TFM Midday Update 9-25-19


Corn futures are mixed this morning, with Dec down a 1/2 cent to 3.74-1/4, Mar is steady at 3.85-1/2, and May is up a 1/2 cent to 3.93-1/4. The Taiwan Feed Industry Association sent the letter yesterday of intent for the purchase of 5 million tons of corn and 500,000 tons of DDGs over the next two years. Corn is maturing at the slowest pace since 1992 and the second slowest on record. This has helped the calendar spreads to firm up lately. The Dec contract made its highest close yesterday since August 16, and though Stochastic are giving overbought readings, multiple successful tests of nearby support along with momentum pointing higher still looks strong. In addition, corn charts are showing an inverted head and shoulders formation that points to higher prices. Speculative funds were thought to have bought about 4,000 contracts of corn yesterday.


Soybean futures are retesting some nearby support this morning, with Nov down 4-1/2 to 8.89-3/4, Jan is down 4-1/4 to 9.03-1/2, and Mar is down 4 to 9.15. Soybean futures may be slightly softer this morning on some comments that President Trump made yesterday afternoon criticizing the China trade policy. China officials recently visited crushing plants in Brazil, and opening the door to Brazilian meal might look similar to the arrangement made with Argentina earlier this month. China historically crushes their own beans, but may look to diversify meal sources looking ahead. Taiwan Vegetable Oil Manufactures Association pledged yesterday to purchase between 2.6 and 2.9 million tons of soybeans over the next two years. Nov beans this morning have traded as low as 8.87-1/4, testing nearby support at the 100-day moving average level. Though prices appear to be drifting towards the lower end of the recent consolidation range, prices could still move higher, especially given cool weather concerns in the northern Plains. Speculative funds were thought to have bought about 2,000 contracts of beans yesterday.


Wheat markets are mixed this morning, with Dec Chi wheat down 2-1/4 cents to 4.79-1/2, Dec KC wheat is down a 1/2 cent to 4.04-1/2, and Dec spring wheat is up 8-3/4 to 5.53-1/4. Egypt, Japan, Turkey, and Ethiopia are all tendering for wheat or barley this week. While fundamental developments for the winter wheat markets have been light lately, heavy rains in the northern Plains and southern Canada continue to drive short covering action in the spring wheat futures market. Above-normal precipitation is still forecasted at least through the first week of October which could impact harvested acres and cause severe quality down grades. Chi wheat tested and failed to break through its 50-day moving average resistance level yesterday for the eighth session in a row and has continued its turn lower. KC wheat contracts are trending lower as well but to a lesser degree. Dec spring wheat is trading at its highest level today since July 15 with near-term resistance at 5.61-1/2. Speculative funds were thought to have sold about 1,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning, with Oct lives up 35 cents to 102.47, Dec lives are up 37 cents to 107.80, and Feb lives are up 22 cents to 114.17. Sep feeders are steady at 141.25 and Oct feeders are down 5 cents to 141.60. Beef values continue to slide despite the run up in futures prices, and this is likely due to the heavy beef stocks reported on the most recent Cold Storage report. Oct futures have been stopped at their overhead 50-day moving average resistance level, but Dec and Feb have pushed through nearby resistance. Oct feeders are likely finding some selling pressure today on overbought technicals after their sharp run lately. Live cattle markets are showing a pronounced inverted head and shoulders formation which points to higher prices, and live cattle markets still have gaps to close from the Tyson fire.


Hog markets are showing solid gains so far today, with Oct up 1.50 to 63.50, Dec hogs are up 1.70 to 70.80, and Feb hogs are up 1.27 to 77.20. The CME Lean Hog Index is down again today, but the downtrend does appear to be slowing. Trade relations with China have been improving, and traders will be watching export sales data tomorrow very closely. The best traded Dec hog contract is testing the 200-day moving average resistance level that has held since August 1. A break and close above this level would be hugely positive, and if prices could punch through 71.60, a run to the July highs is possible. It will likely be difficult for Oct to rally much without a turnaround in the cash trend. Feb hogs are trading above their 100-day moving average resistance level for the first time since July 29.


Carol Tillmann

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates