TFM Midday Update 10-11-19


Corn futures are up sharply this morning with Dec up 12-3/4 to 3.93, Mar is up 11-1/4 to 4.02-3/4, and May corn is up 10-1/4 to 4.07-3/4. Yesterday’s USDA report caused a wave of selling as reductions in ending stocks were not as sharp as the market was expecting. However, the ending stocks numbers and stocks to usage numbers were smaller than the September report despite the higher corn yields. Buyers are reacted today on the tighter balance sheets, as well as the successful test of nearby support levels yesterday. Corn not only tested and held some trendline support, but also the 20 and 50-day moving average levels. Current markets have corrected their overbought conditions and the trend still looks higher. Speculative findswere thought to have sold about 41,000 contracts of corn yesterday.


Soybean futures are trading with solid gains this morning with Nov up 8-1/4 to 9.31-3/4, Jan beans are up 8-1/2 to 9.46, and Mar beans are up 8-1/4 to 9.57-3/4. Yesterday’s closes were disappointing considering the bullish supply and demand data. Not ony was yield reduced by a bushel per acre, but also the ending stocks to use ratio dropped from 15.9% on Sep to 11.4% in Oct. The late session weakness was likely tied to heavy selling in corn and wheat. Extreme winter weather this weekend in the Plains is also suportive with highs winds, freezing temperatures, and snow coverage. Nov beans have traded as high this morning as 9.34-1/2, their highest price since July 15. Stochastics may be slightly overbought, but the trend is still higher. Speculative funds were thought to have bought about 6,000 contracts of soybeans yesterday.


Wheat markets are sharply higher this morning with Dec Chi wheat up 13 cents to 5.06, Dec KC wheat is up 10-3/4 to 4.14, and Dec spring wheat is up 9 cents to 5.44-1/4. Yesterday’s Supply and Demand report was bearish with lower usage numbers in both the U.S. and world balance sheets pushing stocks to usage ratios higher. Buying today is likely spilling over from the higher corn and soybean markets, and also the spring wheat still in the fields now covered in snow. World export prices continue to claw higher though global supplies are plentiful. Dec Chi wheat is trading above its 200-day moving average level for the first time since July 15th, Dec KC wheat is testing the upper ends of its recent consolidation range, and Dec spring wheat has pushed through its 100-day moving average resistance level. Speculative funds were thought to have sold about 7,000 contracts of Chi wheat yesterday.


Cattle markets are moderately higher today with Oct lves up 47 cents to 109.20, Dec lives are up 42 cents to 111.85, and Feb lives are up 42 cents to 117.70. Oct feeders are up 15 cents to 144.45, and Nov feeders are up 12 cents to 144.25. Cash cattle trade has been extremely quiet this week, but there were a handful of animals sold in IA and about 1.00 higher than last week. Beef values have put in a solid bounce this week and are now at their highest levels since late September. The stock market has also put in a nice run over the past handful of sessions, but buying in the cattle markets seems liimited due to the extreme overbought conditions of the market, as well as a sharp premium of futures prices to the cash market. Live cattle markets are still consolidating near their recent highs while the feeder markets are possibly forming pennant continuation patterns that could point higher.


Hog markets are slightly higher this morning with Oct up 40 cents to 62.80, Dec hogs are up 55 cents to 69.02, and Feb hogs are up 47 cents 76.35. Yesterday’s export sales for 2019 delivery were solid, but China made their single largest weekly purchase for 2020 delivery. This purchase represented over 10% of cumulative U.S. export sales for 2019. China’s spot pig price continues to shoot higher and further advance in the hog markets look limited in the near term due to the premium of futures prices to the cash index. Dec hogs retested some nearby support at the 10 and 20-day moving average levels, but have traded in a very tight range so far today.


Kelly Rubisch

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