TFM Midday Update 3-26-20

CORN

Corn futures are slightly lower this morning, unable to find follow-through buying to push prices out of recent consolidation ranges. May corn is down 0.0175 to 3.4675, Jul corn is down 0.0.75 to 3.5275 and Dec corn is down 0.0175 to 3.655. There was talk of additional Chinese purchases of US corn yesterday, but currently, the corn market is trying to price in the lack of ethanol demand lately. Ethanol production for the week ending March 20 was reported at 1.005m barrels per day, down 2.9% from the previous week but up 3.08% from last year. Reports of widening basis and idle ethanol plants are spreading. Jul corn futures are testing their 10-day moving average resistance level for the third session in a row this morning. A close above that line would be a bullish technical development, but it just doesn’t seem as though corn has the fundamental strength to do so currently. The U.S. sold 1.8m tonnes of corn for the week ending March 19, a marketing-year high. Funds were thought to have bought about 8,000 contracts of corn yesterday.

SOYBEANS

Soybean futures are a bit soft today, with May down 0.045 to 8.7675, Jul is down 0.0325 to 8.8125 and Nov is down 0.0125 to 8.7625. Most fundamentals are still supportive at this point. China’s stocks are running low, South American heat and dryness may impact production and export logistics in Brazil and Argentina are running into various complications. The U.S. dollar is making a sharp move lower as the Brazilian real continues to consolidate. July soybeans made a disappointing close lower yesterday after trading at their highest prices since March 6. However, a bit of a correction may be necessary to keep buyers interested. July beans tested their 20-day moving average support level this morning and have since bounced higher. The U.S. sold about 904,000 tonnes of soybeans for the week ending March 19, up sharply from last week and the previous 4-week average. Funds were thought to have sold about 3,000 tonnes of soybeans yesterday.

WHEAT

Wheat markets are correcting lower today due to overbought technical. May Chi wheat is down 0.0925 to 5.7075, May KC wheat is down 0.065 to 4.945 and May MPLS wheat is down 0.05 to 5.325. Demand for physical wheat stocks is still strong despite relatively comfortable global supplies. However, it is unclear what this means for the future – will stockpiling create lower demand once much of the uncertainty has passed? A weakening dollar is supportive in the meantime. July winter wheat futures have corrected back within their Bollinger band ranges though Stochastics are still overbought. Spring wheat futures have fallen back below nearby support levels and may be relieving overbought conditions a bit more quickly. The U.S. sold about 740,000 tonnes of wheat for the week ending March 19, up sharply from last week and up 73% from the previous 4-week average. Funds were thought to have bought about 10,000 contracts of Chi wheat yesterday.

CATTLE

Cattle markets are showing triple-digit losses so far this morning, with Apr lives down 2.62 to 10.585, Jun lives are down 2.22 to 94.10 and Aug lives are down 1.90 to 95.27. Apr feeders are down 2.62 to 126.10 and May feeders are down 3.17 to 125.97. Cash trade has been moving steadily higher this week though beef values have begun to pull back. Jun live cattle posted a sweeping negative session yesterday but were able to hold their 20-day moving average support level. Prices have fallen below that support today. Apr feeders are trading just off the lows of the day so far, though well within yesterday’s range and still above support. Export sales for the week ending March 19 were reported at 14,500, down 32% from last week and down 12% from the previous 4-week average.

HOGS

Hog markets are sharply lower this morning, with Apr down 2.57 to 63.25, Jun is down 2.85 to 68.90 and Jul is down 2.80 to 70.80. Pork cutout values have begun to pull back from the recent rally and it seems as though grocery stores will have plentiful supplies for the time being. Weights are still increasing against the normal seasonal trend which is inflating production beyond recent slaughter increases. Jun hogs have fallen back below their 10-day moving average support level and may be making a move to fall back within its recent consolidation range near contract lows. U.S. pork export sales for the week ending March 19 were reported at 38,600 tonnes, up 6% from the previous week and up 89% from the previous 4-week average.

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Carol Tillmann

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