TFM Midday Update 2-24-20


Most corn futures contracts are pushing to new lows this morning, with Mar down 4-1/2 cents to 3.72-1/2, Jul down 4 cents to 3.79-1/2, and Jul corn down 4 cents to 3.82. Friday’s session left a bearish taste for last week after the USDA’s Outlook Forum indicated that ending stocks and stocks usage ratio for the 2020 corn crop could grow to burdensome levels. The spread of coronavirus to South Korea, Italy, and Iran over the weekend is a macro-economic pressure point and is creating a risk-off session in most markets. Mar corn futures traded this morning at their lowest level since September 12 though have come off of the day’s lows a bit. Dec futures made a new low close on Friday and are pushing even lower this morning. Speculative funds were thought to have sold about 11,000 contracts of corn on Friday.


Soybean futures are down hard this morning, with Mar down 15-1/4 cents to 8.75, Jul beans down 14-3/4 to 8.95, and Nov beans down 12-1/4 to 9.05-1/4. Soybean markets are down with most markets today on coronavirus concerns as the spread continues. The market is also growing skeptical of major China purchases near term despite the fact that China has stated they will not issue tariff waivers to buyers until March 2. Brazilian soybean harvest is running about 12% behind last year’s pace but is right in line with the average year. Mar soybeans tested the lows this morning from February 3 but have so far held that level. Jul beans are pushing below nearby lows from February 3 and are continuing the bear flag continuation pattern. Nov beans are also making a move below nearby lows out of the bear flag formation. Nov beans filled the gap today from late May but still need to trade down to 8.90-1/2 to fill the gap from May 13. Speculative funds were thought to have sold about 8,000 contracts of soybeans yesterday.


Wheat markets are finding sharp seller interest today, with Mar Chi wheat down 12 cents to 5.39, Mar KC wheat down 9-3/4 to 4.58-3/4, and Mar spring wheat down 7-1/4 to 5.18-3/4. Last week’s USDA Outlook Forum was supportive for the wheat markets, but a risk-off day in most markets is pulling wheat down with it. Soil moisture for the winter wheat crop in the Plains is plentiful and Russian wheat crop estimates are climbing. China has not been a major buyer of U.S. wheat lately though there is speculation that could change once China begins to offer tariff waivers at the beginning of March. Mar Chi wheat futures tested their 100-day moving average support level for the first time this morning since mid-November and have so far held that level. Mar KC wheat traded at its lowest values today since mid-December but is holding onto its 200-day moving average support level. Mar spring wheat closed at 10-week lows on Friday and is pushing to prices not seen since early December so far this morning. Speculative funds were thought to have sold about 7,000 contracts of Chi wheat on Friday.


Cattle markets are down hard this morning, with Feb lives down 1.90 to 117.82, Apr lives down 2.85 to 115.40, and Jun lives down 2.55 to 107.72. Mar feeders are down 2.25 to 137.95 and Apr feeders are down 2.57 to 139.52. At the time of this writing, the stock market is down over 800 points, and given the weakness in beef values lately, this does not bode well for markets sensitive to the relative strength of the economy. Friday’s Cattle on Feed report was considered supportive which belies the negativity today. Cash cattle trade was choppy, though the 5-area average last was up 80 cents for the week. South Korea is now struggling with the coronavirus outbreak and is a major buyer of U.S. beef, it is not hard to tell where much of today’s selling pressure is coming from. Apr lives are trading at their lowest levels since September 20. There is a gap on the charts between September 20 and September 23 but prices jumped over that gap this morning. Mar feeders have recovered from limit down price earlier today but are now trying to break through the 10-day moving average resistance level.


Hog markets are showing triple-digit losses today, with Apr down 2.30 to 64.72, Jun down 2.05 to 79.80, and Jul down 1.75 to 80.97. Pork values are trying to stabilize near recent levels though pork production in the U.S. is still surging. China will not issue tariff waivers until the beginning of March, so major purchases will likely be on hold until then. Still, many are worried about the logistics of moving pork around China and this could lead to underwhelming sales. The best traded Apr contract is trading back below its 10 and 20-day moving average levels for the first time since last Tuesday. A close below these levels will be a disappointing technical development and could turn momentum lower.


Carol Tillmann

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