TFM Midday Update 1-24-20


Corn futures are a bit soft this morning with Mar down 2-1/2 to 3.91-1/4, May is down 2-1/4 to 3.96-1/4, and Jul is down 2-1/4 to 4.01. Argentina corn production estimates are beginning to come down which is supportive, and China corn imports in Dec were 76% higher than imports in December 2018. This may lead some to believe that China has less corn than initially thought and may spur purchases in the future. The U.S. sold 144,000 tons of corn to Guatemala and 141,000 tons to unknown destinations yesterday. On this morning’s export sales report, the U.S. sold just over 1 mil tons of corn for the week ending January 16th. This is up 28% from last week and up 92% from the previous 4-week average. Despite the bullish fundamental tilt, funds appear to be defending their hefty short position today, pushing Mar futures to a test of their 10, 20, and 100-day moving average support levels. Prices have since bounced back to the middle of the day’s range, but are still lower for the day. Speculative funds were thought to have bought about 14,000 contracts of corn yesterday.


Soybean futures are pushing lower today after making a decent mid-session recovery yesterday afternoon. Mar beans are down 5-3/4 to 9.03-3/4, May is down 5-1/2 to 9.17-3/4, and Jul beans are down 5-1/2 to 9.31-1/2. Brazilian soybean harvest has begun and most are expecting a record crop. Earlier harvested beans in Mato Grosso are yielding 10%-15% higher than last year. There have been no signs that China has started to ramp up U.S. soybean purchases at this time and the coronavirus outbreak is causing additional uncertainty. Soybean prices pushed to 6-week lows yesterday and are well into oversold territory. Mar beans have traded as low today as 9.02, the lowest price since December 6th. The U.S. sold about 790,000 tons of soybeans for the week ending January 16th, up 23% from last week and up 59% from the previous 4-week average. Speculative funds were thought to have sold about 5,000 contracts of beans yesterday.


Wheat markets are off to a rough start this morning with Mar Chi wheat down 8-1/4 to 5.72-1/4, Mar KC wheat is down 5-1/2 to 4.86-3/4, and Mar Mpls wheat is down 4-3/4 to 5.51. The strength in the U.S. dollar and weakness in the grains complex is weighing on wheat markets today. China’s Dec wheat imports were 111% higher than their wheat imports in December 2018, which could indicate a significant boost to U.S. export demand when China ramps up their phase 1 trade deal purchases. Mar Chi wheat is currently testing its 10-day moving average resistance level, still under general weakness from Thursday’s session. Mar KC wheat is testing nearby support at the 20-day moving average after falling below the 10-day and Mpls wheat futures are testing their 200-day moving average support level. The U.S. sold 696,000 tons of wheat for the week ending January 16th, up 7% from last week and up 58% from the previous 4-week average. Speculative funds were thought to have bought about 4,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower with Feb lives up 10 cents to 124.77, Apr lives are down 32 cents to 123.85, and Jun lives are down 52 cents to 115.80. Jan feeders are down 72 cents to 142.05 and Mar feeders are down 1.10 to 139.42. Beef values are still moving slowly higher, which should be a positive for the cash markets. Cash cattle trade in the country has so far been quiet this week with just a few head sold in NE at 124.00 yesterday. Still, carcass weights are heavy and economic instability due to the coronavirus spread is a negative factor. Apr lives traded at their lowest levels this morning since October 31. Live cattle have fallen below their Bollinger band support lvels though stochastics are not yet getting oversold readings. Prices have rebounded to near the highs of the day though the momentum indicators are still turning over. Mar feeders have fallen below their 100-day moving average support level for the first time since September 24th and are trading at their lowest values since November 22nd. Prices are oversold though crossing moving average lines are pointing lower.


Hog markets are showing triple digit losses so far with Feb down 1.22 to 67.27, Apr is down 1.95 to 73.40, and Jun is down 1.87 to 85.95. The CME lean hog index is higher and pork values were higher at yesterday’s close. Some are beginning to think that China’s slow buying pace in the grain and oilseed markets may be pointing to increasing purchases in the meats, but this has not exactly materialized either. China bought just 3,000 tons of pork this week from the U.S. Today’s price action could also be technical in nature with many unsuccessful tests of nearby resistance yesterday. Apr hogs tested but were unable to break through the 20 and 50-day moving average resistance levels yesterday and have fallen back below nearby support at the 10-day moving average this morning.


Kelly Rubisch

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