TFM Midday Update 10-30-19


Corn futures are trading slightly higher this morning, with Dec up 1-1/2 cents to 3.87-3/4, Mar is up 1-1/4 to 3.97-1/4, and May is up 3/4 cent to 4.03-1/2. U.S. corn is now cheaper than Brazilian corn on export markets, and the spread between Argentine corn and U.S. corn is still narrowing. China corn prices were up over 1% yesterday with talk that pig feed demand may be increasing. Given China’s dwindling corn stocks, this could be a signal that China may buy U.S. corn if a deal is signed. Price action has been relatively quiet so far, following bullish key reversals yesterday. The best traded Dec corn futures contract is trading above its 10-day moving average level for the first time since October 22 and is testing its 20-day moving average resistance level. A close above the 20-day would be the first since October 18. Speculative funds were thought to have bought about 7,000 contracts of corn yesterday.


Soybean futures are trading slightly higher this morning, with Nov up 2 cents to 9.20-1/4, Jan is up 1-3/4 to 9.35-1/4, and Mar beans are up 2 cents to 9.48-1/4. A lack of new buying has been somewhat disappointing given good prospects for the Phase 1 trade deal being signed next month, as well as a slow harvest pace and early October freeze. Right now it appears that the market will need to see increased exports soon, or a deal to attract new buyers. Brazilian soybean planting is running 11% behind the average pace with southern regions forecasted to receive beneficial rains over the next week or so and the northern areas expected to remain dry. Nov soybeans are trading just off the highs of the day so far, though still with an inside session. Stochastics are giving nearly oversold readings after the sharp selloff starting Friday. Speculative funds were thought to have sold about 6,000 contracts of soybeans yesterday.


Wheat markets are soft this morning, with Dec Chi wheat down 2-3/4 to 5.08-3/4, Dec KC wheat is down 3/4 cent to 4.18-1/4, and Dec spring wheat is down a penny to 5.24-3/4. Besides Egypt’s purchase yesterday of 235,000 tons of wheat, fundamental developments have been very light lately. U.S. farmers are expected to plant the lowest number of winter wheat acres this year since 1909, but heavy global inventories are likely to make up for lower seedings. Dec Chi wheat is currently testing its 20-day moving average support level, and a close below would be a first since September 6. Dec KC wheat has tested and held its 20-day moving average so far today, though a close below would be the first since October 10. Dec spring wheat is trading just below its 50-day moving average support level today and has fallen to oversold levels. Momentum indicators in all three markets are still pointing lower. Speculative funds were thought to have sold about 2,000 contracts of Chi wheat yesterday.


Cattle markets are higher this morning, extending their rallies and pushing to multi-month highs. Oct lives are up 60 cents to 113.95, Dec lives are up 90 cents to 117.72, and Feb lives are up 45 cents to 122.42. Oct feeders are up 17 cents to 145.60 and Nov feeders are up 30 cents to 145.77. Retail beef values had a solid jump yesterday afternoon, and most are expecting cash cattle to trade about 2.00 higher than last week. The expectations of higher cash trade are especially supportive given the unusually wide premium of futures markets to cash. Slaughter is also down from last week and from the same week last year. Dec lives are trading just off the highs of the day, hitting their highest value since April 29. Nov feeders tested and held support at the 200-day moving average yesterday and are making moderate gains today.


Hog markets are finding some recovery bounce today with Dec up 1.05 to 65.37, Feb hogs are up 42 cents to 73.05, and Apr hogs are up 27 cents to 79.42. The CME Lean Hog Index and pork values have been choppy lately, thought the best traded Dec contract has sold off enough to come within a few dollars of the index. China pig prices are up over 206% year to date, and traders are still anticipating massive exports if a trade deal can get signed. The recent retreat to oversold levels may also be a technical buying signal though the day’s advances are limited. Dec hogs are trading close to the highs of the day though have still yet to test their overhead resistance at the 10-day moving average level.


Carol Tillmann

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