TFM Midday Update 11-1-19


Corn futures are very slightly lower this morning, with Dec down 1/4 cent to 3.89-3/4, Mar corn is down 3/4 cent to 3.98, and May corn is down 1/2 cent to 4.04-1/4. Weakness yesterday was likely due to slow export sales reported yesterday, as the U.S. is currently running nearly 13% behind the average sales pace. Snow and cold weather in the upper Midwest has slowed harvest activity, and while the cold temps will remain, most forecasts do look drier for the next 6-10 days. Dec corn closed above its 10 and 20-day moving average levels yesterday for the second session in a row but has fallen lower today and is testing its 10-day moving average support level. Mar corn has also fallen below its 10-day moving average support level today. Speculative funds were thought to have sold about 1,000 contracts of corn yesterday.


Soybean futures are up slightly this morning, with Nov up 7-1/2 to 9.24-1/4, Jan beans are up 3-3/4 to 9.36, and Mar beans are up 3 cents to 9.48-1/4. Soybean futures found some selling pressure yesterday from some rumors that China may not be as willing as initially expected to sign a long-term trade deal with the U.S. There is some speculation that the Phase 1 deal may be the only deal signed. The next week is cold but dry for the Midwest which should keep harvest moving along. Technical action yesterday was very impressive and today’s session is showing solid follow-through. Jan beans back tested their lower Bollinger Band support level after falling into oversold levels and rallied into the close. Jan beans are trading just off the highs of the day so far and is retesting its 10-day moving average resistance level. Speculative funds were thought to have bought about 5,000 contracts of beans yesterday.


Wheat markets are slightly higher this morning, with Dec Chi wheat up 1-1/2 to 5.10-1/4, Dec KC wheat is up 2-3/4 to 4.22-1/2, and Dec spring wheat is up 2-3/4 to 5.26-3/4. The Buenos Aires Grains Exchange lowered their Argentine wheat production estimate yesterday to 18.8 million tonnes vs 19.8 million tonnes last week and the USDA’s current estimate of 20.5 million metric tonnes. Argentine harvest progress was seen at 3.5% complete. Spring wheat harvest in Canada is drawing to a close and there is talk of significant downgrading of crops due to sprouting. Dec Chi wheat made a very solid close yesterday, back-testing its 100 and 200-day moving average support levels and finishing with just very slight losses. Chi wheat has been choppy today as futures are retesting their 20-day moving average resistance level. Dec KC wheat also had a nice session yesterday, testing its 50-day moving average support level and then rallying into the close to make modest gains. Follow-through buying interest today has pushed futures back above the 10-day moving average level. Dec spring wheat is currently trading above its 50-day moving average resistance level. Speculative funds were thought to have sold about 1,000 contracts of Chi wheat yesterday.


Cattle markets are making new highs again for the move, with Dec lives up 1.27 to 118.50, Apr lives are up 90 cents to 124.85, and Jun lives are up 92 cents to 117.22. Nov feeders are up 55 cents to 148.15 and Jan feeders are up 45 cents to 145.12. Retail beef values are their highest levels since late August and cash trade has been seen so far this week at $112 which is 1.00 to 2.00 higher than last week. Dressed weights are lower than last week but up slightly from a year ago. Production in Q4 will be lower than Q3 for the first time in five years, though Q2 production for next year should come in about 5% higher than Q2 of 2019. Dec lives traded at their highest level today since April 25 and have found buyers on yesterday’s pressure. Jan feeders are also making new highs for the move, trading at their highest levels since May 20.


Hog markets are showing moderate losses so far today, with Dec down 1.87 to 64.12, Feb hogs are down 1.30 to 72.02, and Apr hogs are down 95 cents to 78.90. The CME Lean Hog Index has been trending lower over the past week and pork values have been choppy. Recent questions about China’s willingness to sign a long-term trade deal with the U.S. is negative for the hog markets, and yesterday’s export sales report showed Chinese cancelations of purchases from the U.S. Pork production last week was up over 5% from last year, keeping domestic supplies heavy. Dec hogs are drifting back towards the low end of the recent trading range after falling below the 10-day moving average support level when the market opened. Feb hogs are also trending lower and currently near the lows of the day.


Carol Tillmann

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