TFM Midday Update 10-4-19


Corn futures are drifting lower in early trade, with Dec down 3 cents to 3.85-3/4. Mar is down 3 cents to 3.97-3/4, and May is down 2-3/4 to 4.03-1/4. Harvest progress has been slow due to excess moisture, and many have gotten into harvest have reported disappointing yields. Some support was seen early on this morning with the EPA announcement that promises to replace exempted gallons of biofuel. Details on this announcement are very light, but ethanol blending should increase. Sharp gains this week, along with a USDA Supply and Demand report next Thursday, have kept price action quiet and somewhat underwhelming. Dec corn has traded as low today as 3.84-1/4, still a few cents above the 50-day moving average support level. Prices are still overbought, though one could argue the current consolidation level as a bull flag continuation pattern. Speculative funds were thought to have bought about 6,000 contracts of corn y yesterday.


Soybean futures are slightly higher today, with Nov up 2-1/4 to 9.14. Jan is up 2 cents to 9.28, and Mar beans are up 1-1/2 to 9.38. The EPA announced a new biofuel plan this morning, which should increase biodiesel blending, but specifics are not yet known. Excess moisture in the Midwest is keeping harvest activities light and could be negatively impacting the soybean crop. Parts of Brazil are currently too dry, keeping some planting behind schedule as well. Yesterday’s export sales data was supportive, and a lack of buyer follow through was likely due to the overbought technical indicators. Similar to the corn charts, a bull flag formation appears to be developing directly above the 200-day moving average level, which could suggest another leg higher in prices. Speculative funds were thought to have bought about 2,000 contracts of beans yesterday.


Wheat markets are mixed to mostly higher this morning, with Dec Chi wheat up 1-3/4 to 4.90-1/2. Dec KC is down 1/4 cent to 4.05-1/2, and Dec spring wheat is up 6-3/4 to 5.36-1/4. China purchased 130,000 tons of white wheat from the U.S. yesterday, the single largest purchase of wheat since Dec 2016. Still, export sales were somewhat disappointing and have kept wheat futures prices on the defensive. Egypt bought 60,000 tons of wheat from France this week, over 5.00 higher than last week. Dec Chi wheat tested and held its 10-day moving average support level again today for the third session in a row. Dec KC wheat is testing its 10 and 20-day moving average resistance levels, and Dec spring wheat is attracting solid buyer interest today, retesting its 10-day moving average resistance level. Speculative funds were thought to have bought about 1,000 contracts of wheat in Chi yesterday.


Cattle markets are mixed to mostly lower, with Oct lives up 2 cents to 106.82. Dec lives are down 22 cents to 110.60, and Feb lives are down 45 cents to 116.55. Oct feeders are down 62 cents to 141.72, and no feeders are down 75 cents to 141.35. Cash cattle have already traded 2.00 to 3.00 higher in the country this week than last week, a very supportive sign. However, average steer weights are at their highest level since December, and beef values are at their lowest level since January. Stock market volatility is normally reflected in cattle markets, but the lack of a break so far has been impressive. Dec live cattle are trading within a very tight range today, holding in overbought levels. Nov feeders are continuing their consolidation pattern as well after testing and holding their 10-day moving average support level.


Hog markets are slightly lower today, with Oct down 15 cents to 62.27. Dec hogs are down 42 cents to 67.67, and Feb hogs are down 52 cents to 74.77. Rallying pork and index values are keeping prices supported, but the sharp discount of the index to the futures market is also limiting gains. Export sales this week are solid, even though China only purchased 1,350 tons of pork. Technical price action today has been choppy with Dec retesting its 50-day moving average level for the first time since September 23, but prices have bounced off that level and recovered back above their 20-day moving average support level. Feb hogs tested their 20-day moving average level but have since bounced back above their 200-day moving average level.


Lisa Heder

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