TFM Midday Update 12-27-19


Corn futures are currently trading mixed, with mild strength in front-month contracts as the Mar contract is up 1-1/4 to 3.89-3/4, while May is 1 cent higher to 3.96-1/4. The market has had a quiet trading range of 3 cents in the Mar contract for intraday high to low. Strength in the wheat complex is helping to provide some buying support in the corn market again today as prices have moved through the key 100-day moving average in the Mar contract. This is the first time since August that we have traded above this key-moving average. The USDA announced weekly export sales this morning, and for the week of December 19, corn sales increased by 24.6 million bushels. This is at the low end of the estimated range and was disappointing after a strong week of sales in the previous week. Weekly export shipments were at 13.1 million bushels, below the necessary pace to reach USDA’s export estimate for the upcoming marketing year. Those lackluster sales are limiting gains in the corn market today.


Soybean futures are currently trading softer, as the front-month Jan contract is down 6-1/2 cents to 9.31-1/4, while Mar is down 5-1/4 cents to 9.41. Jan options expiration is bringing some volatility into the soybean market, as prices have dropped off of overnight session highs. Regardless, the market is seeing some profit-taking after an aggressive rally since posting its November lows and is potentially putting a reversal signal on charts which could bring some additional selling pressure if this negative technical signal finishes at the end of the trading day. Weekly export sales were also disappointing for the soybean market, with new sales at 27.1 million bushels for the 2019/20 crop year, at the bottom end of trade expectations. Weekly export shipments were at 37 million bushels, which was friendly and ahead of USDA export estimate pace. The market is still looking for additional sales on the books before we start competing with the oncoming South American crop.


Wheat markets are the strength of the grain market today as Chi contracts are trading 7 to 9 cents higher. The Chi Mar contract up 9 cents to 5.58, while May is up 9 cents to 5.60-3/4. Strength is seen in the other classes of wheat as KC hard red winter wheat is trading 7 to 8 cents higher and spring wheat contracts are 3 to 4 cents higher. Weekly export sales remain strong for U.S. wheat with new sales at 26.3 million bushels for the week of December 19, at the top end of trade expectations. In addition, shipments were at 18.7 million bushels, which was light according to the needed export pace to meet the USDA’s totals for export estimates for the year. Playing a factor in the wheat market has been money flow, as speculative traders have been moving into a long position with rumored anticipation that China could step into the U.S. wheat export market. In addition, global wheat prices have been on the rise given the strength seen with the Russian rubel vs the U.S. dollar.


Cattle markets are trading mixed, with front-month Dec 5 cents higher to 123.32, while Feb cattle are 5 cents higher to 126.85. The market is showing some strength after yesterday’s strong gains and the anticipation of improved cash trade this week. Though still relatively undeveloped, and will likely develop late on Friday afternoon, cash trade is anticipated to be 1.00 to 3.00 higher on a week over week basis. Retail values have firmed this week, possibly bringing an end to the strong pullback in retail values since its peak in November. Also adding additional support is the forecast for a strong winter storm across the northern Plains which could limit movement of cattle in some of those regions.


Hog markets are trading lower, with the Feb contract down 95 cents to 69.95 and Apr hogs down 65 cents to 77.62. Weekly export sales saw additional shipment support to China, but purchases for the next marketing year were light. The hog market is still dealing with large amounts of slaughter animals in the front months, and with Feb futures holding a strong premium to both the index and cash markets may be susceptible to some weakness. Summer month contracts struggle with the 90.00 resistance level, as prices have failed to push through this barrier for the third consecutive day.


Carol Tillmann

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