TFM Midday Update 10-31-19


Corn futures are weak this morning, with Dec down 4-3/4 to 3.86, Mar is down 3-1/4 to 3.96-1/4, and May corn is down 3 cents to 4.02-1/4. China trade concerns are the main source of selling pressure today, with articles overnight expressing doubt that China wants to sign a long-term deal. Snow and rain in Wisconsin, Illinois, Indiana, Michigan, and Ohio are keeping producers out of the fields. Dec corn futures have fallen back below their 10 and 20-day moving average levels and calendar spreads have begun to weaken again after a strong few sessions lately. The U.S. sold 549,000 tons of corn for the week ending October 24, up 12% from last week and up 29% from the previous 4-week average. Speculative funds were thought to have bought 11,000 contracts of corn yesterday.


Soybean futures are slightly lower after recovering from some earlier losses. Nov beans were down 2-1/2 cents to 9.13-1/2, Jan beans are down 2 cents to 9.28-1/2, and Mar beans are down 1-3/4 to 9.41-3/4. News yesterday that the APEC meetings in Chile have been canceled was a source of pressure yesterday, and now there are rumors that China may be unwilling to sign a long-term deal with the U.S. Soybean traders are not buying inclement weather either, with snow and rain falling in most of the upper Midwest currently. South American weather forecasts for the next 6-10 day shows beneficial rains across 75% of the Argentina growing regions and most of Brazil as well. The U.S. sold 944,000 tons of soybeans for the week ending October 24, up 99% from last week but down 39% from the previous 4-week average. The Nov soybean futures traded as high as 9.20-1/4 overnight but have since fallen back to 9.12-1/2, next support comes in at 9.09-1/4, the 200-day moving average level. Speculative funds were thought to have sold about 7,000 contracts of beans yesterday.


Wheat markets are lower this morning, with Dec Chi wheat down 4-3/4 to 5.04-1/2, Dec KC wheat is down 6-1/2 cents to 4.11-3/4, and Dec spring wheat is down 3-3/4 to 5.19-3/4. Wheat markets are continuing their recent downtrend, and are not finding any spillover support from the rest of the grain complex. While China is not expected to be a major importer of U.S. wheat, a lack of deal optimism today is bearish nonetheless. Dec Chi wheat has fallen sharply below its 20-day moving average support level, and a close below would be the first since September 6. Chi wheat is retesting support at the 10 and 200-day moving average levels, and a turn below would likely attract more technical selling action. Dec KC wheat is trading at its lowest value today since October 11, retesting its 50-day moving average support level. Dec Mpls wheat made its lowest close yesterday since September 19, and feeders are pushing lower again today. Mpls wheat is oversold though the trend is lower. The U.S. sold 494,000 tons of wheat for the week ending October 24, up 88% from last week and up 31% from the previous 4-week average. Speculative funds were thought to have sold about 2,000 contracts of Chi wheat yesterday.


Cattle markets are sharply lower today, with Oct lives down 2.20 to 111.17, Dec lives were down 1.22 to 117.07, and Feb lives were down 1.07 to 122.02. Nov feeders are down 97 cents to 146.90 and Jan feeders are down 95 cents to 143.85. The strong trend in retail beef values in cash cattle trade has not been enough to keep the trend moving higher today so far. There is also talk of a surge in placements for the month of October and average slaughter weights have been heavy, possibly encouraged by the sharp premium of futures markets to cash. Dec lives are trading near the lows of the day, though still making an inside session. This could give the bulls at least a bit of peace of mind, as there has not been any textbook reversal action so far. Nov feeders retested yesterday’s highs but have drifted lower throughout the session. The U.S. sold nearly 16,000 tons of beef for the week ending October 24, up 14% from last week and up sharply from the previous 4-week average.


Hog markets are showing triple-digit losses today, with Dec down 1.52 to 64.25, Feb is down 1.45 to 71.82, and Apr hogs are down 1.00 to 78.57. The CME Lean Hog Index is lower and pork values continue to drift lower as well. Not only has U.S. slaughter been sharply ahead of last year, but average weights have been increasing as well. Pork supply appears to be overwhelming domestic demand, and without progress on the China front, traders are willing hog sellers. Dec hogs have made a very quiet session today, trading within yesterday’s range so far. Feb hogs have traded at their lowest levels today since October 8 though have recovered from sharper losses earlier in the day. Both contracts are technically oversold though the trend is lower.


Carol Tillmann

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