TFM Midday Update 9-12-19


Corn futures are higher in some pre-report trade with Sep up 2 cents to 3.50-1/4 and Dec corn up 2-1/4 to 3.62-1/4. Mar corn is up 2-1/4 cents to 3.74-1/2. Much of the buying today appears to be in sympathy with the soybeans. Still, crop conditions have been sliding, and many are concerned that the lack of heat and sunlight lately may be subtracting bushels. Ethanol production was mildly supportive yesterday, with 87.61 million bushels of corn used for the week ending September 6. Export sales data this morning was disappointing with 498,000 tonnes sold for the week ending September 5. This came in below the low end of market expectations of 500,000 metric tonnes. Dec corn has pushed through its 10-day moving average resistance level this morning and is currently holding there, but today’s USDA report will give us the short term direction. Speculative funds were thought to have sold about 6,000 contracts of corn yesterday.


Soybean futures are sharply higher, a rare development going into a USDA report. Sep beans are up 20-1/4 cents to 8.74-1/4, Nov beans are up 19-1/2 to 8.86 and Jan beans are up 19-1/2 to 9.00. News overnight was very supportive that President Trump delayed some Chinese tariffs by two weeks to avoid conflicts with a Chinese holiday. In addition, export sales data released this morning was very supportive with weekly sales coming in at 1.172 million metric tonnes for the week ending September 5. This beats the high end of expectations for the week at 1.1 million tonnes. There is also speculation that China will buy some U.S. soybeans and pork out of the October trade meetings. The Nov contract has traded as high today as 8.89-1/2, which was above its 50 and 100-day moving average levels. Nov beans have not closed above these levels since July 24, and a close today above that resistance should open up a run to 9.15. Speculative funds were thought to have sold about 5,000 contracts of beans yesterday.


Wheat markets are moderately higher in some pre-report buying action with Dec Chi wheat up 2-3/4 to 4.80-1/4. Dec KC wheat is up 1-1/2 cents to 4.00, and Dec spring wheat is up 3-1/4 cents to 5.05-1/2. Today’s USDA report is not expected to show anything but ample global wheat supplies, but still, short traders seem to be covering shorts ahead of the data release. Dryness fears in Argentina are supportive, along with moisture stress in Brazil. Spring wheat futures appear to have the most potential right now with excessive moisture in the northern Plains delaying harvest and negatively impacting quality. The Dec Chi wheat contract traded at its highest level today since August 12 but have since backed off of the highs. Dec KC and Mpls wheat contracts are currently testing their 20-day moving average levels. The U.S. sold 611,000 tons of wheat for the week ending Sep 5, up 96% from last week and up 20% from the previous 4-week average. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are mostly lower this morning, with Oct lives down 50 cents to 98.00. Dec lives are down 7 cents to 103.55, and Feb lives are down 32 cents to 109.87. Oct feeders are up 7 cents to 134.10, and Nov feeders are down 47 cents to 133.07. Retail beef values were sharply lower all day yesterday, likely the main reason for lower trade today. Still, with cash trade so low, packer margins are strong, and we expect the slaughter pace to reflect strong margins. Technically, the recent break in prices looks to have been too much too quickly. Prices have pulled out of oversold levels, which should be conducive to at least a stabilization effort.


Hog markets are limit higher in all contract months out to Apr 2020. Oct is locked at 63.17, Dec at 64.20 and Feb at 70.60. Export sales data was very impressive, with net sales of nearly 22,000 tons of pork, up 24% from last week and up 3% from the previous 4 week average. The most bullish factor was that China was responsible for nearly 11,000 tons of those sales. There is talk that China will be a buyer of U.S. pork ahead of the next round of trade talks, and President Trump delayed tariffs on China late yesterday afternoon. Any perceived improvement in U.S./China trade relations will be seen as very positive for the hog markets, and sellers will be few and far between on such news.


Lisa Heder

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