TFM Midday Update 12-4-19


Corn futures are drifting lower this morning after disappointing closes yesterday. Dec is down 1-3/4 to 3.70-1/4, Mar is down 1 cent to 3.80-1/4 and May is down 1 cent to 3.86-1/4. Lower corn trade is disappointing, especially given a renewed sense of optimism today regarding U.S. / China trade negotiations. Brazilian corn exports in Nov were up 18% from last year, and there is speculation that stocks could get very tight, perhaps insufficient to meet local feed demand into early 2020. Though harvest continues to drag on, especially in North Dakota, there is talk that the strong basis in the country, along with difficult to store wet corn, could be accelerating producer sales. The best traded Mar contract tested and failed to close above its 20-day moving average resistance level yesterday, and Mar corn has again tested and sunk back below its 20-day moving average resistance level this morning. mar corn is currently testing its 10-day moving average support level, and a close below that would be a negative technical development and the first since last Wednesday. Speculative funds were thought to have sold about 1,000 contracts of corn yesterday.


Soybean futures are moderately higher this morning, with Jan up 5-1/4 to 8.76-1/4. Mar beans are up 5-1/4 to 8.90-3/4, and May beans are up 5 cents to 9.05-3/4. Bloomberg reported this morning that some optimism regarding U.S. / China trade negotiations, and given that prices held Sept lows yesterday, some short covering may be working today. Still, there does not appear to be much urgency to get a trade deal done, and South American weather is still non-threatening at this point. Chinese palm oil prices are making new two-year highs, and U.S. soybean meal prices are continuing their recovery pattern. Jan beans have traded as high this morning as 8.80 but have since sagged back with corn turning lower. Stochastics are still giving sharply oversold readings, and a fundamental hiccup could cause short covering quickly. As of last Tuesday, funds were short nearly 43,000 contracts. Open interest is up about 42,000 contracts since then, which suggests more fund short selling. Speculative traders were thought to be about net even in beans yesterday .


Wheat markets are choppy this morning, with Mar Chi wheat steady at 5.25-1/4. Mar KC was up 1-3/4 to 4.38-1/2, and Mar Mpls is up 3 cents to 5.16-1/2. Egypt purchased 295,000 tonnes of wheat from Russia yesterday and paid 3.99 per tonne higher than their last tender on November 13. A weaker U.S. dollar has been supportive, but after shooting lower earlier in the session, the dollar has recovered to about the middle of the day’s range. Canadian wheat production for 2019 is expected to come in lower than previous estimates, with the report out Friday morning. Mar Chi wheat closed below its 10-day moving average support level yesterday and has drifted back below that level after higher trade this morning. Mar KC wheat is well off the day’s highs and is testing its 10-day moving average support level. Mar spring wheat broke through its 10-day moving average resistance level yesterday, and Stochastics gave a buy signal crossover. Speculative funds were thought to have sold about 7,000 contracts of Chi wheat yesterday.


Cattle markets are lower this morning, with Dec lives down 67 cents to 119.87. Feb lives are down 1.12 to 124.52, and Apr lives are down 1.17 to 125.05. Jan feeders are down 97 cents to 141.40, and Mar feeders are down 1.02 to 142.90. There was some light, weak, early cash trade in Nebraska yesterday at 1.19, directly in the middle of last week’s range of 118 to 120. The 5-day weather forecast is dry for the Plains, which is bearish, though above normal precipitation is expected again in 6-10 days. Boxed beef values made their biggest daily drop yesterday since November 21. Feb lives are trading below their 20-day moving average support level for the first time since November 25, and a close below would be the first since November 22. Feb lives have not made more than one consecutive close below the 20-day moving average since early September, so significant trade below that line could be a topping signal. Jan feeders are trading below their 10, 50 and 200-day moving average support levels.


Hog markets are mixed to mostly higher this morning, with Dec down 27 cents to 62.22. Feb hogs are up 42 to 68.80, and Apr hogs are up 62 cents to 74.90. China’s spot pig prices continued their rally overnight, though U.S. pork values were lower. Optimism regarding U.S. / China trade negotiations today is positive, thought these opinions seem to shift almost daily. Yesterday’s closes were technically impressive, making its first above its 10-day moving average resistance level since November 13 and also producing a buy signal in the the Stochastics. While today’s price action has not been overly  impressive, prices have still traded higher for most of the day so far.


Lisa Heder

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