Top Farmer Midday Update 1-17-19

Corn: Corn futures are essentially steady this morning, with Mar up 1/4 cent to 3.74-1/4, May steady at 3.82-1/4, and Jul up 1/4 cent to 3.90-1/4. Forecasts for South America are drifting back towards heat and dryness in Brazil and more rain in Argentina. Previously, forecasts were shifting to more mild temperatures. Prices have fallen off of today's highs, but with trend line support still holding, sellers seem hard to come by. Jul futures have tested their 100-day moving average level this morning but are currently trading back below. During yesterday's session, funds bought 9,000 contracts of corn and are thought to be long about 97,000 contracts currently.

Soybeans: Soybean futures are slightly higher this morning, with Mar up 1-1/2 cents to 8.96, May up 1-1/4 cents to 9.09-1/4, and Jul is up 1-1/2 cents to 9.22-1/4. Another private Brazilian crop agency lowered its soybean production estimate yesterday. Celeres lowered their estimate almost 5 million tons to 117.2 million metric tons. This was due to a hot and dry growing season which is forecasted to continue. Still, with conflicting opinions on recent trade talks with China, soybean futures are finding it difficult to move much higher at this time. Funds are thought to be short around 23,000 contracts coming into today as futures hold trend line support.

Wheat: Wheat markets are mixed this morning, with Mar Chi wheat down 1-1/4 cents to 5.11-1/4, Mar KC wheat is up 1-1/4 cents to 4.96-3/4, and Mar Mpls wheat is up a penny to 5.66. The positivity in the winter wheat markets from expectations of slowing Russian exports is somewhat mooted today as the Russian Agriculture Minister denied any discussions about limiting wheat exports. Another reason for the mixed open could be spread traders. Currently, the Mar KC/Chi wheat spread is trading directly at its 50-day moving average resistance level. That spread has only closed above the 50-day moving average twice since falling below back in mid-October. Significant technical action above that moving average could draw more activity and move KC wheat closer to its normal premium over Chi wheat. Funds bought about 1,000 contracts of wheat yesterday and are thought to be short about 14,000 contracts.

Cattle: Cattle markets are taking moderate losses today, correcting after the sharp early-week surge. Feb live cattle are down 1.27 to 126.55, Apr lives are down 92 cents to 126.80, and Jun lives are down 80 cents to 116.70. Jan feeders are down 2.17 to 141.60 and Mar feeders are down 1.85 to 142.85. At this point, traders are still expecting strength in the cash markets later this week due to inclement weather. However, there is likely some hedge pressure at these high levels, as well as speculative length profit taking. It is also worth noting that retail beef prices have not echoed the recent strength in futures prices and could be a weighing factor.

Hogs: Hog markets appear to be stabilizing after some sharp losses earlier this week. Feb hogs are up 37 cents to 60.42, Apr was down 35 cents to 64.72, and Jun is up 15 cents to 78.32. African swine fever fears in China have not been quelled, so there are likely still traders looking for dips to buy. The Feb contract has found some support near lows from mid-October and early November, while others are wary of these levels. The old trader's adage goes that triple-bottoms never hold, and the current chart formation is showing a triple-bottom. Cash fundamentals are improving, providing some fundamental justification for buying at this triple-bottom. Jun hogs are trading back above their 200-day moving average level after closing below it yesterday for the first time in the contract's life.

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