TFM Midday Update 11-7-19


Corn futures are moderately lower this morning, with Dec down 2-3/4 to 3.76, Mar is down 3 cents to 3.84-3/4, and May is down 3 cents to 3.91-3/4. The Ethanol Production report for the week ending November 1 showed production up 1% from the previous week but down 5.1% from the same week last year. Corn usage for ethanol production was about 3 million tons behind what is needed on a weekly basis to meet this year’s USDA estimate. The average market guess is showing a yield reduction for tomorrow’s report, but late harvest years usually show an increase in yield on the November report. Much of today’s selling is technical in nature after yesterday’s closes below the 50-day moving average support levels. Dec corn has fallen below the 50% mark of the September to October rally and made its lowest close since September 27. Dec corn is likely oversold, but momentum is still pointing lower. The U.S. sold about 488,000 tons of corn for the week ending October 31, down 11% from the previous week but up 15% from the previous 4-week average. Speculative funds were thought to have sold about 15,000 contracts of corn on Wednesday.


Soybean futures are slightly higher today, with Nov up 2-1/2 cents to 9.17-1/2, Jan beans are up 1-3/4 to 9.29-1/4, and Mar beans are up 1-1/4 to 9.42. Headlines yesterday that the U.S. and China may not sign the Phase 1 deal until December was a major source of pressure, but reports surfaced this morning that China says it has agreed with the U.S. to cancel tariffs in phases. This is seen as positive, especially given the U.S. hesitancy in the past to peel off existing tariffs. Soybean exports are running 16.6% ahead of last year’s pace and September’s exports are the second largest in history. The U.S. sold about 1.81 million tons of beans for the week ending October 31, up 92% from the previous week and up 41% from the previous 4-week average. The market is expecting a slightly positive report tomorrow. Jan soybeans retested their 10-day moving average resistance level early this morning at 9.33-1/4 but have since backed off. Soybean futures are still oversold after recent pressure despite the positive tone to fundamentals. Speculative funds were thought to have sold about 6,000 contracts of beans yesterday.


Wheat markets are soft this morning, with Dec Chi wheat down 4 cents to 5.12-3/4, Dec KC wheat is down 4-1/2 cents to 4.23-1/4, and Dec spring wheat is down 3-1/2 to 5.19-3/4. The market seems primed to see a downside production revision for Australia and Argentina on tomorrow’s USDA report, though Russian production could come in higher than last month. France has sold 420,000 tons of wheat to Egypt so far this year which is nearly as much as the past two seasons combined. This has kept Paris futures supported and Black Sea wheat supported as well. The U.S. dollar is continuing its rally so far this week keeping pressure on U.S. wheat futures. Dec Chi wheat is currently testing and holding onto its 10-day moving average support level after falling through its 20-day moving average level. Dec KC wheat tested its 100-day moving average resistance level earlier this morning but has since fallen back to test its 10 and 20-day moving average support levels. Spring wheat futures are testing the low end of their recent consolidation range. The U.S. sold about 361,000 tons of wheat for the week ending October 31, down 27% from last week and down 14% from the previous 4-week average. Speculative funds were thought to have bought about 2,000 contracts of Chi wheat yesterday.


Cattle markets are creeping higher today, stabilizing after some slight losses yesterday. Dec lives are up 52 cents to 119.52, Feb lives are up 42 cents to 125.12, and Apr lives are up 22 cents to 125.77. Nov feeders are up 55 cents to 147.35 and Jan feeders are up 1.60 to 146.05. Beef prices are continuing their trek higher which should allow packers to pay up for cattle in the country today or tomorrow. Still, the sharp premium of futures to cash could encourage feedlots to keep cattle too long and pack on too much weight. Winter wheat conditions are not favorable for cattle feeding which could spark higher placements for the month of November. Technically, cattle remain deep in overbought territory though recent closes have not been very far off the session highs. This indicates late-session speculative buying as managed money continues to own cattle. Dec lives are trading near the midpoint of the day’s range so far and have not traded lower than yesterday’s close. Jan feeders briefly retested their 10-day moving average support level this morning and are just off the highs of the day currently.


Hog markets are mixed to mostly higher this morning, with Dec down 17 cents to 64.60, Feb hogs are up 1.42 to 74.20, and Apr hogs are up 77 cents to 80.15. Pork values were up nicely yesterday and while the index is still moving lower, daily losses are decreasing which may signal a turning trend. The U.S. and China have agreed to roll back current tariffs in phases which sounds like progress in working towards a trade deal. China recently lifted the ban on Canadian pork that was imposed in June which continues to illustrate China’s need for pork products. Still, gains are limited today due to enormous production levels and slower-than-expected exports. Dec hogs are back below their 10-day moving average level this morning while the Feb contract is again testing its 100-day moving average resistance level. Apr hogs are trading near the top end of their recent consolidation range.


Carol Tillmann

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