals, hogs may attract short term selling interest.


Lisa Heder

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