Top Farmer Midday Update 3-22-19

Corn: Corn futures are finding solid buyer support after a sizable sale of corn to China this morning. Flooding issues continue to support the corn market, with ethanol production capacity down 13% bossing ethanol prices to their highest levels since last August. Long ranged forecasts for higher than normal precipitation are keeping flooding risks high, with 2/3 of the U.S. facing elevated risk for flooding through May, and 25 states will have the potential for major or moderate flooding through May. This morning, private Chinese buyers bought over 11.8 mil bu of U.S. corn as confidence grows about the prospects for a U.S./China trade deal. Old crop contracts are beginning to probe back into the trading ranges that corn was contained within between mid-October and late February. Meanwhile, new crop Dec corn is firmly back within that trading range and has punched through its 50, 100, and 200-day moving average levels for the first time since February 22. During yesterday's session, funds bought about 15,000 contracts of corn and are thought to be net short about 224,000 contracts.

Soybeans: Soybean markets are drifting lower in early trade today, with May down 3-1/4 cents to 9.07-1/4, Jul down 3-1/4 cents to 9.21, and new crop Nov down 3-1/2 to 9.41-1/4. Flooding concerns has the potential to add to soybean acres if producers cannot get corn in the ground later this spring. A dry two week forecast for Argentina is also pressuring soybean prices as this should allow for a jump start to harvest. The Buenos Aires Grains Exchange is currently expecting an Argentina soybean crop of 53 mmt, though the market sees that as a low end estimate. Though the July contract made a positive close technically yesterday, it's first above its 200-day moving average since February 25, prices have sagged this morning and are currently holding their 20-day moving average support level. Funds bought about 3,000 contracts of soybeans yesterday and are now thought to be net short about 81,000 contracts.

Wheat: Wheat markets are higher in all three exchanges this morning, with May Chi wheat up 4-1/2 to 4.71, May KC wheat up 2-1/4 cents to 4.49-1/4, and May Mpls wheat is up 1-1/2 cents to 5.72-3/4. Winter wheat contracts are finding more buyers this morning after two consecutive closes above the 20-day moving average levels. Meanwhile, very wet conditions in North Dakota, South Dakota, and Minnesota are raising chances for spring wheat planting this year. However, news that Russia is sending a test cargo of wheat to Algeria today is bearish. If this test cargo passes Algerian quality standards, Russia could begin to earn increased business in that region. Funds bought about 3,000 contracts of wheat in Chi yesterday and are now thought to be net short about 62,000 contracts.

Cattle: Cattle markets are mixed in relatively quiet sessions today. Apr lives are down 22 cents to 129.67, Jun lives are down 2 cents to 123.87, and Aug lives are up 15 cents to 120.12. Apr feeders are up 97 cents to 149.90, and May feeders are up 75 cents to 154.75. With a recent rally, hedging activity is likely active today, especially considering hog markets are not providing the same support they were for the first four days of the week. Technically, live cattle futures are also overbought. Prices have closed above their Bolinger Band range every day this week and stochastics have been getting overbought readings as well. It is unclear if today is the beginning of a correction or if it is just money flowing out of the market. Meanwhile, feeder markets continue to surge due to large calf losses due to flooding.

Hogs: Hog markets are mixed to lower this morning, with Apr hogs down 92 cents to 77.40, Jun hogs are down 22 cents to 94.52, and Jul hogs are up 65 cents to 98.12. Prices are falling mid-morning, closing gaps created by the opening trades today. Similar to the cattle markets, it is unclear if today's pressure is due to profit taking from enormous gains so far this week, or if money is beginning to short sell the hog market. The seriousness, and more importantly the lack of trustworthy information about the African swine fever issue in China makes this market very hard to call at this time.

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