TFM Midday Update 1-22-20


Corn futures are a bit higher this morning, holding nearby support levels from yesterday. Mar corn is up 1-1/4 to 3.88-3/4, May is up a penny to 3.94-1/2, and Jul is up 1/2 cent to 3.99-3/4. Excess rains in Brazil are already beginning to delay soybean harvest, and if this continues, safrinha corn planting could begin to fall behind. The safrinha crop makes up 70% of total Brazilian corn production, so delays could have a sizeable impact. Weather in Argentina looks mostly non-threatening at this point though drier conditions in southern areas could create some stress. Corn futures made lower closes yesterday but limited technical damage by rallying into nearby support levels late in the session. Prices have so far checked those levels today and are now trading near the middle of the day’s range so far. Speculative funds were thought to have sold about 7,000 contracts of corn yesterday.


Soybean futures are trading slightly higher so far today, with Mar up 2-1/4 to 9.18-1/4, May up 2 cents to 9.31-3/4, and Jul up 2 cents to 9.45-1/2. Palm oil futures were up 3% overnight on forecasts for larger-than-expected drops in production this year. Meal prices have also been supportive, with Argentina meal rallying from a big discount to U.S. supplies in October through December to now about even with U.S. prices. Heavy rains in Brazil have begun to delay soybean harvest, though most are still expecting a record Brazilian crop. Soybeans made their first closes below the 200-day moving average support levels yesterday since September 12, a negative technical development. Mar beans have tested the 200-day moving average resistance level today but quickly sold off. Both Bollinger Bands and Stochastics are giving oversold readings, so any positive news could bounce soybean prices higher relatively quickly. Speculative funds were thought to have sold about 8,000 contracts of beans yesterday.


Wheat markets are mixed this morning, with Mar Chi wheat up 1-1/2 to 5.83, Mar KC wheat down 2-3/4 to 4.97-1/4, and Mar spring wheat up 2-1/2 to 5.64-3/4. Paris milling wheat futures made their highest closes overnight in nearly a year and tenders recently from Egypt, Algeria, and Turkey have helped support global cash prices. There is still talk of Russian wheat export quotas and the market does not yet know how much of Australia’s wheat crop has been lost recently. Mar Chi wheat traded sharply higher early in the session, reaching as high as 5.92-1/2. Chi wheat has since set back and is trading steady with the open nearly 11 cents off the day’s highs. Mar KC wheat has tested nearby support at the 10-day moving average and Mar spring wheat traded at its highest level this morning since October 17. Speculative funds were thought to have bought about 7,000 contracts of Chi wheat yesterday.


Cattle markets are slightly lower this morning, with Feb lives down 7 cents to 126.30, Apr lives down 20 cents to 127.02, and Jun lives down 30 cents to 118.87. Jan feeders are down 65 cents to 144.42 and Mar feeders are down 1.05 to 143.62. Cash cattle trade ended up very slightly soft at the end of last week and drifted a bit early this week. Still, beef values are rallying at a decent pace which should support the cash markets. Enthusiasm lately about China beef purchases may be somewhat limited by an announcement that Russia can now sell more beef to China. The Apr live cattle contract has been trapped between nearby support and resistance levels today in a tight trading range of 80 cents. Mar feeders have fallen below nearby support at the 50-day moving average level and a close below would be the first since January 3.


Hog markets are slightly higher today after weakness yesterday, with Feb up 30 cents to 67.65, Apr up 67 cents to 74.50, and Jun hogs up 50 cents to 87.15. The cash index is still sideways though pork values are beginning to rally. China’s spot pig prices are up over 7% for the month so far and they still have a need to import pork products. There is talk that the Chinese virus outbreak could slow import activities in the near term. Feb and Apr hogs are both trading above nearby resistance at the 10-day moving average and a close above would be the first since January 2. Jun hogs are also trading above their 10-day moving average near the upper end of recent trading ranges.


Carol Tillmann

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