10:30 Snapshot

Posted on Tue, 12/10/2019 - 10:31

Corn futures are slightly higher at midsession after successfully testing last week’s lows.

  • March futures opened steady to firm last night and failed to build much upside momentum. Prices set back this morning, once again tested last week’s low at $3.75 and rebounded. Key support remains the November low at $3.73. Last week’s high at $3.84 ¾ is short-term resistance. A close above $3.80 tonight could set up a test of that high.
  • Bearish traders expect USDA to cut its U.S. corn export forecast about 50,000 MT in today’s monthly WASDE report at 11 a.m. CT. Traders on average expect little change in the world carryover in today’s report, but the range of estimates is large.
  • The agency will not release a U.S. production forecast until Jan. 10, so there will not be a bullish U.S. supply change.
  • As of Dec. 8, USDA says corn harvest advanced three percentage points to 92% complete, whereas the five-year average is 100%. That implies there were still 6.5 million acres of corn left in fields, or about 1.2 billion bushels. This will be USDA’s last update of the season.
  • Some underlying support is coming from a Wall Street Journal report that China and the U.S. are negotiating a delay in Dec. 15 U.S. implementation of new tariffs. That could be a sign that China has agreed to specific large U.S. ag purchases.

Soybeans are 2 to 3 cents higher, extending the short-covering rally for sixth session.   

  • March soybeans climbed to $9.16 ¾ this morning, a penny below yesterday’s session high. Soybeans closed above the 20-day moving average yesterday, providing technical support.  The 100-day and 200-day moving averages are just above the market near $9.20 and $9.23.  
  • Prices remain supported on optimism that some deal will be reached before threatened new U.S. tariffs are imposed on Dec. 15.
  • Soybeans rose yesterday on reports Chinese crushers were using new tariff-free quotas to purchase U.S. soybeans ahead of the upcoming Dec. 15 deadline. The market was surprised there were no USDA sales confirmations this morning, but traders expect to see sales announcements in the next two days. New purchases rumored from 300,000 MT to 1.5 MMT.
  • Odds are increasing for passage of U.S.-Mexico-Canada Agreement legislation this year. House Democrats reportedly reached a tentative agreement with the White House over changes to the U.S.-Mexico-Canada Agreement (USMCA).
  • Few changes are expected in USDA WASDE report. USDA could trim the Argentina soy crop but leave Brazil output unchanged after recent rains improved conditions.  A small cut in USDA’s U.S. carryover is expected from a hike in crush.
  • November soybeans’ ratio to December corn rose to 2.43, up from 2.36 a week ago and a sign of worries about soybeans competing for acres with corn heading into the planting season.

SRW wheat are down 1 to 2 cents, HRW wheat is mixed and spring wheat futures are steady to a penny lower.

  • The March SRW futures tested last week’s low after falling below the 20-day moving average this morning and pared session losses. Prices remain inside of Friday’s daily range, with the momentum indicators still showing weakness  
  • Today’s monthly USDA WASDE Report is expected to show very small cuts in both the U.S. and world carryover projections.  
  • Poor export prospects for U.S. supplies keep the pressure on wheat futures.
  • The lowest offer in the international tender from Egypt's state commodities buyer GASC to buy wheat on Tuesday was $220.86 a MT FOB for French wheat, down about a $1 from last Egyptian purchases. Results are expected later in the day.
  • The CBOT reported no deliveries against the December soft red winter wheat contract and there were four deliveries against the December HRW wheat contract.

Live cattle futures are choppy, while feeder futures are slightly higher, erasing earlier weakness.  

  • February cattle opened steady to higher, but ran into selling at the 20-day moving average, pushing futures back into the red at midsession.
  • The market may wait for confirmation of further cash market strength direction after gaining 71 cents last week. A big slaughter is expected again this week after rising to 679,000 head last week, the highest this year.
  • Wholesale boxed beef prices fell again on Monday, with Choice down 92 cents and Select sliding 81 cents. Sales were moderately active. Choice is at its lowest point since Oct. 23.
  • Beef exports have slowed in the past month after prices rose. The lower prices this week should improve the competitive position of U.S. beef, but competition is intensifying.
  • Brazilian beef exports will hit a record in 2019. driven by China's approval of more local suppliers amid an outbreak of a deadly pig disease in Asia, exporter group Abiec said on Tuesday.

Lean hog futures are slightly to moderately higher.

  • Lean hogs opened higher and extended gains back above last week’s close. Prices are about $1 below the 20-day moving average. Last week’s high is about $2 higher than current values and remains key resistance.
  • Lean hogs bounced on positive China trade talk progress.
  • Pork cutout values slipped 10 cents on Monday as continued strength in picnics and hams failed to offset weakness in other cuts on Monday. Sales were light to moderate.
  • China will sell 40,000 MT of frozen pork from its state reserves on Dec. 12, according to a notice posted on the website of the China Merchandise Reserve Management Center on Tuesday.
  • The government has recently said it will release supplies from reserves to guarantee sufficient meat for China's upcoming Lunar New Year holidays. Still, government reserve sales are far too small to make much difference in a pork shortage estimated at 13 MMT.