TFM Midday Update 10-14-19


Corn futures are choppy so far this morning, with Dec steady at 3.97-3/4, Mar down 1/2 of a cent to 4.07-1/4, and May down 1/4 of a cent to 4.12-1/2. Corn prices began the night session with solid gains on increased optimism regarding the U.S./China trade situation. However, later into the night, rumors that China was requesting additional talks before signing the Phase 1 trade deal brought selling pressure. Though trade talks have been relatively quiet since then, the winter storms in the northern Plains over the weekend are also supportive. Dec corn traded as high as 4.02-1/2 overnight and as low as 3.93-1/4 this morning. The trend is still higher, and though futures may be approaching overbought levels, a close above the 200-day moving average resistance level would be a positive technical development. Speculative funds were thought to have bought about 40,000 contracts of corn on Friday.


Soybean futures are slightly higher in early trade today, with Nov up 2-3/4 to 9.38-3/4, Jan beans up 2-1/2 to 9.53, and Mar beans up 1-3/4 to 9.52-3/4. While the news on Friday that the U.S. and China had come to a general agreement for a Phase 1 deal, developments over the weekend have brought about some uncertainty over said deal. Timing, further negotiations, and another round of tariffs scheduled for December have all introduced some more uncertainty into the soybean market. The winter storm in the northern Plains over the weekend came in much worse than expected with reports of flattened beans and snowdrifts several feet tall. As many as 15 million acres of soybeans were at risk from the freezing temperatures. Nov beans traded as high overnight as 9.45-1/2 and as low this morning as 9.30-1/2. The trend is still higher, but the overbought condition of futures prices may bring a correction, especially on more China uncertainty. Speculative funds were thought to have bought about 15,000 contracts of soybeans on Friday.


Wheat markets are higher this morning, with Dec Chi wheat up 3 cents to 5.11, Dec KC wheat up 6-1/4 to 4.25-3/4, and Dec spring wheat up 2-3/4 to 5.50-3/4. Russian wheat export prices sustained their rally last week and Paris wheat futures closed 2.1% higher on the week to their highest close since July 30. Heat and dryness in Australia and Brazil is also supportive, with production estimates coming down. There was also some optimism tied to the U.S./China trade negotiations, with some expecting China to import between 3 and 4 million tons of U.S. wheat. Dec Chi wheat closed above its 200-day moving average on Friday for the first time since July 12 and has been choppy so far today. Dec KC wheat made its highest close on Friday since August 9 and is attracting buyers again today while the Dec spring wheat futures appear to be making another run at their 200-day moving average resistance level. Speculative funds were thought to have bought about 10,000 contracts of Chi wheat on Friday.


Cattle markets are higher this morning, with Oct lives up 72 cents to 110.17, Dec lives up 70 cents to 112.85, and Feb lives up 72 cents to 118.77. Oct feeders are up 1.02 to 145.12 and Nov feeders are up 1.20 to 145.45. Cash cattle picked up about 1.00 last week and many are expecting beef to be included in a trade deal with China. Boxed beef values are rallying, though slowly. Dec live cattle made their highest close on Friday since August 1 and looks primed to test its 200-day moving average resistance level. A close above this would be the first since April 26. Nov feeders are trading above their 200-day moving average level for just the second session, and a close above would be the first ever for that contract month.


Hog markets are choppy this morning, with Oct up 12 cents to 63.05, Dec hogs down 45 cents to 69.15, and Feb hogs down 15 cents to 76.90. China’s spot pig prices keep rallying, and China imports of U.S. pork surged last week. Progress between the U.S. and China on trade negotiations is very positive for the hog markets, but prices are choppy today as traders want to see the further confirmation of the Phase 1 deal. Dec and Feb hogs are making consolidation moves today, with the best traded Dec contract back and forth with no clear trend. Slaughter last week was up 9.1% from the same week last year, so hog futures could be subject to pressure on excess supply if the trade negotiations grind to a halt.


Carol Tillmann

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