CORN

Corn futures are trading lower today, correcting slightly from Friday’s sharp gains. Mar corn is down 3-3/4 to 3.85-1/2, May is down 3-1/2 to 3.91-3/4, and Jul corn is down 3-1/4 cents to 3.97-3/4. Demand side fundamentals look mostly friendly big picture. News that China will accept more foreign beef is a positive development as this should keep feed usage strong. Weather in South America still looks mostly non-threatening, though there is talk that heavy rains lately in Brazil could slow soybean harvest, which in turn could slow second crop corn plantings. Mar corn has fallen back below its 20 and 100-day moving average support levels this morning, but has so far tested and held its 10-day moving average support level. Momentum indicators are still pointing sideways and converging moving average lines illustrate the sideways trend as well. Speculative funds bought about 38,000 contracts of corn, thought to be mostly short covering.

SOYBEANS

Soybean futures are showing sharp losses so far this morning with Mar down 13-1/4 to 9.60-1/2, May is down 12-3/4 to 9.30-1/2, and Jul beans are down 12-1/4 to 9.43-1/4. Traders are still skeptical that China will be able to reach the proposed purchasing goals for this year and next. Palm oil prices are still weak which is a pressure point, and the U.S. dollar his a one-month high on Friday. Excessive rains in Brazil may slow harvest, though the current harvest pace is only about 4.3% behind last year at this time. Recent rains have also eliminated most of the risk of dryness in major soybean growing areas. Mar soybeans made a bullish key reversal on Friday, but have fallen back below all major nearby support levels in disappointing price action. A close below the 200-day moving average would be the first since December 12th and could spark further liquidation. Soybean prices are oversold currently which could attract buyers, especially on news of Chinese purchases. On Friday, speculators were thought to have bought about 5,000 contracts of soybeans.

WHEAT

Wheat markets are continuing their recent strength with Mar Chi wheat up 6 cents to 5.76-1/2, Mar KC wheat is up 1-3/4 to 4.96, and Mar Mpls wheat is up 1/2 of a cent to 5.60-1/2. Talk that the French wheat crop will be subject to even more rain damage, as well as lower and lower Australian production estimates continue to keep buyers active. Temperatures in Australia are beginning to drop a bit, and some rains hit last week though damage done lately is still unknown. In the U.S., better chances for rains in the central and southern Plains may limit gains, especially in the KC contract. Mar Chi wheat set back briefly this morning, but is so far trading at its highest level since last Wednesday. A close at the current price would be the highest of the rally so far. Mar KC wheat briefly tested nearby support at the 10-day moving average level, but has crawled back and is now trading at the highs of the day so far. Mar Mpls wheat is also trading just off the highs of the day after some early pressure. Speculative funds are thought to have bought about 5,000 contracts of Chi wheat on Friday.

CATTLE

Cattle markets are mixed to mostly higher this morning with Feb lives up 10 cents to 126.45, Apr lives are up 17 cents to 127.42, and Jun lives are up 20 cents to 119.40. Jan feeders are down 32 cents to 145.02, and Mar feeders are up 2 cents to 145.02. Beef prices have regained traction higher lately though cash cattle trade on Friday was relatively uneventful. The 5-area average price for last week was down about 68 cents from the previous week. Big picture fundamentals are still pointing friendly for cattle as China is expected to be a bigger buyer going forward of U.S. beef products. Feb live cattle have traded in a tight range today of just 52 cents. Feb lives are so far making an inside session and the trend is sideways. Mar feeders are also trading within an inside session and are so far testing resistance at the 20-day moving average level.

HOGS

Hog markets are very slightly higher this morning with Feb up 17 cents to 67.85, Apr is up 25 cents to 74.35, and Jun is up 10 cents to 87.45. China has committed to buy nearly 3-1/2 times more pork from the U.S. than the second biggest buyer for 2020. It still appears as though China will need to buy more pork, but the inability of hog futures to rally on strong purchases lately is disappointing. Carcass values cannot seem to gain much traction higher and the CME index hast traded sideways for over two months. The Feb contract is trading above its 10-day moving average level for the first time since last Thursday and a close above would be the first since January 2nd. Stochastics crossed into a buy signal last week and a strong close could attract buyers. Apr hogs are testing their 10-day moving average resistance level and Jun hogs are trading at the highs of the day and may test their 20 and 50-day moving average resistance levels.

Author

Carol Tillmann