TFM Midday Update 12-3-19


Corn futures are grinding higher in early trade today, with Dec up 1-1/2 to 3.75. Mar is up 1-1/4 to 3.83-1/4, and May is up 1-1/4 to 3.87-3/4. On yesterday’s Crop Progress report, 89% or the U.S. corn crop was said to be harvested, steady with expectations and sharply below the average for this week at 98%. There are still no deliveries against the Dec corn contract, which is positive. The U.S. dollar is down again this morning, which is positive, though the stock market is sharply lower as well. the best traded Mar corn contract briefly tested its 10-day moving average support level but has rallied since, and is now trading above its 20-day moving average resistance level. Mar corn has not yet traded above yesterday’s highs, though the momentum appears to be pointing higher. Speculative funds were thought to have bought about 9,000 contracts of corn yesterday.


Soybean futures are attempting to stabilize this morning, with Jan up 3/4 cent to 8.71-1/4. Mar beans are up 1/2 cent to 8.85-3/4, and May beans are up 3/4 cent to 9.01. Soybean harvest was said to be 96% complete as of Sunday afternoon, steady with expectations and slightly below the normal pace at 99% complete. China has used nearly all of its waivers to purchase American soybeans tariff-free. Initially, the Chinese government was going to allow 10 million metric tonnes of tariff-free imports, and if some concrete progress is not made soon, many are worried that China may not issue more waivers once the first 10 million tonnes has been used. South American weather is non-threatening, and the Brazilian currency is near all-time lows. Technically speaking, soybean futures are sharply oversold. Jan beans have traded an inside session today, and any fundamental surprise could spark short covering. Speculative funds were thought to have sold about 8,000 contracts of soybeans yesterday.


Wheat markets are mixed this morning, with Mar Chi wheat down 4-1/2 cents to 5.30-3/4. Mar KC is down 1-3/4 to 4.41, and Mar Mpls is up 5-3/4 to 5.15-1/2. The lower U.S. dollar today is supportive, along with Australian production estimates that are continuing to fall. Egypt is tendering for wheat, and traders will be watching for sales results closely. After last Friday’s surge, Chi contracts are correcting back out of overbought levels, while KC and Mpls futures are consolidating. Spread trading is also important for today, with the Mar winter wheat spread up 6-1/4 cents to 89-3/4 under. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning, with Dec lives down 12 cents to 120.62. Feb lives are down 42 cents to 125.37, and Apr lives are down 15 cents to 126.05. Jan feeders are up 70 cents to 142.85, and Mar feeders are down 37 cents to 143.40. Beef values were slightly positive yesterday, and cash has been moving higher. However, heavy weights and production, especially when corn is cheap, has many concerned that the market could be topping soon. Live cattle markets are no longer overbought after last Friday’s weakness, though futures are unwilling to push through nearby support. Feb live cattle have tested and held their 20-day moving average support level for the second session in a row. Jan feeders made an impressive close yesterday and are again finding buyer interest in higher trade so far today.


Hog markets are making triple-digit gains so far today, with Dec up 1.00 to 61.35. Feb hogs are up 1.52 to 67.67, and Apr hogs are up 1.22 to 73.80. Slaughter levels are expected to decline soon from a seasonal standpoint and strong pork product prices, despite huge production, seems to indicate that export activity has been strong. Technically, futures are sharply oversold, and lately most contracts have been unable to put in significant closes above technical resistance. The best-traded Feb hog contract is again testing its 10-day moving average resistance level for the third session in a row. A close above should spark some buyer interest, but in the mean time, sellers are defending positions. Apr hogs are also putting in another test of their 10-day moving average level.


Lisa Heder

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