TFM Midday Update 2-20-20


Corn futures are drifting lower again today, with Mar down 1 cent to 3.79-1/2. Jul is down 1-1/2 cents to 3.86-3/4, and Dec is down 1-1/4 to 3.89-1/2. Today’s USDA outlook conference put out a preliminary planted acreage estimate at 94 million acres. Given trend line yields at 179 bushels per acre, this could easily lead to ending stocks in the mid 2 billion bushel range. This would be bearish for prices and is likely a reason for lack of buying today. China has not made any significant purchases or even hinted at purchasing U.S. corn or DDGs lately, also a pressure point. Brazilian soybean harvest is at 21% complete, versus 36% last year, which is delaying sahfrina corn planting. Mar corn futures are trading in the middle of the day’s tight range and have still not broken out of the range from the past few weeks. Mar corn futures have traded at 3.81 for 15 sessions in a row. Speculative funds were thought to have sold about 9,000 contracts of corn yesterday.


Soybean futures are drifting this morning with Mar down 1-1/2 to 8.95-3/4. Jul is down 2-1/2 to 9.13, and Nov is down 3-1/2 cents to 9.19-1/2. The U.S. dollar is at its highest levels today since 2017, while the real has sunk to new all time lows. This is keeping major pressure on soybeans despite tightening deliverable supplies. The American farmer is not selling beans currently after the 60-cent selloff last month. Argentine farmers are hanging onto soybeans tightly as well, and crush demand has pulled back significantly. Finally, in Brazil, soybean harvest is only 21% complete versus 36% last year due to excess rains. The market is still hopeful that China will step in to buy U.S. beans once the Chinese government begins to grant tariff waivers at the beginning of March. Mar soybeans sunk early this morning, testing nearby support at the 10 and 20-day moving average levels but have since rallied back and is trading just off the highs of the day. Today’s session is still an inside day on the charts, and direction looks mixed. Speculative funds were thought to have bought about 9,000 contracts of soybeans yesterday.


Wheat markets are lower today, with Mar Chi wheat down 4-1/2 to 5.60-3/4. Mar KC is down 5-3/4 to 4.74, and Mar Mpls is down 4-3/4 to 5.31-1/2. While there has been no word yet regarding actual Chinese purchases of U.S. wheat, there have been rumors that China traders are probing for offers. Still, others are skeptical that China will be a major buyer of wheat due to China’s huge ending stocks pile. U.S. winter wheat weather looks non-threatening, and the dollar is higher again today. Mar Chi wheat is holding support at the 20-day moving average level. Mar KC wheat is also holding onto its 20-day moving average support level, and Mar spring wheat has fallen below its 10-day moving average support level after a test of resistance this morning. Speculative funds were thought to have sold about 2,000 contracts of Chi wheat yesterday.


Cattle markets are moderately lower this morning, with Feb lives down 55 cents to 120.75. Apr is down 1.00 to 119.80, and Jun lives are down 72 cents to 111.57. Mar feeders are down 42 cents to 140.35, and Apr feeders are down 75 cents to 142.27. Beef values have been sliding hard lately, and with expectations for a surge in production into quarter two, it may be difficult to see the beef and cash markets stabilized. Friday’s Cattle on Feed report is expected to show relatively heavy supplies, though cold and wet forecasts for the Plains should keep weight gain in check. The best traded Apr live cattle contract has fallen back below the 20 and 200-day moving average support levels. A close below would be the first since last Thursday and a negative technical development. Mar feeders briefly tested overhead resistance at the 50 and 100-day moving average levels but have since backed off and are trading near the lows of the day.


Hog markets are moderately lower today, with Apr down 72 cents to 66.85. Jun is down 1.02 to 82.15, and Jul is down 87 cents to 83.12. Slaughter levels are beginning to come down, which is keeping some underlying support in the market. Pork cutout values may also be attempting to stabilize, and China should become a major purchaser of U.S. pork once the government starts to issue tariff-free waivers at the beginning of March. Average weights are down nearly 4 pounds from the record high in the first week of January, which is also positive. For now, hog futures are setting back to nearby support. Jun hogs tested nearby support at the 10 and 20-day moving average support levels but have since bounced back higher and are trading in the upper third of the day’s range.


Lisa Heder

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