TFM Midday Update 12-2-19


Corn futures are finding solid buyer interest this morning, with Dec up 4-1/4 to 3.75-1/2. Mar is up 3 cents to 3.84-1/4, and May is up 3 cents to 3.88-3/4. There were no deliveries this morning on the Dec corn contract, a positive development. Snow over the past week in the upper Midwest will further delay corn harvest and may raise likelihood of abandoned acreage. Solid export sales last week were also supportive this morning. Both the Dec and Mar corn contracts have pushed through their overhead 20-day moving average resistance levels, and May is currently testing its 20-day moving average level. After making a recent low last Wednesday, futures have recovered out of oversold levels, and a close above nearby resistance could turn the trend higher. The U.S. shipped 429,000 tons of corn for the week ending November 28, versus 616,000 tons the previous week and 1.06 million tons the same week last year. Cumulative corn shipments are running about 58% behind last year’s pace. Speculative funds were thought to have bought about 20,000 contracts of corn on Friday.


Soybean futures are slightly lower this morning, with January down 1-3/4 to 8.75. Mar beans are down 1-3/4 to 8.89-1/2, and May beans are down 1 cent to 9.04-3/4. Improving weather in the major Brazilian growing areas, as well as the Brazilian currency at an all-time low, have provided a very bearish backdrop to the soybean market lately. IN addition, U.S. and China negotiations may be slowing down. The Argentina soybean producer has been front loading as many sales as possible, as export taxes are likely to go up on December 10. Technically, soybeans look very weak, though possibly prone to a bounce. Funds have been short sellers of beans lately, and technical indicators are extremely oversold. The U.S. shipped 1.55 million tons of beans for the week ending November 28, versus 1.95 million tons the previous week and 1.05 million tons a year ago. Soybean shipments are running about 2.7 million tons ahead of last year’s pace. Speculative funds were thought to have sold about 3,000 contracts of soybeans on Friday.


Wheat markets are choppy to mostly lower this morning, with Mar Chi wheat down 1-1/4 to 5.40-1/2. Mar KC wheat is down 2-1/4 to 4.44-3/4, and Mar spring wheat is down 3 cents to 5.11-1/2. Australian officials lowered their wheat production estimate to 15.85 million tonnes, versus 19.2 million tonnes in September. This is 35% under the 10-year average, as a drought in Australia has hit the wheat crop hard. There is some speculation that U.S. wheat acreage could be even lower than initially expected due to dragging corn and soybean harvest. Chi wheat made the highest closes on Friday since July, and price action today has been quiet in overbought territory. Mar KC wheat made its highest close on Friday since early August and is setting back today in its Bollinger band range. Mar spring wheat closed above its 10-day moving average on Friday for the first time since November 1 and is back-testing that level today. The U.S. shipped 247,000 tons of wheat for the week ending November 28, versus 435,000 tons the previous week and 476,000 tons a year ago. Cumulative shipments are running about 2 million tons ahead of last year’s pace. Speculative funds were thought to have bought about 11,000 contracts of Chi wheat on Friday.


Cattle markets are soft this morning, with Dec lives down 57 cents to 120.62. Feb lives are down 57 cents to 125.62, and Apr lives are down 45 cents to 125.92. Jan feeders are down 1.12 to 141.15, and Mar feeders are down 97 cents to 142.05. The fundamental picture this morning is mostly mixed, with dressed steer weights at their highest level since December 2016, though cash markets traded 50 cents to 2.00 higher last week. The beef trend has been choppy to slightly lower lately, and last week’s export sales total was the second highest since April 11. Feb lives have tested their 10 and 20-day moving average support levels this morning but have since bounced back above. Jan feeders are pushing below their 50-day moving average support level, and a close above would likely turn the trend lower. Live cattle markets made new highs on Friday but closed lower, a negative signal.


Hog markets are moderately lower this morning, with Dec down 1.00 to 61.02. Feb hogs are down 1.65 to 66.52, and Apr hogs are down 1.20 to 72.72. The CME index is slightly lower this morning, though China’s spot pig prices were up almost 4% overnight. The U.S. pork values have been trending higher lately despite surging production, which is another indicator of strong exports. Feb hogs made a bullish key reversal on Friday, though were still sharply oversold. Today’s price action has been two-sided within Friday’s range. Feb hogs briefly tested their 10-day moving average level early in the session but have since fallen back below.


Lisa Heder

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