TFM Midday Update 3-25-20

CORN

Corn futures are finding a bit of follow-through buying this morning from yesterday’s higher closes. May corn is up 0.0175 to 3.49, July corn is up 0.015 to 3.535 and Dec corn is up 0.0225 to 3.675. Domestic corn demand is pulling back quickly due to weakening demand for ethanol production. However, given current prices, there doesn’t seem to be much of an appetite to sell corn. The US dollar has consolidated near recent highs and may be turning over. This would keep US corn supplies competitive for exports. July corn futures are currently testing their 10-day moving average resistance level and a close above would be the first since March 10. Stochastics have made a bullish crossover, so the trend looks sideways to higher. Speculative funds were thought to have bought about 11,000 contracts yesterday.

SOYBEANS

Soybean futures are slightly higher this morning, with May up 0.0075 to 8.8725. July is up 0.02 to 8.895, and November beans are 0.05 higher to 8.80. Tighter Chinese supplies, South American export complications and firming vegetable oil prices are all supporting soybeans. The Brazilian real is stabilizing near recent lows, and the US dollar may be making a turn lower. This could further encourage China to rebuild soybean stockpiles with US supplies. Technical action has been strong so far this week. July made its first close above the 20-day moving average resistance level on Monday since March 4. July beans back tested that support level yesterday and have filled their gap today from early May. Prices have rallied very quickly so a correction may be coming sooner rather than later, but the trend looks higher. Speculative funds were thought to have bought 2,000 contracts of soybeans yesterday.

WHEAT

Wheat futures have resumed their uptrend this morning after a brief pause yesterday. July Chi wheat is up 0.065 to 5.82, July KC wheat is up 0.0475 to 5.00 and July MPLS wheat is up 0.035 to 5.47. Countries around the world are beginning to stockpile wheat supplies to ensure food security in uncertain times. For example, Iraq’s trade ministry advised the cabinet that it needs to import 1 million tonnes of wheat for its food rationing program to boost strategic stocks in the coming months. Currency exchange rates may be shifting to make US supplies even more attractive for importers. July Chi wheat is trading at its highest levels today since Feb 21 and is still technically overbought. July KC wheat is trading at its highest levels today since late Jan and spring wheat futures are testing overhead resistance not seen since mid Feb. Funds were thought to have bought about 1,000 contracts of Chi wheat yesterday.

CATTLE

Cattle markets are mixed this morning, with April lives up 3.52 to 109.67, June lives are up 0.32 to 97.35 and August lives are down 0.50 to 97.75. April feeders are down 2.55 to 127.52 and May feeders are down 2.15 to 127.35. Beef values made their first close lower yesterday in eight sessions as the rush to secure beef supplies may be subsiding for the near term. Keep in mind that various “shelter in place” directives across the country will dent restaurant demand to a great degree, though there is talk that some regions will make steps to get back to normal around Easter. Cash markets have rallied $5-$9 this week already which should help pull front month futures higher. June live cattle have had a very wide range so far today, briefly testing the 20-day moving average support level. Apil feeders have tested both their 20-day moving average support level and their 50-day moving average resistance level, nearly 10.00 apart!

HOGS

Hog markets are slightly lower this morning, with April down 0.20 to 66.22, June is down 0.72 to 72.27 and July is down 0.57 to 74.12. Pork values made their first lower close yesterday in 12 sessions. With the recent surge in beef prices, many are expecting an increase in demand for lower-priced pork products. The cash market should be a steady source of support, with production chains running at blistering speeds. June hogs are currently making a bearish key reversal. June has already posted higher highs and lower lows than yesterday’s session. Prices have not yet tested nearby support but the price action today looks quite bearish.

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Lisa Heder

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