TFM Midday Update 9-18-19


Corn futures are trading slightly higher in quiet and back and forth trade this morning. Dec corn is up 1 cent to 3.69, Mar corn is up 1 cent to 3.81, and May corn is up 3/4 of a cent to 3.89. Weak energy markets since the jump on Monday have been a major pressure point on corn, and though corn maturity is far behind the average year, U.S. weather forecasts for the next two weeks are showing above normal temperatures for nearly the entire country, which is bearish. China’s plan to implement a nationwide mandate for ethanol blended gas by 2020 appears unlikely to happen as China corn stocks have fallen from over 200 mmt in 2017 to just 56 mmt in 2019. Dec corn futures have traded as high this morning as 3.90 and as low as 3.96-1/2. Prices have not fallen below the 20-day moving average support level since breaking through it and momentum indicators are pointing higher. Speculative funds were thought to have sold about 15,000 contracts of corn yesterday.


Soybean futures are falling moderately lower today with Nov down 6-3/4 to 8.87, Jan beans are down 6-1/2 to 9.00-3/4, and Mar beans are down 5-3/4 to 9.13-3/4. Aug soybean crush was reported yesterday at 168.085 mil bu vs the average market guess of 162.42 mil bu. This was a new record for the month of August and very supportive. In addition, Chin’a Vice Minister is scheduled to arrive in Washington today to start the 13th round of trade talks. However, soybean futures are falling out of overbought levels today as momentum turns lower. The best traded Nov contract reached as high as 8.97 in earl trade this morning, but has since fallen back to its 100-day moving average support level at 8.86-3/4. Speculative funds were thought to have sold about 5,000 contracts of beans yesterday.


Wheat markets are higher this morning and making another test of nearby resistance with Dec up 3-1/4 cents to 4.87-1/2, Dec KC wheat is up 2-3/4 to 4.05, and Dec spring wheat is up 3 cents to 5.09-1/2. Egypt is tendering for wheat today and prices are expected to come in slightly higher than the last tender in late August. The Russian Ruble has picked up over 5% this month which has made Black Sea wheat more expensive on the export front. Algeria and Ethiopia are also tendering for wheat. While today’s buying action is impressive considering Friday’s hook reversals, no major progress has been made. Dec Chi wheat is putting in its fourth test in a row of its overhead 50-day moving average level. A close above would be the first since July 16, and will likely open up a run to 5.00. KC and spring wheat futures tested nearby support earlier in the session and have since moved higher. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning with Oct lives up 40 cents to 99.75, Dec lives are steady at 105.30, and Feb lives are down 30 cents to 111.47. Sep feeders are down 27 cents to 138.90 and Oct feeders are up 32 cents to 137.62. Light cash trade this week has come in steady to 1.00 higher than the cash trade last week. Beef values have been choppy, though if the new trade deal with Japan can be signed, beef exports should be able to increase. Packer margins are strong right now, which should keep the slaughter pace moving relatively quickly. Still, cheap feeders and cheap corn have many traders worried about excessive placements and others are worried about higher marketings on Friday’s Cattle on Feed report. Dec live cattle have traded in a quiet inside session so far today with a range of less than 1.00. Oct feeders back tested nearby support at the 50-day moving average level and have held in quiet follow through.


Hog markets are mixed to mostly higher this morning with Oct up 90 cent sto 63.00, Dec hogs are down 20 cents to 67.47, and Feb hogs are up 1.10 to 74.65. The CME lean hog index is on a nasty slide which is keeping Oct hogs’ rally potential somewhat limited, though the market is expecting pork exports to increase significantly with China tariffs lowered, Oct hogs are trading at too much of a premium to the cash market to expect a large rally. Oct hogs retested their 10 and 20-day moving average resistance levels this morning and Dec has held onto its 50-day moving average support level. A second case of ASF was reported in South Korea overnight and this should keep traders vigilant for further cases.


Kelly Rubisch

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