TFM Midday Update 10-21-19


Corn futures are slightly soft this morning, with Dec down 2-1/4 to 3.88-3/4, Mar down 1-3/4 to 4.01 and May corn down 1 cent to 4.08-1/2. Increasing harvest pressure and poor export sales pace the past few weeks have kept the corn market on the defensive, especially considering that corn futures have flirted with overbought levels lately. Most expect that last weekend’s storm and cold weather in the Plains could reduce the corn crop by 150 to 400 million bushels. Technical trade today has been relatively quiet, with futures testing the overhead 10-day moving average resistance levels in Dec corn this morning. Prices have so far held their 20-day moving average levels but are trading just off the lows of the session. Momentum indicators are pointing lower. Speculative funds are thought to have sold about 15,000 contracts of corn.


Soybean futures are slightly lower this morning, with Nov down 1-1/4 to 9.32-3/4, Jan down 1 cent to 9.46-1/2 and Mar down 1/4 cent to 9.59. China’s comments indicating there was “concrete progress” made between the U.S. and China negotiations last week is a positive sign. The paper has yet to be signed, but things are apparently moving in the right direction from both the U.S. perspective and China. The USDA is resurveying many areas damaged by winter storms last weekend to determine reductions in harvested acreage from the usual harvest rate. These results will be included on the 11/8 Supply and Demand report. Nov soybeans have traded as high today as 9.33 but are currently drifting back to the lower end of the day’s range after a test of support at the 10-day moving average. Speculative funds were thought to have bought about 7,000 contracts of soybeans on Friday.


Wheat markets are soft this morning with Dec Chi wheat down 7 cents to 5.25-1/4, Dec KC down 4-1/2 to 4.29-1/4 and Dec spring wheat down 3-1/4 to 5.41-1/4. Soybean harvest in Kansas is just 13% complete as of last week, and many are beginning to believe that HRW wheat acreage could decline due to slow planting pace and insurance dates around the corner. There are also rumors that China may include HRW in the list of goods it wants to purchase with the phase one trade deal. Production estimates from Australia and Brazil continue to decline on hot and dry weather. Dec Chi wheat traded to its highest level this morning since mid July but has since backed off and may be forming a hook reversal. Dec KC wheat is making similar price action and is trading just off the lows of the day currently. Dec spring wheat has tested nearby support at the 100-day moving average level but has begun to consolidate. Speculative funds were thought to have bought about 4,000 contracts of Chi wheat on Friday.


Cattle markets are slightly higher this morning with Oct lives up 27 cents to 110.75, Dec lives up 5 cents to 113.67 and Feb lives down 2 cents to 119.05. Oct feeders are up 22 cents to 143.72, and Nov feeders are up 30 cents to 143.15. Disappointing export sales and steady to lower cash trade on Friday had many expecting a bit of a corrective break, but so far, buyers have held futures mostly steady. Friday’s closes were technically impressive, testing nearby support on sharply lower trade and then finishing the day in the top third of the range. Cold and wet weather in the 6-10 day forecast should keep weight gain in check. Dec live cattle have traded within a range today of just 67 cents and are currently testing their 200-day moving average resistance level. Oct feeders briefly tested nearby support at the 20-day moving average level but have since bounced hihger and are now retesting the highs of the day and their 10-day moving average resistance level.


Hog markets are showing moderate gains today with Dec up 70 cents to 68.65, Feb hogs up 95 cents to 78.42 and Apr hogs up 92 cents to 84.37. China’s pig prices continue to rocket higher with the spot pig index up 8% overnight. China should continue to be an aggressive importer of U.S. pork products going forward. Last Friday’s export sales data was apparently not accurate and included a significant quantity of pork sales from previous weeks but not previously reported. This likely was cause for some speculative long  liquidation. Price action today has been solid, however, with Dec retesting its overhead 10, 20 and 100-day moving average resistance levels. Gains for the day so far have been relatively modest, though the consolidation shows that speculators are never far away from owning hogs with potential from China to buy so much pork.


Lisa Heder

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