TFM Midday Update 10-29-19


Corn futures are very slightly higher in early trade today, with Dec up 3/4 cent to 3.84-3/4, Mar is up 1/2 cent to 3.95, and May corn is up 1/4 cent to 4.01-3/4. Yesterday afternoon’s Crop Progress report was supportive, with corn harvest seen at just 41% complete vs the average market guess of 43% complete. This is 20% behind last year and down 23% from the previous 10-year average. Crop conditions went up 2% to 58%, though current good to excellent ratings are down 10% from last year and down 8% from the previous 10-year average. Corn continues to suffer from a lack of new developments either bullish or bearish, and prices keep drifting. Dec corn futures traded as high this morning as 3.87-1/2 but have since backed off to more modest gains. The trend is still lower, though calendar spreads may be stabilizing which could hint at some strength. Speculative funds were thought to have sold about 7,000 contracts of corn yesterday.


Soybeans are slightly lower so far this morning, with Nov beans down 1-1/4 to 9.19-1/2, Jan beans are down 1-1/4 to 9.34-1/4, and Mar beans are down 1/2 cent to 9.47-1/4. Soybean harvest as of Sunday was reported yesterday afternoon at 62%, down 7% from last year and down 16% vs the previous 10-year average. Even despite a slow harvest pace and early October freeze, the seemingly high possibility of a Phase 1 trade deal with China does not seem to spark much new bullish interest. Technical price action has been a bit disappointing today, with futures again testing their 20-day moving average overhead resistance level and then falling back to negative territory. Nov beans traded at their lowest levels this morning since October 8. Without a successful breach of that 20-day moving average level, the trend still looks lower. Speculative funds were thought to have bought about 3,000 contracts of soybeans yesterday.


Wheat markets are mixed to mostly higher this morning, with Dec Chi wheat up 3-1/4 to 5.15, Dec KC wheat is up 3-1/2 to 4.20-1/2, and Dec spring wheat is down 1-1/2 cents to 5.26-1/4. Wheat markets are finding general support from weather conditions in Australia and Argentina, as well as expectations that the U.S. winter wheat acres will be the smallest in over 100 years. Egypt is tendering for wheat this week and Black Sea offers are still rising. France and U.K. wheat planting is slow due to excess rains. On the other hand, winter wheat plantings in the U.S. were seen at 85% complete, up 8% from last year and up 1% vs the previous 10-year average. Dec Chi wheat is making an inside session so far, trading near the highs of the day currently. Dec KC wheat retested its 20-day moving average support level for the third session in a row and has bounced higher while Dec spring wheat has so far tested and held its 50-day moving average support level. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower, with Oct lives down 7 cents to 112.95, Dec lives are down 5 cents to 116.55, and Feb lives are down 17 cents to 121.55. Oct feeders are down 20 cents to 145.20 and Nov feeders are down 50 cents to 145.22. The retail beef trend is higher, though the futures market’s premium to the cash market could limit product potential, especially if fundamentals were to soften up. The premium to the cash market may also encourage feedlots to feed cattle out to higher weights if the cash market cannot catch up soon enough. Dec lives traded at their highest level today since April 30 and a move to new highs for the current rally. Nov feeders are testing and holding their 200-day moving average support level so far this morning.


Hog markets are showing moderate losses so far today, with Dec down 1.57 to 64.07, Feb hogs are down 1.50 to 72.47, and Apr hogs are down 97 cents to 78.92. China’s pig prices continue to rally, but U.S. pork prices have been in a mostly lower trend. The CME Index has also been unable to sustain much of a rally, keeping sellers active in the hog markets. Current consolidation levels seem likely to hold until a trade deal with China is signed or there is some other major fundamental development. Dec hogs are retesting the lows of their consolidation range currently and Feb hogs are moving towards the low end of their range as well. Both contract months are approaching oversold levels according to Stochastics.


Carol Tillmann

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