TFM Midday Update 2-14-20


Corn futures are mixed to mostly lower this morning, with Mar up 1/2 cent to 3.80, Jul down 3/4 cent to 3.88, and Dec down a penny to 3.91. Corn prices are still trapped between coronavirus uncertainty and hopes that China will begin to buy U.S. and DDGs soon. Any Chinese purchases starting tomorrow will count towards the Phase 1 commitments, so traders will be watching news wires closely for flash sales announcements. Ethanol stocks in the U.S. jumped 3.8% last week which was responsible for much of the pressure yesterday. Mar corn briefly traded through its 10-day moving average support level this morning but has since fallen back below. Corn has been within an extremely tight trading range lately, and the Mar contract has traded at 3.80 for 12 sessions in a row. Speculative funds were thought to have sold about 9,000 contracts of corn yesterday.


Soybean futures are up slightly this morning, with Mar up 2-1/4 to 8.98-1/2, Jul up 1-1/4 to 9.19-1/4, and Nov up 1-1/4 to 9.25. Soybeans have put together a decent rally so far this week and are trying to carry that strength into the weekend. Starting tomorrow, any Chinese ag purchases will count towards the Phase 1 deal commitments. This will likely determine direction for the near term. If China does end up making sizeable bean purchases soon, we should see further strength in the bean markets, but on the other hand, if purchases don’t surface, then we can expect a fairly quick pullback. Brazilian farmers are still struggling to harvest soybeans with excessive rains lately and this is providing a bit of support in addition to the disruptions in Argentina’s meal supply due to the largest crusher filing for bankruptcy. Mar soybeans closed above their 20-day moving average level for the first time yesterday since January 10 and have successfully backtested that line today. Momentum indicators are still pointing higher. Speculative funds were thought to have bought about 9,000 contracts of soybeans yesterday.


Wheat markets are up moderately today, continuing to consolidate within their recent ranges. Mar Chi wheat is up 4-1/2 cents to 5.48-3/4, Mar KC wheat is up 4-1/2 to 4.70-1/2, and Mar spring wheat is up 3/4 cent to 5.27-1/2. Forecasts for the Plains are beginning to show below-normal precipitation, and many are reporting that soil moisture is becoming depleted. The U.S. dollar is higher again today which is keeping some of the bounce limited today. Mar Chi wheat is making an inside session so far and has not yet been able to test nearby resistance at the 10 and 50-day moving average levels. Mar KC wheat is trading above its 10 and 50-day moving averages and Mar spring wheat is attempting to stabilize after making new lows for the move yesterday. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat yesterday.


Cattle markets are sharply higher this morning, finding a good bounce on technical short covering out of oversold territory. Feb lives are up 1.95 to 121.40, Apr lives are up 2.15 to 120.67, and Jun lives are up 1.92 to 112.55. Mar feeders are up 2.67 to 139.00 and Apr feeders are up 2.82 to 141.77. Beef prices are trying to stabilize around recent levels though cash trade so far this week has been $1 to $2 lower than last week. Many are hoping that China begins to buy more U.S. beef once the Phase 1 commitments go into effect tomorrow. Domestic production looks heavy for the near term though many traders view the recent selloff as too much too soon. Apr lives have pushed through their 10 and 200-day moving average levels for the first time since the selloff began. Apr briefly tested its 20-day moving average level but was unable to breakthrough. Mar feeders nearly gapped higher this morning and are trading at their highest levels since January 24.


Hog markets are mixed to mostly higher this morning, with Feb down 10 cents to 55.90, Apr up 65 cents to 64.72, and Jun up 32 cents to 81.35. Pork values are still very weak and the CME Lean Hog Index is still trending lower. Export sales last week were the lowest total since the first week of January, so the majority of buyers today seem to be focused on the Phase 1 trade deal going into effect tomorrow. Food shortages due to the coronavirus are serious, though many worry that coronavirus could complicate logistics for pork imports. Apr hogs have pushed through yesterday’s highs after a test of the 10-day moving average support level. Stochastics and other momentum indicators are once again pointing higher though follow-through has been relatively modest so far.


Carol Tillmann

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