TFM Midday Update 11-26-19


Corn futures are drifting lower this morning, with Dec down 2-1/4 to 3.68-1/4, Mar is down 2 cents to 3.78-3/4, and May is down 2 cents to 3.84-1/4. Non-threatening weather in South America, as well as an immediate response to a positive phone conversation between the U.S. and China overnight is pushing the corn markets lower this morning. Corn is also finding spillover selling interest from the other grain markets. Yesterday’s Crop Progress report showed that harvest is 84% complete vs 93% complete at the same time last year. Forecasts for cold and wet weather across the upper Midwest for the second half of this week along with two different snowstorms could slow harvest progress further. Dec corn futures briefly tested their 10-day moving average resistance level this morning after failing to close above it yesterday. Mar futures also failed to close above their 10-day moving average level yesterday and briefly tested that level this morning. Speculative funds were thought to have bought about 11,000 contracts of corn yesterday.


Soybean futures are moderately lower this morning, with Jan down 8 cents to 8.84-1/2, Mar is down 8 cents to 8.99, and May is down 7-3/4 to 9.13-1/4. There was apparently some progress made in a phone call between the U.S. and China overnight, though traders do not seem too optimistic that a trade deal is close. Weather in Brazil looks non-threatening at the moment which is keeping buyer interest somewhat subdued. Export inspections this week of just over 1.9 million tons was the highest weekly total in almost two years. Technically, soybean markets look very sour, with four lower closes in a row and lower highs for six sessions in a row. Bean markets are sharply oversold, but support may not emerge without some sort of bottoming signal. Speculative funds were thought to have sold about 4,000 contracts of soybeans yesterday.


Wheat markets are soft this morning, with Dec Chi wheat down 3-3/4 to 5.27-1/4, Dec KC wheat is down 7 cents to 4.28-1/2, and Dec spring wheat is down 1/4 cent to 4.98. Fundamental changes from yesterday are few and far between, with Black Sea weather still cold and European weather still rainy. Australian and Argentina production estimates are continually dropping due to hot and dry weather. Russian officials cut their 2019 crop production forecast by 3 million tons to 75 million tons. U.S. winter wheat rated good to excellent as of Sunday afternoon was seen at 52%, steady with last week. Dec Chi wheat is correcting from yesterday’s surge higher but is still outside of its Bollinger Band range. Dec KC wheat has sunk back within its Bollinger Band range though is still trading 4 to 5 cents above nearby support. Dec spring wheat has traded mostly lower today but is currently near the upper third of the day’s range so far. Speculative funds were thought to have bought about 10,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning, with Dec lives up 32 cents to 120.02, Feb lives are up 27 cents to 125.42, and Apr lives are up 32 cents to 125.55. Jan feeders are down 57 cents to 141.40 and Mar feeders are down 50 cents to 141.85. Dec live cattle are trading 4.00 above the 5.00-area average which seems a bit rich. This is also encouraging feedlots to feed cattle to higher weights which then increases beef production. Beef prices are down over the past week, and with beef stocks down on last week’s Cold Storage report, traders seem at least somewhat hesitant to sell cattle at the moment. Feb live cattle held their 10-day moving average support level this morning in very quiet two-way trade. Apr lives are testing their 10 and 20-day moving average resistance levels but are so far unable to breakthrough. Jan feeders are trading between their 50-day moving average support and 200-day moving average resistance.


Hog markets are mostly lower this morning, with Dec down 32 cents to 60.70, Feb hogs are down 57 cents to 67.22, and Apr hogs are down 42 cents to 73.45. Traders do not seem to care much about reports that a phone call between China and the U.S. went well overnight. U.S. pork going to China is still subject to higher tariffs and enormous production numbers are keeping traders anxious over overwhelming domestic supplies. Still, carcass cutout values are near 25% above last year’s carcass values at this time in spite of the huge production totals lately. Dec hogs are drifting towards the low end of the day’s range in quiet trade and Feb hogs are putting in another inside session near recent lows.


Carol Tillmann

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