TFM Midday Update 1-31-20


Corn futures are trading slightly higher today, with Mar, May, and Jul all up 1-1/4 cents to 3.80-3/4, 3.86, and 3.90-3/4 respectively. The U.S. dollar is correcting lower off of its recent highs, especially supportive given that U.S. corn is already the cheapest in the world. Markets are still spooked by the spread of coronavirus and it does not appear as though China will be buying major quantities of U.S. corn in the near future. Mar corn has so far stayed within yesterday’s range, trading with a mostly positive tilt. Mar corn has next overhead resistance at the 50-day moving average at 3.83-1/2 and support will come in around the 3.75 to 3.76 area. Speculative funds were thought to have sold about 15,000 contracts of corn yesterday.


Soybean futures are trading very slightly lower this morning, with Mar down 1-1/2 to 8.74-3/4, May down 1-3/4 cents to 8.88-3/4, and Jul beans down 1-3/4 to 9.02-1/2. Soybean futures are still under pressure from a lack of recent Chinese purchases as well as the spread of coronavirus. Unless the Chinese government extends the New Year holiday, then those not infected by coronavirus will be back at work on Monday and some are expecting China to begin purchases of U.S. soybeans. China has also asked soybean processing plants to resume crushing activities as of yesterday. Mar soybeans are trading at their lowest levels today since May 24 and are still sharply oversold. Jul beans still have a gap to fill at 8.80-1/4 if pressure continues. Speculative funds were thought to have sold about 11,000 of soybeans yesterday.


Wheat markets are attempting to stabilize today, with Mar Chi wheat down 1/4 of a cent to 5.60-1/4, Mar KC wheat is down 3 cents to 4.68, and Mar spring wheat is down 3/4 of a cent to 5.35. Though Russia wheat plantings will be down a bit from last year, crop conditions are significantly better than previous years. Tender prices have begun to pull back from recent highs, but the U.S. dollar is off today which is supportive in such a competitive world crop. Mar Chi wheat tested and failed to break through its 20-day moving average resistance level early this morning and has since backed off to trade in the lower third of the day’s range. Mar KC wheat is trading moderately lower and Stochastics are drifting into oversold levels. Mar spring wheat is currently holding its 50-day moving average level for the third session in a row. A close below would be the first since December 13. Speculative funds were thought to have been net-even in Chi wheat yesterday.


Cattle markets are mixed this morning, with Feb lives up 7 cents to 121.85, Apr lives are down 5 cents to 120.15, and Jun lives are down 5 cents to 111.97. Mar feeders are up 1.02 to 136.67 and Apr feeders are up 1.37 to 138.50. Prices are trying to stabilize today ahead of the Cattle Inventory report released this afternoon. Beef values are beginning to drift lower though are not sliding at near the pace that the board has been selling off. Forecasts are showing above-normal precipitation for the next 6-10 days which should help to limit weight gain. Cash trade so far this week has been very light and has not provided much direction. Apr live cattle held their 200-day moving average support level yesterday afternoon. Prices surged higher on the open today but have since fallen back and are now below their 200-day moving average level. Mar feeders are trading about halfway up the day’s range after an impressive jump early in the session. Stochastics are not yet giving a buy signal though the day’s rally so far is pulling their reading higher.


Hog markets are trading sharply lower yet again today, with Feb down 2.70 to 58.60, Apr down 3.45 to 62.37, and Jun down 1.55 to 77.22. The CME Lean Hog Index is at its highest level since October but pork values have pulled back to their lowest levels since late September. Huge domestic production lately has added to the negative tone first started by coronavirus outbreak. Apr hogs traded as low today as 61.50 but have rebounded a bit into the mid-session. Apr hogs are sharply oversold though buyers will be hard to come by until we can see some appreciation in pork values or continue China buying of U.S. pork products.


Carol Tillmann

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