TFM Midday Update 1-10-20


Corn futures were slightly lower in early trade today ahead of the USDA Supply and Demand report and slumped 4 cents after the release before trimming losses. Mar corn then rallied a little and is down only 1/4 of a cent to 3.83, May corn is down 1/2 of a cent to 3.89-1/2, and Jul corn is down 3/4 of a cent to 3.96. USDA pegged yield at 168 BPA, up 1 bushel from last month. This pushed total U.S. production to 13.692 bil bu versus 13.661 bil in December. Weekly Exports were released this morning. For the week ending January 2, the U.S. sold nearly 162,000 tons of corn, missing the low end of expectations at 350,000 tons. This was down 70% from last week and down 83% from the 4-week average. Rain in the forecast for Brazil and Argentina is also a bearish factor though a major private Brazilian consulting firm is expecting a 3.6% drop in Brazil corn production this year. Mar corn futures have not broken outside of yesterday’s trading range, and only briefly tested their overhead 50-day moving average resistance level. Speculative funds were thought to have sold about 6,000 contracts of corn yesterday.


Soybean futures are lower after the report with Jan down 4-1/4 to 9.29-1/2, Mar down 3 to 9.40-1/2, and May down 3-1/4 to 9.53-3/4. USDA’s soybean production came in at 3.558 bil bu on a 47.4 bpa yield. Last month’s forecast was 3.550 bil bu with a 46.9 bpa yield. The U.S. sold about 356,000 tons of beans for the week ending January 2, missing the low end of expectations at 400,000 tons. This was up 8% from last week but down 59% from the previous 4-week average. Moderate rains expected in the next 6-10 days in South America are keeping buying action relatively light, though it also appears that traders do not want to hold enormous short positions going into today’s report. China is still planning on signing the Phase One trade deal next Wednesday. Mar futures tested and held their 20-day moving average support level and are trading just off the highs of the day so far. Nearby resistance is at the 10-day moving average level at 9.47-1/4. Speculative funds were thought to have sold about 5,000 contracts of soybeans yesterday.


Wheat markets are showing solid follow-through strength this morning, with Mar Chi wheat up a penny to 4-1/2 to 5.63-1/4, Mar KC wheat up 5-1/4 to 4.95-1/2, and Mar spring wheat up 5-1/2 to 5.57-1/2. World Wheat production was pegged at 288.1 million metric tons in today’s report, down from 289.5 mmt in December. The U.S. sold just under 81,000 tons of wheat for the week ending January 2, a marketing year low. The low end of expectations was 200,000 tons and this week’s sales were down 74% from last week and down 87% from the previous 4-week average. Still, quickly declining tensions in the Middle East are positive as Iraq is the region’s largest buyer. Egypt bought 300,000 tons of wheat this week 7.00 per ton higher than their last tender, indicative of rising global cash prices. Mar Chi wheat made its highest close yesterday since June 27 and traded at its highest levels today since June 28. Mar KC wheat is trading just off the highs of the day and may retest the highs from January 2. Mar spring wheat checked nearby support at the 200-day moving average level this morning and has since rallied higher. Speculative funds were thought to have bought about 5,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower this morning, with Feb lives down 2 cents to 126.70, Apr lives up 5 cents to 127.35, and Jun lives down 10 cents to 119.37. Jan feeders are down 52 cents to 146.45 and Mar feeders are down 27 cents to 146.27. Cash cattle trade so far this week has been quiet though a few head have traded near the upper end of last week’s range. Choice values have been in a very tight range lately, though are beginning to climb higher, currently at their highest levels since December 26. However, an international look, the liquidation of the Australian breeding herd is keeping short-term beef supply elevated. Feb live cattle are trading a very tight range inside of yesterday’s session, briefly testing its 10-day moving average support level. Mar feeder cattle made a break early in the session below yesterday’s lows but have since recovered and are trading about halfway up the day’s range.


Hog markets are up slightly this morning, stabilizing after yesterday’s weakness. Feb hogs are up 65 cents to 67.67, Apr hogs are up 15 cents to 74.62, and Jun hogs are up 5 cents to 86.27. Record hog weights and the lowest carcass values since late September have kept prices on the defensive this week. The cash index has been choppy and unable to provide much support though China pig prices are still rallying ahead of the Lunar New Year holiday. Traders are still waiting to see whether next week’s Phase One deal signing will open the floodgates to sustain Chinese buying. Apr hogs briefly tested support at the lower Bollinger Band support level today. Stochastics are close to drifting into oversold territory though this does not necessarily give a buy signal. Jun hogs have held onto trend-line support today which should keep sellers from becoming too aggressive.


Carol Tillmann

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