TFM Midday Update 2-11-20


Corn markets are drifting lower today, unable once again to follow through on the previous trading session’s decent gains. Mar corn is down 3-3/4 to 3.79-3/4, May corn is down 3-3/4 to 3.84-3/4, and Jul corn is down 3-1/4 to 3.89. South American weather has been non-threatening, the U.S. dollar is trading at its highest level since October 10, and the Brazilian real made new all-time lows this morning. Many traders are also worried that while U.S. corn ending stocks may come in a bit lower on tomorrow’s report, global ending stocks are expected to grow. Mar corn futures made their highest closes on Friday since January 29 but have since given back all the day’s gains. The trend is still sideways as Mar corn has not been able to string together more than two positive sessions in a row since mid-December. For the week ending February 6, the U.S. shipped about 769,000 tons of corn vs 562,000 tons last week and 753,000 tons for the same week last year. Speculative funds were thought to have bought about 20,000 contracts of corn on Friday.


Soybean futures are putting in a solid start to the week, breaking out of the recent trading range and pushing through nearby resistance. Mar beans are up 7 cents to 8.89, May beans are up 6-3/4 to 9.01-3/4, and Jul beans are up 6-1/2 to 9.14-1/2. Soybean meal may be at the heart of the strength today, making a bullish key reversal last Thursday when funds were holding a record net short position. Meal prices have since bounced higher today in some impressive recovery. Still, South American weather looks non-threatening and the higher U.S. dollar is bearish. Mar soybeans traded through nearby resistance this morning at the 10-day moving average and are holding gains about 5-1/2 cents above that level. Mar beans have not traded this high since January 30 and a close above the 10-day moving average would be the first since January 2. Stochastics are also crossing up into a buy signal. For the week ending February 6, the U.S. shipped about 604,000 tons of beans vs 1.37 million tons last week and 1.15 million tons for the same week last year. Speculative funds were thought to have been about net even in soybeans on Friday.


Wheat markets are showing moderate losses so far today, led lower by the U.S. dollar strength. Mar Chi wheat is down 5-1/4 to 5.53-1/2, Mar KC wheat is down 1-1/4 to 4.71-1/4, and Mar spring wheat is down 2-1/2 to 5.33-1/4. Most forecast models are calling for active rains in the Plains over the next few weeks which should help to improve questionable crop conditions. The U.S. dollar is at its highest levels today since mid-October and China purchased more French wheat last week to fill import quotas set by the WTO and there is talk that China buyers purchased an additional six cargoes of wheat from France recently. The Mar Chi wheat has tested and held support today at the 50-day moving average level but also failed to break through resistance at the 10-day moving average level. Stochastics are nearly oversold. Mar KC wheat is currently holding its 10-day moving average level after a close above on Friday and Mar spring wheat is trading back towards the lower end of its recent range in oversold territory. The U.S. shipped about 524,000 tons of wheat for the week ending February 6 vs 436,000 tons the previous week, and 563,000 tons the same week last year. Speculative funds were thought to have bought about 3,000 contracts of Chi wheat on Friday.


Cattle markets are moderately lower again today, with Feb lives down 52 cents to 120.80, Apr lives are down 65 cents to 119.15, and Jun lives are down 35 cents to 110.92. Most traders are concerned over short-term beef demand, especially with beef values falling to their lowest level since early to mid-January. Cash cattle drifted lower last week and beef production was higher. Still, packers are making money and export sales totals lately have been strong. Apr live cattle are sharply oversold according to Stochastics but cannot seem to attract any buyers at current levels. Mar feeder cattle are testing their 10-day moving average resistance level, and a close above would be the first since February 4 and only the second since January 14.


Hog markets are lower this morning, correcting from the solid strength seen in the back half of last week. Feb hogs are down 1.15 to 55.95, Apr hogs are down 90 cents to 65.35, and Jun hogs are down 5 cents to 81.50. Carcass values are at their lowest level since March 2019 despite huge sales of pork to China this year vs the average pace. China pork prices are continuing their rally and were up 2.75% overnight. Still, traders are worried about the longer-term demand impacts due to the coronavirus. Apr hogs gapped higher on Friday morning and made their highest close since January 29. Stochastics are only just now crossing up to a buy signal as futures are testing nearby support at the 10-day moving average level. The Apr chart is currently showing an island bottom formation which can often signal a rally.


Carol Tillmann

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