TFM Midday Update 10-16-19


Corn futures are soft this morning, with Dec down 4 cents to 3.89-1/4, Mar down 3-1/4 cents to 4.01, and May corn down 3-1/4 cents to 4.07-1/4. The major bearish development today was tied to the EPA outlining its proposed rule to reallocate bio-fuel blending requirements for the next two years instead of offsetting lost demand due to hardship waivers, the EPA will calculate demand based on recommended exemptions vs the larger number of gallons that are actually waived. By some estimates, this will increase demand by just 770 million gallons vs approximately 1.35 billion gallons per year that were anticipated. Corn harvest was said to be 22% complete vs the average trade guess of 24% and 15% a week ago. Corn ratings dropped 1% this week to 55% good to excellent. Dec corn has fallen through nearby support at the 10-day moving average level, and a close below would open up a downside target at 3.84-1/2. Corn markets are no longer overbought and traders are still cautious regarding the U.S./China trade negotiations. Speculative funds were thought to have sold about 11,000 contracts of corn yesterday.


Soybean futures are slightly lower this morning, with Nov beans down 3-1/2 to 9.30-1/2, Jan beans down 4 cents to 9.44-1/2, and Mar beans down 3 cents to 9.56-1/4. Yesterday’s NOPA Crush report was very disappointing, with just 152.56 million bushels crushed in September vs the average market guess of 162.1 million bushels. Soybean oil stocks were seen at 1.442 billion pounds vs the average market guess of 1.382 billion pounds. According to the USDA, the U.S. soybean crop is in better shape than it was a week ago, with good to excellent ratings increasing 1% to 54%. This is causing many to scratch their heads considering the winter storms seen in the northern Plains over the weekend. Soybean harvest is said to be 26% complete vs the average market guess of 25% complete. Nov soybeans have traded as low this morning as 9.27-1/2 in a bit of a technical correction from overbought levels. The trend is still higher, but traders will still have U.S./China negotiations on the front of their minds. Speculative funds were thought to have sold about 4,000 contracts of soybeans yesterday.


Wheat markets are choppy this morning, with Dec Chi wheat up 2-1/2 cents to 5.09-1/2, Dec KC wheat down 1/2 cent to 5.20-3/4, and Dec spring wheat up 1/4 cent to 5.45-3/4. Egypt is tendering for wheat again today after purchasing wheat last week at the highest price of the season. Offers in the Black Sea are slightly higher today. Spring wheat harvest is said to be 94% complete with about 385,000 acres still to be harvested, mostly in North Dakota. Dec Chi wheat tested and held nearby support at the 200-day moving average level this morning and has moved moderately higher. Dec KC wheat has been choppy with a tight trading range today and spring wheat futures are off just slightly in very quiet trade. Speculative funds are thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning, with Oct lives up 47 cents to 111.47, Dec lives up 12 cents to 113.57, and Feb lives down 5 cents to 119.50. Oct feeders are up 35 cents to 145.35 and Nov feeders are down 15 cents to 145.92. Cattle markets have been very quiet today, with no major fundamental developments besides beef values creeping to their highest levels since mid-September. Cash cattle have yet to trade this week and technical action has been very quiet since the live cattle markets have tested their overhead 200-day moving average resistance levels. The best traded Nov feeder cattle contract is making an inside session with very quiet trading.


Hog markets are showing moderate losses today after triple-digit gains yesterday. Dec hogs are down 1.85 to 70.27, Feb hogs down 65 cents to 78.50, and Apr hogs are down 47 cents to 84.40. Most are warming up to the idea that China will continue to be a major buyer of U.S. pork products as weekly production has run at near-record levels lately and pork prices have been choppy to higher. South Korea reported another case of African swine fever overnight near the border and traders suspect North Korea could see a sharp drop in production. The best traded Dec lean hog contract has fallen back below its 200-day moving average support level but has not made any moves out of recent consolidation levels. The trend is still choppy. Feb hogs briefly traded above yesterday’s highs but have since backed off.


Carol Tillmann

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