TFM Midday Update 12-12-19


Corn futures are finding some impressive buying action this morning with Dec up 5-3/4 to 3.63-1/2, Mar is up 5-1/2 to 3.76-3/4, and May corn is up 5-1/2 to 3.83-1/2. With the recent selloff, U.S. corn has become the cheapest in the world, and following the USMCA progress, the USDA announced this morning that Mexico purchased 1.07 mt of corn. Reports have also surfaced that Brazil’s corn supplies are running so short that their largest meat packer will be importing 200,000 tons of corn for early 2020 from Argentina. Ethanol production for the week ending December 6th was solid, up 1.1% from last week and up 2.5% from last year. The best traded Mar contract has tested its overhead 10 and 20-day moving average resistance levels today, and a close above those would be the first since October 17th. Prices have fallen 2 cents off of the day’s highs so far, but the price action is still impressive. For the week ending December 5th, the U.S. sold 874,000 tons of corn, beating the high end of trade estimates for the week. Speculative funds were thought to have sold about 16,000 contracts of corn yesterday.


Soybean futures are moderately higher this morning with Jan up 6 cents to 8.99-1/2, Mar beans are up 6 to 9.14, and May beans are up 5-3/4 to 9.27-1/2. Reports surfaced early this morning that U.S. negotiators have offered to slash existing tariffs by as much as 50% on about $360 bil of Chinese goods, as well as canceling the round of tariffs scheduled to go into effect on the 15th. Ag Secretary Perdue said that China lifting tariffs on U.S. soybean exports was a signal of progress. Things seem to be moving in the right direction on the trade front. Export sales were impressive this morning with 1.05 mil tons reported sold for the week ending December 5th, just off the high end of estimates for the week. Mar soybeans opened below the 20-day moving average level today and traded within 2 cents of the 10-day moving average level. Prices have since rebounded, matching yesterday’s highs at 9.16 and are currently trading about a nickel higher. Mar beans have not yet made an outside session, but this would be a positive technical development. Speculative funds were thought to have sold about 8,000 contracts of soybeans yesterday.


Wheat markets are sharply higher today with Mar Chi wheat up 12-1/2 cents to 5.31-3/4, Mar KC wheat is up 12-1/2 to 4.43-1/4, and Mar spring wheat is up 7-3/4 to 5.26. Weather is supportive, with little to no rain seen for the western Plains in the 1-5, 6-10 or 8-14 day forecasts. Egypt bought wheat this week and many traders are expecting solid French exports to tighten ending stocks to a 6-year low. Wheat is also finding some overflow support from the other grains, as well as impressive export sales for this week. For the week ending December 5th, the U.S. sold 503,000 tons of wheat, beating trade expectations by over 50,000 tons. Mar Chi wheat is so far making a bullish outside session after pushing through nearby resistance at the 10, 20 and 50-day moving average levels. Mar KC wheat has pushed through its 10, 20, 50 and 100-day moving average levels, and Mar spring wheat is trading at its highest levels since November 14th. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat yesterday.


Cattle markets are lower this morning with Dec lives down 42 cents to 120.15, Feb lives are down 50 cents to 124.82, and Apr lives are steady at 125.87. Jan feeders are down 67 cents to 142.10, Mar feeders are down 70 cents to 142. 97. Retail beef values are continuing their month-long trend lower losing nearly 10% in value since November 13th. Forecasts are showing favorable weather in the Plains for weight gain, which could continue to pressure beef and cash cattle mprices. The best traded Feb live cattle contract closed above its 10 and 20-day moving average resistance levels yesterday, but has since fallen back below in early trade today. Apr lives closed above those same moving average levels yesterday and have so far held them for today’s session. Jan feeders have traded lower for the majority of the session, currently below their 20 and 50-day moving average support levels.


Hog markets are slightly higher today with Dec up 2 cents to 60.72, Feb is up 75 cents to 68.47, and Apr hogs are up 35 cents to 74.60. U.S./China trade negotiations appear to be heading in the right direction today, but as we have seen in the past, hog buying will likely be muted on this until an actual deal is signed. Average weights are at record highs and keeping production at overwhelming levels, though pork values are hanging in above 80.00. Feb hogs are currently trading above their 20-day moving average level for the first time since December 6th, and a close above would be the first since November 13th. Apr hogs have tested their 20-day moving average support level, but have been unable to trade above for extended periods of time. Prices are just below that level now and a close above will be the first since November 13th.


Kelly Rubisch

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