CORN

Corn futures are trading lower so far this morning, with Mar down 2-1/2 cents to 3.84, May is down 2-1/2 cents to 3.90-1/2, and Jul corn is down 2-1/2 to 3.96-3/4. The main focus this week will, of course, be Friday’s USDA Supply and Demand report. Most are expecting lower production and higher demand to shrink the balance sheet come Friday, but negative technical action last week provided a set up for more downside today. Mar corn futures made a bearish key reversal on the weekly charts last week and have fallen below nearby moving average support so far this morning. Mar corn is trading below its 20-day moving average level for the first time since December 13 and a close below would be the first since December 11. Momentum indicators are pointing lower after Stochastics gave a sell signal after Friday’s close. Speculative funds were thought to have sold about 14,000 contracts of corn on Friday.

SOYBEANS

Soybean futures have stabilized this morning after Friday’s washout, with Jan up 3-1/2 cents to 9.34, Mar beans are up 5 cents to 9.46-1/2, and May beans are up 4-1/2 cents to 9.59-3/4. Friday’s risk-off attitude seems to have passed at least so far today and traders are still finding optimism in trade developments with news that a China Trade Delegation is still planning on a January 15 Phase One deal signing. South American weather is non-threatening at this point which is helping to limit gains so far today. Mar soybeans are currently testing their 10-day moving average level after making their first close below it on Friday since December 4. Speculative funds were thought to have sold about 10,000 contracts of beans on Friday.

WHEAT

Wheat markets are soft to start the week, with Mar Chi wheat down 4-3/4 to 5.49-3/4, Mar KC wheat is down a penny to 4.74, and Mar spring wheat is down 1-1/2 to 5.46. Wheat markets continue to struggle with the risk-off attitude that started last Thursday night with the flare-up of tensions in the Middle East. Looking further east, Ukrainian and Russian growing regions are expected to see warmer than normal temperatures in the coming weeks which should help wheat crops avoid damage despite the lack of snow cover. Weekend rainfall over the southern Plains is also providing pressure. Mar Chi wheat is currently trading below its 10-day moving average support level, and a close below would be the first since December 11 and would further sour the technical picture. Mar KC wheat traded below its 10-day moving average level for the first time today since December 12 but has recovered back above it. Mar spring wheat made its first close below the 10-day moving average on Friday since December 2 and has so far made an unsuccessful test to break back above. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat on Friday.

CATTLE

Cattle markets are showing impressive gains today, with Feb lives up 2.05 to 126.77, Apr lives were up 1.92 to 127.60, and Jun lives were up 1.50 to 119.17. Jan feeders are up 3.60 to 146.95 and Mar feeders are up 3.42 to 146.10. With retail beef prices still weak, the 1.00 to 2.00 rally in cash cattle trade last week is the main supportive factor. Cattle weights have held steady against the normal seasonal trend for weights to decline which is also bearish. Buying today is especially impressive considering the negative technical finish to last week’s trade. Feb lives made their first close below the 50-day moving average level since September 20 on Friday but have punched through a few levels of resistance already this morning and are trading at their highest values since December 30. Jan feeders are also making an impressive run, testing their upper Bollinger Band resistance level and trading at their highest values since November 13.

HOGS

Hog markets are slightly higher in some impressive stabilization today, with Feb up 62 cents to 69.17, Apr is up 50 cents to 75.65, and Jun hogs are up 42 cents to 87.52. Both China and U.S. spot pig prices were up so far today though pork prices remain choppy. The U.S. is expecting to see a major decline in production this quarter and into the second quarter which should help tighten supplies, especially if China becomes a major buyer of U.S. pork. Still, without an overly bullish fundamental picture, today’s stabilization appears to be mostly technical in nature. Friday’s limit-down closes seem to have been too much too soon and were the result of overbought technicals and a risk-off attitude converging. Feb hogs traded at their lowest levels today since December 12 but are currently trading just a few ticks off of the session high after buyers stepped in.

Author

Carol Tillmann