TFM Midday Update 11-8-19


Corn futures are trading very slightly lower today as traders take final positions ahead of today’s USDA Supply and Demand report. Dec corn is down 1/2 cent to 3.74-3/4, Mar corn is down 3/4 cent to 3.83, and May corn is down a penny to 3.90. Trade has been choppy and two-sided today as traders try to decide whether today’s report will show a production adjustment lower or higher. Demand has been dismal, but there is enough uncertainty about the crop moving forward that buyers are not throwing in the towel quite yet. Dec corn is trading lower for the seventh session in a row and reached its lowest price today since September 27. Corn markets are overbought and may be vulnerable to a bullish surprise today. Speculators were thought to have sold 17,000 contracts of corn on Thursday.


Soybean futures are trading moderately lower today, with Nov down 3-1/2 to 9.21-1/2, Jan is down 4 cents to 9.32-1/2, and Mar beans are down 3-3/4 to 9.45. Soybean traders do not seem to want to push soybean futures past nearby resistance after yesterday’s bullish key reversals. Most are expecting a production reduction today with yield and acreage both adjusted lower, in part to winter storms in the northern Plains. Jan soybeans briefly tested their 20-day moving average resistance level today but have since fallen back to test their 10-day moving average support level. Prices are nearly oversold though trade has quieted down in anticipation of today’s data release. Speculators were thought to have bought about 9,000 contracts of beans yesterday.


Wheat markets are soft early this morning, with Dec Chi wheat down 2-1/4 to 5.10-1/4, Dec KC wheat is down 3/4 cent to 4.24, and Dec spring wheat is down 2-1/4 to 5.16-1/2. The U.S. dollar reversal higher this week has been the main source of pressure, even though Egypt purchased large amounts of wheat this week. Most traders see global ending stocks down just about a million tons from last month. The Russian Agricultural Minister left Russian wheat exports estimate unchanged at 36 million tons vs the last USDA estimate at 34 million tons. Price action data has been quiet, with the winter wheat contracts pushing slightly lower below the nearby support while the Dec spring wheat contract has fallen to its lowest prices since September 19. Speculative funds were thought to have sold about 5,000 contracts of Chi wheat yesterday.


Cattle markets are mixed to mostly lower this morning, with Dec lives up 7 cents to 119.07, Feb lives are down 2 cents to 124.82, and Apr lives are steady at 125.85. Nov feeders are down 10 cents to 146.67 and Jan feeders are down 15 cents to 145.62. Choice beef values have rallied to their highest levels since August 22 even though dressed steer weights are at their highest average weights since December 2016. Cash cattle trade this week has been very quiet, and a higher trend in beef values today should open up the door for higher activity this afternoon. Beef export sales yesterday were solid though cumulative sales for 2019 are still down over 5% from last year. According to the U.N. Food Agency, world meat production is expected to decline for the first time in more than 20 years. Dec live cattle are making an inside session so far in extremely quiet trade, similar to the Jan feeder cattle contract. Both markets are technically overbought.


Hog markets are mostly higher this morning, with Dec up 37 cents to 64.67, Feb hogs are up 20 cents to 73.97, and Apr hogs are down 5 cents to 80.10. The CME Lean Hog Index turned higher today and carcass cutout values are at their highest levels since August 20, were up 5.9% for the week so far. Traders appear somewhat hesitant to buy this news without confirmation of large export sales lately. The trade progress with China is, of course, positive though the market seems wary of buying rumors. Dec hogs are trading about one-third of the way up yesterday’s trading range, Feb hogs are making a very quiet inside session so far, and Apr futures have backtested nearby support though have yet to shoot higher through resistance.


Carol Tillmann

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