TFM Midday Update 12-26-19


Corn futures are trading mixed, with front-month Mar down 1/4 cent to 3.87-1/4 and May down 1/4 cent to 3.94. Very quiet trading range with the Mar contract moving 2 cents from high to low so far in today’s session. The corn market continues in consolidation fashion, as the market has traded nearly the same level for seven consecutive sessions. Holiday trade remains overall quiet, as the market is looking for short-term correction. The demand side of the corn market has improved at these price levels as the U.S. seemed to step up in export growth in recent weeks as well as ethanol production. Technically, charts are trending higher supported by stronger cash markets, but will likely stay choppy through the holiday season.


Soybean futures are currently trading 1 to 2 cents higher as the Jan contract is up a penny to 9.37-1/2, while Mar beans are 1-1/4 higher to 9.46-1/4. The rumor mill still stays active regarding Chinese purchases of U.S. beans as part of the Phase One trade agreement that will likely be signed in January. November export data showed stronger movement of U.S. beans than anticipated, bringing support to the market overall. The technical trend continues to work higher, but South American weather and the prospects of a large Brazilian bean crop may limit short-term rallies in the near term. Estimates from private analysts today expect the Brazilian bean crop to be at 124 to 126 million metric tonnes, up from 117 million metric tonnes last year.


Wheat markets are the strength of the grain market today as Chi contracts are 5 to 8 cents higher. Front-month Mar Chi contract is up 8-1/2 to 5.49-1/2 and May is up 7-3/4 to 5.52-1/2. Strength is also seen in KC winter wheat, up 8 cents to 4.68-3/4 in the Mar contract and Mpls wheat also 3-1/2 higher in the Mar contract to 5.46-1/2. The Russian Ag Ministry reduced the country’s wheat crop to 74.3 million metric tonnes, down from 75 million just last month. With a weakening U.S. dollar and strengthening of the Russian rubel, U.S. has gained a more competitive advantage on wheat export sales as noted in last week’s export sales numbers. Technical strength continues to work higher, wheat futures are trying to break out of their most recent consolidation pattern. Chi contracts may be poised to challenge the June highs from last summer which were approximately 15 to 20 cents higher.


Cattle markets are trading firmer, with the front-month Dec contract up 45 cents to 123.10 and the Feb contract up 1.02 to 126.85. After prices fell back and challenged support levels early in the week, money seems to be moving back into the cattle market being led by the prospects of higher cash trade, as well as a relatively aggressive turn in retail values. On Tuesday, choice carcasses gained 1.87 for a second consecutive day of price increases and select carcasses were 3.61 higher. Early cash trade this week is still relatively undeveloped, but the prospects of cash staying firm as we move towards the end of the week does look likely to improve retail values.


Hog markets are trading currently firmer with the Feb contract up 12 cents to 70.82, while Apr hogs are up 27 cents to 78.27. The market has been choppy and two-sided so far in today’s trade, as the cash market continues to disappoint in reflection to futures values for the Feb contract. Hog futures are running in a strong premium over the cash, as well as the Lean hog Index, which may limit any front-month purchases. The anticipation of strong demand, as well as firmer retail values early in the week, help provide support as hog futures continue to grind higher since their November lows.


Carol Tillmann

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