TFM Midday Update 11-15-19


Corn futures are trading slightly lower today, with Dec down 2-1/2 to 3.73-1/4, Mar is down 2-1/4 to 3.82-1/2, and May is down 2-1/4 to 3.88-1/2. Ethanol production for the week ending November 8 was seen as positive, up 1.6% vs last week but down 3.5% vs last year. Ethanol stocks were down 4.1% from last week and down 10.7% from last year. Bullish traders have focused on increasing ethanol margin as well as better than expected feed usage due to heavy cattle placements, heavy dressed steer weights, and near-record hog weights. Bearish traders have focused on a slow export pace and improving South American weather. The U.S. shipped 582,000 tons of corn for the week ending November 7, within expectations. Dec corn briefly tested its 10-day moving average resistance level this morning but has since fallen back lower and is now trading on the lows of the day. Corn futures are still within last Friday’s range, and a break below will likely trigger more selling action. Speculative funds were thought to have bought about 2,000 contracts of corn yesterday.


Soybean futures are slightly higher this morning, with Jan up 3-1/2 cents to 9.20-1/4, Mar beans are up 3-3/4 to 9.33-1/4, and May beans are up 3-1/2 to 9.44-3/4. The U.S./China trade negotiations seem to be slowing down a bit with discussions around just how much China plans to spend on U.S. ag goods. However, the general tone is positive and China did make a major purchase of U.S. beans yesterday. There are reports that China is experiencing delays in the unloading at Chinese ports with about 1.8 million tons apparently being held up in ports currently. South American weather appears to be improving greatly, with above-normal precipitation expected for Argentina and Brazil over the next 6-10 days. Jan soybeans held their 100-day moving average support level yesterday as well as the 50% retracement of their Septemeber to October rally. There is still a bearish head-and-shoulders formation on the charts, but buying off of yesterday’s lows may signal that a short-term low is in. Prices have tested but have been unable to break through their 50-day moving average resistance levels today. The U.S. sold 1.25 million tons of beans for the week ending November 7, coming in near the high end of market estimates. Speculative funds were thought to have bought about 3,000 contracts of soybeans yesterday.


Wheat markets are drifting lower this morning, with Dec Chi wheat down 2-1/4 to 5.05-1/2, Dec KC wheat is down 1-3/4 to 4.20-1/2, and Dec Mpls wheat is down 3 cents to 5.09-3/4. Egypt bought wheat yesterday from Russia and Ukraine though at a lower price than last week’s tender. Argentina also reduced their production estimates yesterday but this did not attract much buying interest. Weather forecasts for KC wheat-growing areas are getting better which is keeping the pressure on the hard red wheat despite being very cheap. Dec Chi wheat is drifting towards the low end of its recent consolidation levels, coming within a 1/4 cent of Monday’s low. Dec KC wheat briefly tested its 20-day moving average resistance level but has fallen back and stayed within a very quiet range and Dec spring wheat is making new lows for the move, still falling deeper into oversold territory. The U.S. sold about 239,000 tons of wheat for the week ending November 7, near the lower end of trade of estimates. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower this morning, with Dec lives down 25 cents to 118.82, Feb lives were down 17 cents to 124.75, and Apr lives were down 20 cents to 125.90. Nov feeders were down 42 cents to 146.20 and Jan feeders were up 32 cents to 144.37. Cash cattle trade has begun to creep higher this week, but only by 50 cents or so. Beef values closed lower yesterday and may be signaling a top soon. Both the live and feeder cattle markets are sharply overbought and momentum indicators appear to be turning lower. Dec lives retested overhead resistance on yesterday’s bounce but cannot close above it. Trade has been two-sided today, and if prices cannot breach the 10-day moving average resistance level, a significant top is likely in place. Jan feeders are moderately higher after testing some nearby support.


Hog markets are lower this morning, with Dec down 15 cents to 62.60, Feb hogs are down 1.77 to 71.60, and Apr hogs are down 2.05 to 78.25. Pork values may have turned lower and the CME Lean Hog Index is still choppy which should keep rallies in the front-month contract in check. There is some reports of a hiccup in the U.S./China trade negotiations but the overall tone is still very positive. Nearly record hog weights have kept production high. Especially given slaughter has been up 3% to 4% from last year so far this week. Dec, Feb, and Apr hogs are all making a move towards the low end of recent ranges despite recent strength. This is disappointing, especially in the deferred contracts.


Carol Tillmann

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