TFM Midday Update 12-18-19


Corn futures are trading very slightly negative today, in some correction from the recent surge in prices. Mar corn is down 3/4 cent to 3.89-1/4, May is down 3/4 cent to 3.95-3/4, and Jul corn is down a penny to 4.01-1/4. Mar corn is up just slightly from the September lows, and world prices are up sharply from the lows and U.S. corn is still the cheapest on the export front. Argentina is still on the dry side and the market is still supported by the recent U.S./China Phase 1 deal. China is expected to increase corn and corn product imports from the U.S., but corn import quotas will remain intact meaning the largest increases will likely be from DDGs and ethanol. Mar corn made its first close yesterday above its 50-day moving average since November 5. The Mar contract was unable to break through its 100-day moving average level yesterday afternoon and prices are so far testing that level again after a brief test of the 50-day moving average support level. Speculative funds were thought to have bought about 9,000 contracts of corn yesterday.


Soybean futures are trading sideways to slightly higher, with Jan steady at 9.28-3/4, Mar is down 1/4 cent to 9.40-1/2, and May is up 1/4 cent to 9.54-1/2. Congressional leaders unveiled a bill yesterday that included a 1.00/gallon tax credit for bio-diesel, retroactive through 2018. This bill needs to pass by Friday to keep the government funded, but soybean oil is still lower on the session. Soybean oil made 17-month highs yesterday, with Mar up 12.9% over the last 10 sessions. Non-threatening weather in Brazil is a pressure point and focus may shift back to South American weather as we get more clarity on the U.S./China trade deal. Argentina’s export pace is expected to slow down considerably given new taxes. Mar beans were lower overnight, trading as low as 9.35. Mar beans have so far recovered off the lows and are trading just off the highs of the day but back within their Bollinger Band range. Soybean futures are still overbought according to Stochastics. Speculative funds were thought to have bought about 8,000 contracts of soybeans yesterday.


Wheat markets are mostly lower this morning, with Mar Chi wheat down 3-1/2 cents to 5.52-3/4, Mar KC wheat is down 2-1/4 cents to 4.64-3/4, and Mar spring wheat is up 1/4 cent to 5.39. Argentina increased their export taxes recently from 12% up to 15%, which should make U.S. wheat more attractive on world markets. Ukraine acreage could be down up to 10% this year due to dry fall weather and Eastern European wheat is at greater risk to frost damage this season. Some precipitation has reentered the forecast for the western Plains which could provide some relief. Mar Chi wheat is so far making an inside session, correcting back within its Bollinger Band range. Stochastics are giving overbought readings. KC futures are also trading in two-way inside sessions. KC wheat looks particularly vulnerable to continuing short-covering by speculators as funds were holding a large net short position as of last Tuesday. Mar spring wheat backtested support at the 50 and 100-day moving average levels but has been unable to make too much progress higher. Speculative funds were thought to have bought about 5,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower this morning, with Dec lives up 17 cents to 122.40, Feb lives are down 7 cents to 126.22, and Apr lives are down 12 cents to 127.20. Jan feeders are down 22 cents to 144.92 and Mar feeders are down 42 cents to 145.30. Beef values were lower at yesterday’s close after taking their largest daily losses since early November. Some precipitation has popped up in 6-10 day forecasts for the Plains which should make weight gain difficult and is a supportive factor. Cash trade so far this week has been relatively quiet after a modest increase last week from the previous week. Feb lives have been within a relatively quiet two-way session today, so far testing and holding nearby support at the 10 and 20-day moving average levels. Apr live cattle have also had a quiet session while Jan and Mar feeder cattle contracts appear to be dipping out of recent trading ranges.


Hog markets are mixed this morning, with Feb up 12 cents to 69.97, Apr hogs are steady at 77.40, and Jun hogs are down 10 cents to 89.25. The CME Index is up today, continuing its choppy trend for the past 1-1/2 months. Pork values fell below their recent 3-week range at yesterday’s close. Traders do not seem too enthused to buy USMCA or U.S/China Phase 1 deals at this point. The best traded Feb contract traded up to its Bollinger Band resistance level this morning but was unable to push through it and has since set back towards the middle of the day’s range. Apr hogs traded outside of their Bollinger Band range this morning but have set back within it and are still overbought according to Stochastics. Jun hogs have made a second consecutive test of their 50-day moving average level resistance point but have set back below it into the mid-session.


Carol Tillmann

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