TFM Midday Update 2-5-2020


Corn futures are drifting lower yet again, after being held at overhead resistance yesterday afternoon. Mar corn is down 2-1/4 to 3.8,, May corn is down 2-1/4 to 3.85-3/4, and Jul corn is down 2-1/4 to 3.90-1/2. Non-threatening weather in South America is overwhelming talk that the USDA could increase corn demand on next week’s Supply and Demand report. There seems to be a general sense that coronavirus treatments or containment measures are close to being developed as evidenced by the higher stock market. Still, there is a general lack of urgency to own corn at this point, Mar corn was stopped at its 50-day moving average resistance level yesterday afternoon and is trading lower today after another unsuccessful test of that level this morning. Funds are still holding large net short positions. Speculators were thought to have bought about 9,000 contracts of corn yesterday.


Soybean futures are only slightly higher this morning after a decent jump overnight. Mar beans are up 1/2 cent to 8.80, May beans are up 1 cent to 8.94 and Jul beans are up 1-1/4 to 9.07-1/2. Soybeans were higher overnight on optimism regarding China’s handling of coronavirus, though there is still much uncertainty with that situation. There are also reports that China will make food and feed availability a top priority moving forward. This bodes well for China purchases of U.S. beans, though China did purchase about ten cargoes worth of South American beans earlier this week. Private estimates for Brazilian soybean production are as high as 8% above last year and 1 million metric tonnes above the USDA’s current projection. Mar soybeans tested their overhead 10-day moving average resistance level this morning for the first time since 1/15 but have since backed off. Prices are trading in the lower 25% of the day’s range, as traders lacked the determination to push beans higher. Speculative funds were thought to have bought about 3,000 contracts of soybeans yesterday.


Wheat markets are moderately higher this morning, continuing their bounce after successful tests of support. Mar Chi wheat is up 1-1/4 to 5.58-1/2, Mar KC wheat is up 2 cents to 4.69-1/4, and Mar spring wheat is up 1-3/4 to 5.33-1/2. The U.S. dollar is surging higher this morning with the index trading at its highest levels since 12/2. This is keeping wheat buyers somewhat subdued so far this morning. Most traders still like the fundamental picture for soybeans, especially the U.S. with the most winter wheat plantings this year since 1909. Mar Chi wheat has tested and held its 50-day moving average level this week and held though has not been able to break through nearby resistance. KC wheat tested and held its 50-day moving average support level four sessions in a row and is trading moderately higher. Mar spring wheat tested resistance at the 50-day moving average level and has since backed off. Speculative funds were thought to have been net even in yesterday’s session.


Cattle markets are are showing slight losses so far today, with Feb lives down 2 cents to 121.60. Apr lives are down 67 cents to 119.97, and Jun lives are down 50 cents to 111.32. Mar feeders are down 1.05 to 136.45, and Apr feeders are down 92 cents to 138.00. Choice values are still drifting lower, and the cash markets have gotten off to a slow start this week. The stock market has made a few solid days in a row, so this could positively impact retail beef prices. Technically, cattle markets look a bit weak, with the Apr live contract making a disappointing close lower after a gap higher open yesterday. Apr lives again tested nearby resistance today but have since fallen below nearby support at the 200-day moving average. Mar feeders made their first close above the 10-day moving average yesterday since 1/14 but have fallen back below this morning.


Hog markets are mixed this morning, with Feb up 55 cents to 57.30. Apr hogs are down 25 cents to 62.07, and Jun hogs are up 2 cents to 77.92. Pork values have been under sharp pressure over the past few sessions and are currently at their lowest levels since March 2019. The CME lean hog index is also pulling back from its recent rally, and there has not been any news of large China purchases of U.S. pork lately. The best traded Apr hog contract is making an inside session so far and trading on the lows of the day. Stochastics are still sharply oversold, though there are a few gaps to fill overhead. There is just not a sense of urgency for speculators to own hogs at this time.


Lisa Heder

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