TFM Midday Update 10-7-19


Corn futures are very slightly higher to start the week off with Dec up 1-1/2 to 3.86-1/4, Mar is up 1-1/4 to 3.98-1/4, and May is up 1-1/4 to 4.03-3/4. Price action will likely stay relatively quiet ahead of Thursday’s Supply and Demand report. Most are expecting the USDA to lower the national average corn yield, and given the reduction in grain stocks on the September 30th report, expectations are for supportive data on Thursday. However, a smaller than expected yield reduction or larger than expected reduction in exports could pull corn lower relatively easier. This afternoon’s Crop Progress report should show that the corn crop is still very immature compared to most years. As of last week, just 43% of the corn had reached maturity vs 84% a year ago. Dec corn futures have traded in an inside session all day today, within in a range of just 2-3/4 cents. Stochastics may be slightly overbought still, but the bull pennant continuation pattern is pointing higher. The U.S. sold about 467,000 tons of corn for the week ending October 3rd vs 422,000 tons last week, and 1.45 mil tons the same week last year.


Soybean futures are mixed this morning with Nov down 1/2 of a cent to 9.15-3/4, Jan beans are down 1/4 of a cent to 9.30, and Mar beans are steady at 9.40-3/4. Grain across the central Corn Belt may slow soybean harvest this week, and though early week weather looks solid in the Dakotas and the upper Midwest, the later parts of the week are expected to bring near freezing temperatures and possibly snow. Most are expecting the USDA soybean yield to come down on Thursday’s Supply and Demand report especially given the fact taht their last estimate was using the heaviest pod weight in 10 years. That, plus the supportive September 30th Grain Stocks report should shrink the balance sheet according to most estimates. Nov beans are trading in an inside session today, holding their 200-day moving average support levels nicely. The soybean markets appear to be forming another set of continuation patterns which should point to higher prices. The U.S. shipped 1.04 mil tons of wheat for the week ending October 3rd vs 986,000 tons last week and 609,000 tons the same week last year. Cumulative shipments are running about 600,000 tons ahead of last year’s pace.


Wheat markets are slightly higher in early trade today with Dec Chi up 1-1/4 to 4.91-3/4, Dec KC wheat is up 1/2 of a cent to 4.04-1/2, and Dec spring wheat is up 3-1/4 cents to 5.39-1/4. Global cash wheat prices continue to creep higher which is a big picture supportive force and there is still concern about heat dryness in Australia, as well as lower spring wheat production in the northern Plains and southern Canadian Prairies. Still, the world has plenty of wheat and it is unclear how much of a rally futures markets can put together given more than ample global supplies. Dec Chi wheat tested and held its 10-day moving average support level this morning, Dec KC wheat tested and failed to break through its 10 and 20-day moving average resistance levels, and the Dec spring wheat futures are retesting their 10 and 100-day moving average resistance levels. A punch above those lines should open up a retest of the 200-day moving average level. The U.S. shipped 385,000 tons fo wheat for the week ending October 3rd vs 503,000 tons last week, and 448,000 the same week last year. Cumulative shipments are running about 1.6 mil tons ahead of last year’s pace.


Cattle markets are mixed to mostly higher this morning, with Oct lives up 85 cents to 108.20, Dec lives are up 50 cents to 111.27, and Feb lives are up 7 cents to 116.70. Oct feeders are up 2 cents to 142.00, and Nov feeders are down 2 cents to 141.35. Cash trade last week was up a few dollars than the previous week and beef production was lower. However, beef values are still drifting lower and the current rallies appear to be overextended. Dec live cattle are sharply overbought, but are trading today at their highest levels since August 9th. The gaps from the KS plant fires have finally been filled and this may spark a bit of a correction lower. Nov feeders are trying to hold onto their 10-day moving average support level currently.


Hog markets are sharply lower this morning with Oct down 1.70 to 60.70, Dec hogs are limit down 3.00 to 64.25, and Feb hogs are limit down 3.00 to 71.47. Extremely heavy pork production last week is the main source of selling pressure today, along with the futures markets that are trading at a sharp premium to the cash index against the normal seasonal trend. Trade negotiations between the U.S. and China are scheduled to restart again this week and the markets will be paying attention very closely to the tone of both sides. Dec hogs have fallen below their 50-day moving average level and the Feb hog contract has done the same.


Kelly Rubisch

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