TFM Midday Update 9-23-19


Corn futures are trading with modest gains so far to begin the week, with Dec up 2-1/2 cents to 3.73-1/4, Mar is up 2-1/2 cents to 3.84-1/4, and May corn is up 2-3/4 to 3.92-1/4. News last week that China cancelled planned U.S. farm visits was seen as bearish, though both sides released statements late Friday that negotiations were constructive and there still has been no changes to plans for high level talks in October. The trade optimism is a major supportive force today, and weather lately has been a bit of a mixed force. The warm temperatures have dashed any thoughts of early frosts, but others see the warm and wet weather as not conducive to ear fill. Dec corn futures have traded as high today as 3.74-1/2, within just 1 tick of the most recent highs made on September 16. Momentum indicators are pointing higher though Stochastics are giving overbought ratings. Speculative funds were thought to have sold about 8,000 contracts of corn on Friday.


Soybean markets are putting together a decent rally for the start of the week, but have fallen off of the morning’s highs. Nov beans are up 11-1/4 to 8.94, Jan beans are up 10-1/4 to 9.06-3/4, and Mar beans are up 9-1/2 cents to 9.18-1/4. Buyers stepped back into the soybean market overnight when some fears about trade talks breaking down from Friday afternoon were quelled. The Chinese delegation cancelled their farm visits Friday but both the U.S. and China maintain that last week’s talks were constructive. Most believe that the USDA production number is still too high, with the USDA using an implied pod weight of 0.35 grams on their latest Supply and Demand report. This is the heaviest pod weight in 10 years and is optimistic considering the extremely late planting this year. Nov beans held their 50-day moving average support level at Friday’s close, opened there overnight, and have since surged as high as 8.99-1/4. Prices have fallen off of the day’s highs by about a nickel, but double-digit gains to start the week are impressive. Speculative funds are thought to have sold about 7,000 contracts of soybeans Friday.


Wheat markets are mixed this morning, with Dec Chi wheat down 3/4 of a cent to 4.83-1/2, Dec KC wheat is up 1/4 of a cent to 4.07-3/4, and Dec spring wheat is up 11-1/2 cents to 5.35-3/4. Winter wheat markets are overbought and are finding some stiff resistance at overhead moving average levels. Meanwhile, only 73% of the North Dakota spring wheat crop was harvested as of September 15 and Saskatchewan harvest is just 23% vs 50% on average. Dec Chi wheat is making its seventh test in a row of its 50-day moving average level. A close above would be a major positive development, but currently, momentum may be turning back lower. Dec KC wheat is trading near the lows of the day in overbought territory while spring wheat futures are trading at their highest level since July 31. Speculative funds are thought to have sold about 3,000 contracts of Chi wheat on Friday.


Cattle markets are showing solid gains this morning after Friday’s support of Cattle on Feed report. Oct lives are up 1.47 to 100.82, Dec lives are up 1.57 to 106.72, and Feb lives are up 1.07 to 113.15. Sep feeders are up 72 cents to 141.05 and Oct feeders are up 1.32 to 140.52. Beef values are currently soft, and while cash cattle did trade 1.00 higher last week than the previous week, actual prices between $100 and $102 are relatively low.  Friday’s Cattle on Feed report showed cattle supplies smaller than a year ago for the first time since December 2016. Dec live cattle gapped higher this morning, trading as high as 107.12. Nearby resistance comes in at 107.75, the 50-day moving average level. A break above that opens another 1.00 higher to the 100-day moving average, and then the target moves to 111.17, the top end of the gap created August 12. Oct lives have broken through their major resistance at the 100-day moving average level and are trading at their highest value since August 2.


Hog markets are moderately higher today, with Oct up 50 cents to 60.85, Dec hogs are up 1.20 to 67.45, and Feb hogs are up 60 cents to 74.50. Trade has been volatile for the past couple of sessions, with headlines regarding U.S./China trade negotiations both positive and negative. High level talks between the two countries are still scheduled for October and this has been able to calm the selling pressure created Friday when news broke that China had cancelled U.S. farm visits. China’s Spot Pig Index is up 113% year-to-date, so any progress is seen as very positive. Dec hogs have traded as high today as 68.82, but have backed off and are now testing their 50-day moving average support level.


Carol Tillmann

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