TFM Midday Update 9-26-19


Corn futures are soft this morning in disappointing early trade, with Dec down 5-3/4 to 3.68-1/2, Mar is down 4-1/2 to 3.81, and May is down 4 cents to 3.89. Ethanol production for the week ending September 20 was down nearly 6% vs the previous week and down about 9% from last year. It was also the lowest weekly production number since April 2016. The 6-10 day weather forecast is showing below normal temperatures for the Dakotas, MN, and NE though the eastern half of the Corn Belt will stay warm. The U.S. sold 494,000 tons of corn for the week ending September 19, missing the low end of expectations by over 1 million tons. Dec corn traded as high this morning as 3.75-3/4 but has since backed off and fallen through its 10-day moving average support level. Nearby support comes in at the 20-day moving average level at 3.66-3/4. While today’s pressure is not positive by any stretch, the market was overbought coming into today, and a correction back to the 20-day moving average support level could attract additional buyers. Speculative funds were thought to have sold about 3,000 contracts of corn yesterday.


Soybean futures are mixed this morning, with Nov down 1-1/2 cents to 8.87-3/4, Jan beans are down 1-1/4 to 9.02, and Mar beans are steady at 9.15. An improving weather forecast in Brazil has been a pressure point on the bean market today, with rains forecast to relieve some of the dryness. On the other hand, President Trump commented at the U.N. meetings that a deal with China could be made sooner than earlier thought, and the U.S. sold an additional 257,000 tons of beans to China this morning. The U.S. sold 1.04 million metric tonnes of beans for the week ending September 19, near the high end of trade estimates. The Nov contract traded as high this morning as 8.95-1/2 but has since backed off and is currently holding support at the 100-day moving average level. While soybean futures have had a tough time breaking through trend line resistance started mid-June, one could argue that soybeans are forming a bull flag continuation pattern which could point to higher prices. Speculative funds were thought to have sold about 5,000 contracts of beans yesterday.


Wheat markets are mostly higher this morning, with Dec Chi wheat up 4 cents to 4.81-1/4, Dec KC wheat is up 2-1/2 cents to 4.06-1/2, and Dec spring wheat is down a penny to 5.53-1/4. Egypt bought 300,000 tons of wheat yesterday, and though none of the wheat was from the U.S., the average price was nearly 3.00 higher than their tender last week. Japan, Turkey, and Ethiopia are also tendering for wheat this week. Rains in the northern Plains are still causing harvest and quality issues, but the sharp rally in spring wheat markets is running into some resistance after a nearly 60-cent run. Dec Chi wheat tested its 50-day moving average resistance level again today but has since fallen back below. Chi futures are no longer overbought but the failed test does not look positive. Dec KC wheat has been choppy most of the day, with prices struggling to hang onto support at the 10-day moving average level. The U.S. sold 283,000 tons of wheat for the week ending September 20, meeting the low end of expectations for weekly sales. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning, with Oct lives down 25 cents to 102.75, Dec lives are down 27 cents to 108.22, and Feb lives are down 22 cents to 114.50. Oct feeders are up 60 cents to 143.05 and Nov feeders are up 20 cents to 141.32. A small handful of cattle traded in IA yesterday 2.00 higher than last week’s price, though widespread cash bids are few and far between. Beef values have been choppy and the Consumer Confidence Index in September was down from August. The best traded Dec live cattle contract is likely finding some selling today on overbought Stochastics, especially considering the recent rally of nearly 10.00. There is still an inverted head and shoulders formation that points to higher prices big picture. Oct feeders are trading at their highest level since July 31, with next resistance coming in at 144.42.


Hog markets are finding sharp selling pressure this morning, with Oct down 62 cents to 63.95, Dec hogs are down 1.90 to 69.50, and Feb hogs are down 2.20 to 75.82. The cash market selloff appears to be slowing down, pork prices have been choppy, and weights are lower than expected. A sense of optimism regarding U.S./China trade negotiations is not enough to keep prices supported today, especially given the steep premium of Oct and Dec futures to the cash market for this time of year. Dec hogs briefly tested then failed their 100-day moving average resistance level this morning and have since fallen back below their 200-day moving average level. Near-term support comes in at the 10-day moving average at 68.75.


Carol Tillmann

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