TFM Sunrise Update 10-7-19


Corn futures are called mixed after trading mostly steady overnight. The trading ranges over the past week have tighten and while the weakness to wrap up last week was somewhat disappointing, nearby support levels held strong A slow harvest pace should keep prices supported. The U.S. Midwest weather forecast is mainly dry for the week before Friday and Saturday will see rains for most of the region from a blizzard that is hitting the Dakotas; drier weather looks to build back in the first half of next week—-temps will be running above average for much of the region until Friday when they fall below average; temp in the 30 to 34 degree range are seen for the northern Midwest by early next week. Volatility will likely be minimal ahead of Thursday’s USDA Supply and Demand report. Momentum indicators are pointing lower, but a bull flag continuation pattern may hint at a chance for another leg higher. Weekly Export Inspections followed by Weekly Progress data are on tap for today. Managed Money is estimated net short 138,000 corn contracts.


Soybean futures were flat/firm overnight. Soybean prices were not able to rally much after last Monday’s jump on a supportive Grain Stocks report. However, the traders’ unwillingness to take beans below their nearby support levels was reassuring, especially given the second bull flag in a row forming at current consolidation levels. Traders are expecting the USDA to come out with a lower soybean yield to an average guess of 47 bushel to the acre from 47.9 bpa, as well as the production number on Thursday’s report. The USDA used the highest pod weight in ten years on last month’s report, and this seems optimistic. Still, USDA reports are unpredictable and should be treated with respect. Managed Money is net short an estimated 9,000 contracts of Soybeans; net short 46,000 lots of Soymeal, and; net long 23,000 Soyoil.


Wheat markets traded unchanged overnight. Winter wheat prices have fallen victim to technical selling action after recent rallies were slowed down. Momentum is pointing lower despite rallying world prices. Managed Money is net short an estimated 25,000 contracts of SRW Wheat. Spring wheat futures may have a bit more potential at this point, with poor harvest conditions in the northern Plains and Canadian prairies hampering harvest activities.


Cattle futures are called mixed to lower. Weak beef prices and talk of economic instability are bearish fundamental factors, and technicals are giving deeply overbought readings. The overall direction looks higher, but a correction lower seems needed given the sharp rally over the past month.


Lean hog futures are called mixed to lower. The big picture expectations for increasing exports are still very supportive, but in the meantime, futures prices are holding a much larger premium to the cash index than is normal for this time of year. This should keep rallies in check. Still, China’s hog herd is likely down 50% from the same time last year, and the cash index and pork values have turned their trends higher.


Lisa Heder

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