TFM Midday Update 12-6-19


Corn futures are choppy this morning, with Dec up 1/4 cent to 3.65-3/4, Mar is down 1/2 cent to 3.76-1/4, and May is steady at 3.82-1/2. Trade negotiations are still moving in the right direction, but the corn markets have not been able to find any buyers on the improving relationship. The Brazilian currency has rebounded a bit over the past couple of days, but disappointing export sales yesterday brought sellers back into corn. The market is expecting both U.S. and global ending stocks to increase on next Tuesday’s USDA Supply and Demand report. The USDA will not adjust production until January 10. Mar corn briefly tested its 10-day moving average resistance level this morning but has since turned lower and has drifted below yesterday’s lows. Momentum is still pointing lower. Speculative funds were thought to have sold about 4,000 contracts of corn yesterday.


Soybean futures are moderately higher this morning, with Jan up 4-1/2 to 8.88-3/4, Mar is up 4-1/4 to 9.03, and May beans are up 4-1/4 to 9.17-3/4. Soybeans found solid buyer interest overnight with news that China will continue to accept waivers for large commercial firms to buy U.S. soybeans tariff-free. There is also some support from news that one of the largest crushers in Argentina is shut down due to some financial stress. Weather in South America remains mostly non-threatening and the Brazilian currency is near all-time lows. Jan soybeans posted an impressive technical close yesterday, breaking through its 10-day moving average level for the first time since November 7. Jan beans traded as high as 8.94 this morning but have since backtracked to trade just near 3 to 4 cents higher. Speculative funds were thought to have bought about 9,000 contracts of soybeans yesterday.


Wheat markets are mixed to mostly lower this morning, with Mar Chi wheat down 3-1/2 cents to 5.20-1/4, Mar KC wheat is down 3-1/4 to 4.32-1/4, and Mar Mpls wheat is up a penny to 5.14-3/4. The short-term fundamental picture looks relatively supportive, with Algeria buying about a half-million tons of wheat on Wednesday and Moroccan crop estimates coming in at about 60% of last year’s production. Monthly U.S. wheat exports for October were up 11% from last year. The major bearish factor seems to be expectations for rising wheat supplies on next week’s Supply and Demand report. Wheat markets also look soft technically, with the Mar Chi contract making its lowest close yesterday since November 22. Both the winter wheat contracts are testing nearby support, Chi at the 20-day moving average and KC at the 20 and 100-day moving average levels. Mar spring wheat tested its overhead 20-day moving average resistance level again this morning but has since backed off to trade just off the lows of the day. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower this morning, with Dec lives down 7 cents to 119.85, Feb lives are down 7 cents to 124.52, and Apr lives are down 12 cents to 125.02. Jan feeders are up 17 cents to 140.72 and Mar feeders are down 7 cents to 141.07. Beef values are continuing their trend lower, and though cash cattle traded yesterday at the high end of last week’s range, futures were unable to find significant buyer interest. Beef production last week was the highest since September 2003 and up 17% from a year ago. Feb live cattle have remained within yesterday’s range so far today after a brief test of overhead resistance. Jan feeders are also making an inside session today in quiet and two-sided trade.


Hog markets are slightly higher this morning, with Dec lives up 35 cents to 61.92, Feb hogs are up 1.10 to 68.67, and Apr hogs are up 85 cents to 74.35. News overnight that China will waive import tariffs for some pork shipments from the U.S. was very supportive. Previously, China was charging a 72% tax on U.S. pork imports, up 60% from the beginning of the trade war. This seems to signal that the two countries are drawing closer to an agreement, but hog traders may delay serious buying until a deal is actually signed. Feb hogs briefly tested their 20-day moving average resistance level but have since fallen off that level this morning. A close above that would be the first since November 13 and could open up another 2.00 to 3.00 of upside. Apr hogs traded as high as 75.65 early in the session but are settling in to trade around 80 cents higher for the day after a test of nearby support.


Carol Tillmann

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