TFM Midday Update 12-13-19


Corn futures are slightly higher today, with Mar up 1-1/4 to 3.79, May is up 1-1/4 to 3.89-1/2, and Jul is up 3/4 cent to 3.90-3/4. The market has fallen off of the day’s highs with relative ease despite the U.S. and China confirming that a Phase 1 deal has been agreed upon. The U.S. has agreed to remove tariffs in phases though the Chinese government was unwilling to comment on any agreed upon purchase amounts as part of the deal. The U.S. dollar is also sharply lower this morning following the U.K. election which is positive for grains. Mar corn traded as high overnight as 3.85-1/2 but has since fallen back to trade a penny or two lower. Corn futures have held nearby support at the 10 and 20-day moving average levels but excitement seems to have subdued rather quickly. Speculative funds were thought to have bought about 19,000 contracts of corn yesterday.


Soybean futures are moderately higher today, with Jan up 5-1/4 to 9.03-1/2, Mar is up 5-1/2 to 9.18, and May beans are up 5-3/4 to 9.31-3/4. News of a Phase 1 trade deal with China is at the forefront today in the soybean market. The U.S. has agreed to take off Chinese tariffs in phases. However, China was unwilling to discuss any details regarding agricultural purchases in a press conference this morning. Meanwhile in South America, Brazilian soybean planting is running about 7.5% behind last year’s pace and plantings in Argentina’s major growing regions have stalled due to a lack of moisture. Mar soybeans tested their 50-day moving average level resistance this morning at 9.32 for the first time since November 15. Prices have sunk rather quickly off of the highs and are now near the lows of the day at 9.18. The agreed upon trade deal will not be signed immediately and traders are still hesitant about the lack of agreed upon purchases. Speculative funds were thought to have bought about 8,000 contracts of soybeans yesterday.


Wheat markets are mixed to mostly lower this morning, with Mar Chi wheat down 2-1/2 cents to 5.27-3/4, Mar KC wheat is down 1/4 cent to 4.42-1/2, and Mar spring wheat is up 3-1/2 cents to 5.26-1/2. Wheat markets initially traded higher this morning on overflow support from the rest of the grains complex on trade deal news with China. China is not a major buyer of U.S. wheat, so the lack of follow-through has been due to later selling in the other grains as well as a buy-the-rumor-sell-the-fact action. The U.S. dollar is lower this morning which is positive. Mar Chi wheat traded as high overnight as 5.36-1/4 but has since fallen back to moderate losses after testing the 10-day moving average support level. Mar KC wheat made a spike high to 4.51-1/2 but has drifted back towards the low end of the day. Spring wheat futures have also fallen off of their session highs but were still holding onto moderate gains for this session. Speculative funds were thought to have bought about 7,000 contracts of Chi wheat yesterday.


Cattle markets are showing triple-digit gains today, with Dec lives up 1.40 to 121.82, Feb lives are up 1.45 to 126.55, and Apr lives are up 1.40 to 127.60. Jan feeders are up 2.57 to 145.12 and Mar feeders are up 2.22 to 145.67. Beef and cash cattle values are still drifting lower though buyers today are interested in cattle in case China begins to import more U.S. beef products. Given the protein shortages in China currently, American beef would be a good way to purchase high-value U.S. ag goods if that ends up being part of the trade deal. Feb live cattle have fallen off of the day’s highs, reaching as high as 127.75 early in the morning. Prices have since fallen back within their Bollinger band range and are still holding triple-digit gains. Apr live cattle made their second consecutive close yesterday above the 10 and 20-day moving average levels, a positive technical development that is being confirmed today. Jan feeders are trading just off the highs of the day and at their highest level since November 18.


Hog markets are mixed to mostly higher this morning, with Dec down 62 cents to 60.37, Feb hogs are up 40 cents to 69.05, and Apr hogs are up 90 cents to 75.52. The lack of buyer follow through mid-morning is disappointing considering the agreed upon Phase 1 deal with China. Though the deal has not yet been signed, China should begin to import large quantities of U.S. pork products to meet the protein deficit caused by African swine fever. The CME Lean Hog Index is up slightly and pork values have been choppy to lower lately. Average weights are at all-time highs keeping production running at an extremely high level. Feb hogs traded as high this morning as 71.55 but has since fallen back to much more moderate gains. Apr hogs have shown similar price action, trading as high as 77.45 and testing their upper Bollinger band resistance level and subsequently finding sellers to push prices to more moderate gains.


Carol Tillmann

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates