TFM Midday Update 10-23-19


Corn futures soft, with down 2-1/4 to 3.85-3/4, Mar corn is down 2-1/4 to 3.97-3/4, and May corn is down 2-1/4 to 4.04-1/2. China corn imports for the year so far are up 33.1% from last year’s pace, though still only at 3.87 million tons. The slightly higher imports seems to indicate that certain parts of the country are low on corn, so if a U.S./China deal can get signed, China could start to import corn to parts of China that need it. Harvest pressure persists, despite the fact that most yields are coming in noticeably lower than last year. Tomorrow’s export sales data will be a key data set, and traders will be watching cash market activity for indicators that China could be buying. Dec corn closed just at its 20-day moving average support level yesterday and has spent the majority of today’s session below that level. A close below 3.88-1/2 could open up 3.76-1/4 as the next downside target. Speculative funds were thought to have bought about 3,000 contracts of corn yesterday.


Soybean futures are trading slightly lower this morning, with Nov down 4-1/2 to 9.29-1/2, Jan beans are down 4-1/4 to 9.44, and Mar beans are down 4 cents to 9.55-3/4. Buying action this week has faded a bit despite China granting waivers to commercial firms allowing purchases of up to 10 million metric tonnes of the U.S. beans tariff-free. Currently, Chinese buyers do not seem very interested in U.S. supplies and any purchases look prime to go for December or January delivery. Last week, China was said to have bought between 10 and 15 cargoes of Brazilian beans for November and December delivery. Nov soybeans have fallen below their 10-day moving average support level this morning. A close below this line will be the first since September 27 and could open up 9.21 as a downside corrective target. Momentum indicators are pointing lower as bean futures are a bit overbought and could use a correction. Speculative funds were thought to have bought about 6,000 contracts of soybeans yesterday.


Wheat markets are choppy this morning, with Dec Chi wheat up 1-3/4 to 5.19-3/4, Dec KC wheat is down a 1/2 cent to 4.20-3/4, and Dec spring wheat is up 3 cents to 5.42. Algeria purchased 600,000 tons of soft wheat yesterday and Turkey picked up 190,000 tons of milling wheat as well. Tunisia is tendering for 50,000 tons of soft wheat today. Paris wheat futures are at 3-month highs and Russian wheat prices are up nearly 5% this week. Australian and Argentine crop estimates are still sliding with heat and dryness issues. Dec Chi wheat tested and held its 10-day moving average support level this morning to bounce a bit higher so far. Dec KC wheat briefly tested its overhead 10-day moving average resistance level and Dec spring wheat is trading within the range made by its 10, 20, and 100-day moving average levels. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly higher this morning, with Oct lives down 50 cents to 109.37, Dec lives are up 57 cents to 114.27, and Feb lives are up 45 cents to 119.55. Oct feeders are up 5 cents to 143.75 and Nov feeders are up 7 cents to 143.57. Buyers have held cattle at relatively higher prices lately due to strong beef values, questionable forecasts, and expectations for U.S. beef production to drop 120 million pounds from Q3. This would be the first drop in beef production from Q3 to Q4 in five years. Technically, live cattle markets are still overbought though selling interest dries up every time markets check support. Dec live cattle have traded at their highest levels this morning since July 29 and could post a new high for the move. Nov feeders are trading on both sides of their 20-day moving average level.


Hog markets are mixed to mostly lower this morning, with Dec up 77 cents to 66.27, Feb hogs are down 67 cents to 75.60, and Apr hogs are down 1.07 to 82.05. China and other Eastern Asian countries will need significant pork imports to meet demand unsatisfied by African swine fever. However, the recent pullback in pork prices suggests that export activity has died down a bit lately. The CME Lean Hog Index has turned lower for the second session in a row though China’s Spot Pig Price Index is still rallying. Dec hogs are retesting their 50-day moving average level after yesterday’s first close below it since October 7. Feb hogs are attempting to hold onto their 200-day moving average support level.


Carol Tillmann

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