TFM Midday Update 11-22-19


Corn futures are slightly higher this morning, with Dec up a penny to 3.69-1/2, Mar is up 3/4 cent to 3.79-3/4, and May corn is up 3/4 cent to 3.85. U.S. corn is cheaper than Brazilian and Argentina corn on export markets right now which is a major positive factor. Domestic feed demand has been better than expected, and though ethanol production was nothing to write home about this week, ethanol stocks were down almost 10% from last year. Dec futures have traded within a range today of just 2 cents,  unable to find strength on yesterday’s positive closes but also unwilling to push to new lows so far today. The recent downtrend has come with open interest suggesting that funds are continuing to sell corn. Speculators were thought to have bought about 5,000 contracts of corn yesterday.


Soybean futures are trading very slightly lower this morning, with Jan down 1-1/2 to 8.99-1/2, Mar is down 1-3/4 to 9.13-1/2, and May is down 1-1/2 to 9.27. Buying interest today has been stifled from worries that delays in a Phase 1 deal signing could push the U.S. to compete with South American supplies for Chinese business. There was talk that the deal may not be signed until 2020. Currently, Chinese tariffs are waived for short term soybean needs. Brazil is expected to receive plentiful rains the next week, also keeping speculative buyer interest at bay, but some are calling for Brazilian planted acreage to be down 1.9% from last year. Jan beans are pushing into new lows for the move, and deeper into oversold territory. Significant support lies at the low end of the trading range from mid to late September, with Jan around 8.95. Speculative funds were thought to have sold about 7,000 contracts of beans yesterday.


Wheat markets are higher this morning, with Dec Chi wheat up 5-3/4 to 5.14-3/4, Dec KC wheat is up 3-1/2 to 4.24-1/2, and Dec spring wheat is down 1/2 cent to 4.94-3/4. The U.S. dollar is sharply higher today, so the buying in wheat is particularly impressive. 5-day forecast for the U.S. Plains is dry but the 6-10 day forecast shows above-normal precipitation which is negative. Better weather this year in India could expand acreage significantly. Australia is still hot and dry. Dec Chi wheat made its close yesterday below the 10 and 20-day moving average levels but prices are pushing back through this morning. Dec KC wheat is also breaching nearby resistance at the 10, 20, and 100-day moving average levels. Spring wheat futures are continuing to drift into new lows for the move. Speculative funds were thought to have sold about 5,000 contracts of wheat yesterday.


Cattle markets are lower this morning, with Dec lives down 45 cents to 118.87, Feb lives are down 1.10 to 123.95, and Apr lives are down 1.60 to 124.17. Jan feeders are down 3.40 to 139.20 and Mar feeders are down 3.42 to 139.37. Beef values have begun to correct from their recent rally, but cash trade has been steady to slightly higher so far this week. This afternoon’s Cattle on Feed report is expected to be negative, with the market expecting a placements number around 111. Feb live cattle are trading below their 20-day moving average level for the first time since September 11 and Jan feeder cattle are trading below their 50-day moving average for the first time since September 20. Momentum indicators are pointing lower and a heavy placement number this afternoon could definitively turn the trend.


Hog markets are slightly higher this morning, with Dec up 72 cents to 61.37, Feb hogs are up 40 cents to 67.85, and Apr hogs are up 7 cents to 74.17. The CME Lean Hog Index has been choppy lately keeping front-month rallies in check while talk yesterday that the Phase 1 trade deal between the U.S. and China may not be signed until 2020 has kept pressure on the deferred contract months. Pork values have fallen over 11.00 since yesterday morning as U.S> production has been at record, or near record levels. All three nearby contracts are consolidating near recent lows in inside sessions so far.


Carol Tillmann

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