TFM Midday Update 11-4-19


Corn futures are drifting lower this morning, with Dec down 3 cents to 3.86-1/4, Mar is down 2-3/4 to 3.95-3/4, and May is down 2-1/2 to 4.02. A dry 5-day forecast has helped to pressure prices early this morning as this should be conducive to harvest activity. The upper Midwest is showing above-normal chances for precipitation on the 6-10 day forecast. The major focus this week will be Friday’s Supply and Demand and Crop Production reports, and though most would expect a lower adjustment for national corn yield, looking back in history, years with a late harvest usually show upward adjustments to yield in the November report. Dec futures have fallen back below their 10-day moving average level after three consecutive closes above it last week. Momentum indicators are pointing mostly sideways and traders will be focusing on position-taking ahead of the report, likely keeping direction choppy. The U.S. shipped 276,000 tons of corn for the week ending October 31 vs 391,000 tons the previous week and 1.28 million tons the same week last year. Cumulative corn shipments are running over 60% behind last year’s pace. Speculative funds were thought to have sold about 7,000 contracts of corn on Friday.


Soybean futures are slightly higher in early trade this morning, with Nov up a penny to 9.25-1/4, Jan beans are up 3/4 cent to 9.37-1/2, and Mar beans are up 1-1/2 to 9.50-3/4. The general tone of the soybean market appears to be somewhat friendly, with commercial interest in deliveries against the Nov contract as well as expectations for better demand from China. Friday’s Supply and Demand and Crop Production reports will be the main determinant for price direction after this week. It does not take huge adjustments on the balance sheet to see soybean stocks shrink or grow significantly, so price action this week will likely stay choppy as traders finalize positioning ahead of the data release. Nov futures have traded as high this morning as 9.29-3/4 and as low as 9.21. This is the first time Nov beans traded above their 20-day moving average since October 25, but prices have since fallen back below. The U.S. shipped 1.48 million tons of soybeans for the week ending October 31 vs 1.58 million tons last week and 1.25 million tons the same week last year. Soybean shipments are running nearly 1 million tons ahead of last year’s pace. Speculators were thought to have bought about 6,000 contracts of soybeans on Friday.


Wheat markets are soft this morning, with Dec Chi wheat down 5 cents to 5.11, Dec KC wheat is down 2 cents to 4.24, and Dec spring wheat is down 6 cents to 5.25-1/4. Lower-than-expected spring wheat yields in Russia are helping to support Black Sea export prices, though parts of Australia got up to 4-inches of rain yesterday. Heat and dryness in Australia have been the main source of support lately, so the precipitation is a bearish development. South American wheat growing conditions have not been ideal and many are expecting this to show up on Friday’s Supply and Demand report. Dec Chi wheat has been unable to follow through on Friday’s gains, falling back below its 10 and 20-day moving average support levels. Dec KC wheat retested support this morning at its 10 and 20-day moving average levels and Dec spring wheat is back below its 50-day moving average support level. The U.S. shipped 293,000 tons of wheat for the week ending October 31 vs 558,000 tons last week and 340,000 tons the same week last year. Cumulative shipments for this marketing year are running about 2 million metric tonnes ahead of last year’s pace. Speculative funds were thought to have bought about 6,000 contracts of Chi wheat on Friday.


Cattle markets are mixed to mostly higher this morning, with Dec live cattle up 30 cents to 119.82, Apr lives are down 7 cents to 125.37, and Jun lives are up 12 cents to 117.87. Nov feeders are down 12 cents to 149.00 and Jan feeders are down 27 cents to 145.72. Retail beef values continue to lead the way higher, at their highest level since late August. Cash trade Friday was seen 3.00 to 5.00 higher than the previous week as packer margins continue to strengthen. Slaughter last week was very heavy, seen at 655,000 head vs 640,000 head last week and up from 653,000 head for the same week last year. Technically, cattle markets are significantly overbought. Dec lives have traded at their highest level today since April 25, though Jan feeders have not been able to retest Friday’s highs. A fundamental break could cause a hard correction, but for now, the trend is higher.


Hog markets are lower this morning, with Dec down 22 cents to 64.22, Feb is down 92 cents to 71.65, and Apr is down 92 cents to 78.55. The CME Lean Hog Index is lower, and the extremely fast production pace is overwhelming domestic demand as well as current export demand. This has kept pork prices choppy and futures somewhat rangebound. A Phase 1 trade deal with China still looks likely though traders appear to want to see the deal signed before significant buying. China’s national average spot pig price is actually down for the month so far though still up 200% year to date. Dec hogs are continuing their consolidation near the low end of their recent range with Feb and Apr falling lower. Stochastics are giving oversold ratings though heavy production will likely keep short-covering fairly light.


Carol Tillmann

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