TFM Midday Update 11-5-19


Corn futures are drifting lower yet again, with Dec down 1-1/2 to 3.81-3/4, Mar corn is down 1-3/4 to 3.91-3/4, and May is down 2 cents to 3.98-1/2. Yesterday’s pressure was due to another week of very poor export inspections. There is also much debate as to whether Friday’s Supply and Demand report will show higher corn production or lower corn production. The average market estimate is indicating that the USDA will drop in national corn yield, but history suggests corn yield generally increases on the November report during late-harvest years. Weather this week looks generally conducive to harvest activity, though precipitation in the northern Midwest will start again over the weekend. Dec corn traded as low this morning at 3.80-1/2, coming close to nearby support on the lower Bollinger Band and 50-day moving average level at 3.79. Momentum indicators are pointing lower though Stochastics have begun to creep towards oversold levels. Speculative funds were thought to have sold about 12,000 contracts of corn yesterday.


Soybean futures are moderately lower this morning after retesting some resistance early in the session. Nov beans are down 5-1/4 to 9.20-1/2, Jan beans are down 4-1/2 to 9.33-1/2, and Mar beans are down 4-3/4 to 9.46-1/2. The soybean market has been unable to respond to more positive headlines regarding the perspective of Phase 1 China trade deal. News broke this morning that licenses would be coming shortly for American companies to sell technological components to Huawei. Nov soybeans traded as high as 9.28-3/4 early in the session, retesting their 20-day moving average resistance level. However, Nov beans fell back below their 10-day moving average support level and may be turning momentum back lower.


Wheat markets are higher this morning, with Dec Chi wheat up 1-3/4 to 5.11-1/2, Dec KC wheat is up 2-1/2 to 4.25-1/2, and Dec spring wheat is up 3-1/2 cents to 5.27-3/4. Egypt is tendering for wheat today for late December delivery which is supportive. Black Sea offers are nearly unchanged from last week. Paris futures have been drifting lower, pressuring the U.S. markets as well as a higher U.S. dollar. Dec Chi wheat is making its second inside session in a row, testing nearby resistance at its 10 and 20-day moving average levels. Dec KC wheat retested support at its 10 and 20-day moving average levels and is bouncing higher while the Dec Mpls contract is pushing back through its 50-day moving average resistance level. Speculative funds were thought to have sold about 5,000 contracts of Chi wheat yesterday.


Cattle markets are soft this morning, with Dec lives down 1.02 to 119.05, Feb lives are down 77 cents to 123.82, and Apr lives are down 65 cents to 124.92. Nov feeders are down 1.35 to 147.72 and Jan feeders are down 77 cents to 145.22. The cash trend is sharply higher and beef values have retained their upward momentum, but the overbought technicals may be bringing some long liquidation today. Dec lives did not break through yesterday’s highs though have traded below yesterday’s lows. This is not reversal action, but a further break could spur some technical correction. Jan feeders traded below yesterday’s lows but have since recovered and are trading at about the midpoint of today’s range.


Hog markets are showing triple-digit gains today, bouncing out of oversold levels and some impressive action. Dec hogs are up 1.92 to 66.45, Feb hogs are up 1.45 to 73.35, and Apr hogs are up 1.10 to 79.72. Retail pork values picked up over 3.00 at yesterday’s close which may signal a significant export sale. Still, the index is trending lower and we will need to see sustained exports to keep pork prices moving higher in the face of extremely heavy production. China’s spot pig price is still drifting lower, likely under pressure from stifled demand. Dec hogs are testing their 50-day moving average level for the first time since October 30, and a close above would be the first since October 21. Feb hogs are retesting their 10-day moving average resistance level, and a close below would also be the first since October 21. More buying should materialize on positive developments regarding the U.S./China trade negotiations.


Carol Tillmann

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