TFM Midday Update 12-19-19


Corn futures are choppy this morning in quiet trade, with Mar and May steady at 3.87 and 3.93-1/2 respectively. Jul corn is down 1/4 cent to 3.99-1/4. Improving demand is supportive, with China expected to increase imports of U.S. corn, ethanol, sorghum, and DDGs. U.S. corn is priced competitively on the world markets and should continue to attract large purchases. The U.S. sold 1.71 million tons of corn for the week ending December 12, up 96% from last week and up sharply from the previous 4-week average. This was on the high end of trade expectations. Corn futures had trouble with their 100-day moving average resistance levels lately and this morning is no different. Prices have yet to breakthrough, and a close above would likely cause buy stops to push the market higher. Speculative funds were thought to have sold about 9,000 contracts of corn yesterday.


Soybean futures are moderately lower this morning, with Jan and Mar beans down 2-3/4 to 9.25-3/4 and 9.37-3/4 respectively. May beans are down 2-1/4 to 9.51-3/4. South American weather has turned a bit bearish, with forecasts for Argentina now showing rains to relieve most dryness concerns. Chinese importers bought at least two cargoes of U.S. beans on Tuesday. Brazilian currency has rallied to its highest level since early November providing some underlying support. The U.S. sold 1.43 million tons of soybeans for the week ending December 12, beating the high end of trade expectations. Mar soybeans are consolidating within their recent ranges after breaking through the 50-day moving average resistance level on Monday. Stochastics are getting overbought readings though selling action seems limited at this point. Speculators were thought to have bought about 1,000 contracts of soybeans yesterday.


Wheat markets are slightly higher in early trade today, with Mar Chi wheat up a penny to 5.49-1/4, Mar KC wheat is up 2-1/4 to 4.64-1/2, and Mar spring wheat is up 5-1/2 to 5.44. The U.S. sold 869,000 tons of wheat for the week ending December 12, beating the high end of trade estimates by 269,000 tons. Sales for that week were up 73% from their previous 4-week average and up 95% from the previous 4-week average and marked a marketing-year high. Wheat in the central and southern Plains have gone into dormancy with some dry conditions with very little rain in the short-term forecast. Australia is still hot and dry, affecting wheat yet to be harvested. Mar Chi wheat is making its second inside session in a row so far today, trading in the middle of the day’s range. Stochastics are giving overbought readings. Mar KC wheat is just off the highs of the day though in overbought territory and spring wheat futures are extending their rallies into overbought territory with next resistance about a dime above the market. Speculative funds were thought to have sold about 5,000 contracts of wheat yesterday.


Cattle markets are mixed to mostly lower this morning, with Dec lives down 32 cents to 121.92, Feb lives are down 47 cents to 125.65, and Apr lives are down 42 cents to 126.82. Jan feeders were up 12 cents to 144.67 and Mar feeders were down 22 cents to 144.67. Yesterday’s Online Fed Cattle Exchange got the cash markets off to a good start, with trade today in Kansas, Nebraska, and Texas at 120.00. This is steady to maybe slightly higher from last week. Choice beef values were down overnight and are cheaper than the same time last year for the first time since June 18. Speculators are still holding a fairly large ownership position and given tomorrow’s Cattle on Feed report, we expect price action to be somewhat limited beforehand. Feb live cattle are trading just off the lows of the day, currently holding support at the 10 and 20-day moving average levels. Jan feeders are trading in the lower third of the day’s range though one could argue the market is forming a bull flag formation which can signal another leg higher.


Hog markets are mixed to mostly lower today, with Feb up 35 cents to 70.25, Apr is down 2 cents to 77.20, and Jun is down 2 cents to 89.02. Carcass values are continuing their trend lower while the cash index is choppy. Weights have begun to pull back a little bit as well which is supportive. U.S. production is at record levels currently and should pullback in Q1. Feb hogs again found sellers this morning at their upper Bollinger Band line but are still near the highs of the day. Apr hogs have recovered from some early session losses and Jun hogs are still trapped between resistance at the 50-day moving average and support at the 100 and 200-day moving average levels. Stochastics for the Jun contract are giving overbought readings.


Carol Tillmann

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