TFM Midday Update 12-5-19


Corn futures are mixed to mostly lower this morning with Dec up 3/4 of a cent to 3.69-1/2, Mar is down 3/4 of a cent to 3.77-3/4, and May is down 1/4 of a cent to 3.84-1/4. The corn market’s inability to follow through on Tuesday’s gains was disappointing yesterday. The U.S. dollar was lower, there was optimism about a possible U.S./China trade deal and energy prices were higher as well. IEG Vantage, formerly Informa, published their Argentine corn production estimate for this year at 46 mil tons vs the USDA’s current forecast of 50 mil tons. Their Brazilian corn production estimate at 103 mil tons was heavier than the USDA’s current estimate at 101 mil tons. The best traded Mar contract opened below its 10-day moving average level, briefly tested it early in the session and has since fallen back below. Momentum is pointing lower, and if the market cannot stabilize at these levels, a retest of the recent low at 3.73 may be on the way. The U.S. sold 546,000 tons of corn for the week ending November 28th, within expectations. Speculative funds were thought to have sold about 8,000 contracts of corn yesterday.


Soybean futures are higher again today with Jan up 5-1/2 to 8.83-1/2, Mar beans are up 5-3/4 to 8.98-1/4, and May beans are up 6 cents to 9.13. A weak U.S. dollar and trade optimism are supportive for the soybean market today. IEG Vantage pegged Argentina soybean production a half million tons below the USDA’s current estimate and Brazil soybean production was seen 1.5 mil tons above the USDA’s current estimate. Today’s price action looks friendly with the three nearby contracts all pushing through nearby resistance at the 10-day moving average level. Mar beans have not closed above their 10-day moving average since November 7th, so a close above today could spark a short covering bounce. Stochastics are still giving oversold readings which could add fuel to a bounce. Soybean export sales for the week ending November 28th missed expectations at 684,000 tons. Speculative funds were thought to have bought about 6,000 contracts of soybeans yesterday.


Wheat markets are mixed this morning with Mar Chi wheat down 3 cents to 5.24-1/2, Mar KC wheat is up 1/4 of a cent to 4.30-3/4, and Mar Mpls wheat is up 4 cents to 5.19. Chi wheat appears to have put in a high for the recent trading range, with plentiful exportable supplies around the world likely limiting upside. KC wheat futures have a bit more potential given the sharp discount to the lower quality Chi wheat. The weak U.S. dollar is supporting all three contracts lately with the U.S. dollar index trading below its 200-day moving average level. Mar Chi wheat has fallen back below its 100-day moving average level. Mar KC wheat is holding its 10-day moving average support level and Mar spring wheat is testing its 20-day moving average resistance level for the first time since October 25th. The U.S. sold 228,000 tons of wheat for the week ending November 28th, missing expectations by about 72,000 tons. Speculators were thought to have bought about 2,000 contracts of Chi wheat yesterday.


Cattle markets are choppy this morning with Dec lives up 47 cents to 119.92, Feb lives were up 52 cents to 124.70, and Apr lives were up 20 cents to 125.20. Jan feeders were down 70 cents to 140.17, and Mar feeders were down 75 cents to 140.67. Beef values have been trending sharply lower lately, keeping with the seasonal trend. Cash trade has been light so far this week, though steady to slightly higher with last week. Dry weather in the 5-day forecast is a bearish force and could add to already heavy steer weights. Feb live cattle bounced off of their lower Bolinger band this morning and have stabilized. Apr lives have shown similar price action, though neither the Feb or Apr contract have tested nearby resistance. Jan feeders are drifting again today after falling through support yesterday. Momentum in both the live and feeder markets is pointing lower.


Hog markets are showing moderate losses so far today with Dec down 37 cents to 61.50, Feb hogs were down 92 cents to 67.50, and Apr hogs were down 82 cents to 73.92. Though there is a renewed sense of optimism regarding U.S./China trade negotiations, hog traders seem numb to such headlines at this point. The U.S. cash index has been trading sideways lately and China’s spot pig index has turned higher. China purchased over 23,000 tons of U.S. pork for the week ending November 28th and U.S. pork sales are now running 48% ahead of last year’s pace. Feb hogs have fallen back below their 10-day moving average support level and Apr hogs are barely holding onto their 10-day moving average support level. Yesterday’s stochastics buy signal has not sparked much in the way of new buying or short covering as prices continue to chop in their recent low trading ranges.


Lisa Heder

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