TFM Midday Update 9-27-19


Corn futures are off slightly in early trade today, with Dec down a penny to 3.71-1/2, Mar is down a penny to 3.83-3/4, and May corn is down a penny to 3.91-1/4. Forecasts for South America are keeping buyers somewhat hesitant today, especially given the poor export sales data yesterday. A Russian grain agency raised their Ukrainian corn production estimate slightly, but traders are mostly concerned with position taking today ahead of Monday’s Grain Stocks report. Dec corn has traded as low today as 3.69-3/4 and as high as 3.73. Prices are just below their 10-day moving average support level, and while Stochastics are overbought, the trend is still higher. Speculative funds were thought to have sold about 7,000 contracts of corn on Thursday.


Soybean futures are slightly lower currently, with Nov beans down 4-3/4 to 8.83-3/4, Jan beans are down 4-1/2 to 8.98-1/4, and Mar beans are down 4-1/2 to 9.10-1/2. Brazilian forecasts are showing increased precipitation starting next week which should accelerate planting. Monday’s Stocks report is expected to show soybean inventories that are more than double for the same report last year. Still, some threatening temperatures for the northern plains are expected next week and are likely keeping widespread selling at bay. Nov beans have fallen below their 100-day moving average level, and a close below would be the first since last Friday. Still, prices are within their recent consolidation range and one could still argue that current consolidation may be a bull flag continuation formation. Speculative funds were thought to have sold about 2,000 contracts of beans yesterday.


Wheat markets are mixed this morning, with Dec Chi wheat up 2-3/4 to 4.87, Dec KC wheat is down 3/4 of a cent to 4.07-1/2, and Dec spring wheat is up 2-1/4 cents to 5.51. Wheat tenders have been active this week and prices have shown 2.00 to 3.00 higher than last week. Saudi Arabia, Jordan, and Bangladesh are all tendering for wheat as of today as well. Technical closes yesterday were very strong as well, likely keeping buyers interested. Dec Chi wheat posted a solid close above nearby resistance at the 50-day moving average level and are so far holding that level today. Dec KC wheat made a nice recovery back above its 10-day moving average level and is holding gains today. Spring wheat futures made a hook reversal yesterday but have corrected back within their Bollinger Band range. Near-term direction still looks higher as precipitation concerns in the northern plains persist. Speculative funds were thought to have bought about 5,000 contracts of Chi wheat yesterday.


Cattle markets are higher this morning, finding solid buyer interest on improving cash trade. Oct lives are up 1.62 to 104.57, Dec lives are up 1.47 to 110.22, and Feb lives are up 1.10 to 116.10. Oct feeders are up 1.55 to 144.60 and Nov feeders are up 1.70 to 143.15. Production this week is down 3.9% from the same week last year, but with lower slaughter and lower average weights. Retail beef values have been down slightly but the pullback in production should keep prices supported. Cash cattle trade in the country has come in at $103 today, $1-$2 higher than last week. The technical picture is also strong with the best traded Dec live cattle contract punching through its 100-day moving average resistance level for the first time since late April. The gap from August 9 is still yet to be filled, but it is well within reach. Oct feeders are trading at their highest values since late May with next target higher at 145.70.


Hog markets are showing moderate gains early in the session today, with Oct up 97 cents to 65.20, Dec hogs are up 97 cents to 71.35, and Feb hogs are up 55 cents to 77.35. Pork values are beginning to rally, and the cash index is showing signs of stabilization. This afternoon’s Hogs and Pigs report is expected to show heavier inventories than last year, but the overall fundamental picture including expectations for increased exports should continue to draw buyers. Dec hogs are testing their 100-day moving average resistance level once again, and a close above would the first since July 24. Stochastics are giving overbought readings, so prices may be at a bit of a crossroads for the short term.


Carol Tillmann

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