TFM Midday Update 9-20-19


Corn futures are trading very slightly higher early today with Dec up 3/4 of a cent to 3.73-1/2, Mar is up a penny to 3.85, and May corn is up 3/4 of a cent to 3.92-1/2. Forecasts for above normal temperatures and above normal precipitation is a bit of a mixed bag for corn price direction. On one hand, the abnormal temperatures are not conducive to an early frost, however, studies have shown that warm weather can shorten the filling and cause smaller ear weights. Basis levels across the country are still strong and many end users are worried about lower test weights on this year’s corn. U.S. biofuel credit prices fell 10% ahead of a meeting between President Trump and Senators to discuss biofuel policy. Dec corn has only traded as high today as 3.74 in relatively quiet price action. Stochastics are overbought, though the 10-day moving average has crossed above the 20-day moving average  indicating strength. Speculative funds were thought to have bought about 5,000 contracts of corn yesterday.


Soybean futures are just slightly lower early this morning, with Nov down 3-1/2 to 8.89-1/2, Jan beans are down 3-1/4 to 9.02-3/4, and Mar beans are down 3-1/2 to 9.14-3/4. Traders are optimistic about face to face trade negotiations between the U.S. and China especially given the news that a Chinese delegation will be traveling to U.S. farms to see U.S. production ag first hand next week. The national drought monitor released notes yesterday regarding a rapidly intensifying flash drought affecting areas in southern IL, as well as parts of KY, IN, and OH. Nov beans have back tested their 100-day moving average support level for the third session in a row today, and though beans are not currently trading higher, the flag formation could indicate a continuation of the uptrend is coming. Speculative funds bought 6,000 contracts of soybeans yesterday.


Wheat markets are higher this morning again testing nearby resistance levels in a solid uptrend. Dec Chi wheat is up 3/4 of a cent to 4.88-3/4, Dec KC wheat is up 2 cents to 4.11-1/2, and Dec spring wheat is up 8-3/4 to 5.29. Sluggish export sales this week have slowed the trend down, but deteriorating wheat crops in Brazil and Argentina are supportive. More rain in MN and the Dakotas has kept harvest moving at a slow pace, and Canadian spring wheat harvest is also lagging behind. Dec Chi wheat is putting in its sixth test in a row of its 50-day moving average resistance level. A definitive close above it would open a run to 5.00 easily. Dec KC wheat has traded within inside session all day and Dec spring wheat punched through its 50-day moving average level again today and a close above would be the first since June 28. Speculative funds were thought to have sold about 2,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning with Oct lives down 5 cents to 99.75, Dec lives are down 37 cents to 105.45, and Feb lives are down 22 cents to 112.30. Feb feeders are up 52 cents to 140.47, and Oct feeders are up 30 cents to 139.22. This afternoon’s Cattle on Feed report is expected to show lower on feed supplies than last year for the first time since December 2016. Extremely strong packer margins have kept marketings current and weights low, but the fast production speed has also kept the beef markets relatively choppy. Dec are continuing their consolidation around recent price levels in overbought territory. Oct feeders are also overbought, but are testing their 100-day moving average level for the second session in a row. A close above this would be the first since April 29.


Hog markets are mixed this morning with Oct up 22 cents to 61.62, Dec hogs are down 85 cents to 67.10, and Feb hogs are down 1.00 to 74.05. Weakness in cash market and retail pork values has kept hog markets on the defensive despite expectations for a mass increase in export business later this year. U.S. and China negotiators are working together today toward a trade deal, and any word of progress should be extremely supportive. In the meantime, price direction looks choppy due to the sluggish cash fundamentals. Currently, Dec hogs are holding nearby support at the 50-day moving average level, but there is no clear trend at this time.


Kelly Rubisch

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