TFM Midday Update 3-3-20


Corn futures are showing impressive strength yet again this morning, with May corn up 8-1/2 to 3.84. Jul is up 7-3/4 to 3.86-1/4, and Dec is up 6 cents to 3.86-3/4. There were no deliveries today for the Mar corn futures, which is usually supportive. Crude oil is up over 1.60, and the fed cut interest rates this morning, so stock markets are higher as well. The risk-on sentiment may be encouraging some commercial buying as well, especially out of cheap prices in general. Jul corn is trading above its 20-day moving average resistance level for the first time since January 24, and a close above would be the first since January 23. Stochastics have crossed over into a buy signal, and momentum is turning higher. Speculative funds were thought to have bought about 10,000 contracts of corn yesterday.


Soybean futures are moderately higher this morning, continuing the recent strength though not with the same vigor as other ag markets. May soybeans are up 4-1/2 cents to 9.05-1/2, Jul beans are up 4-1/4 to 9.15, and Nov beans are up 3-3/4 to 9.21-1/2. Soymeal, a major source of strength lately, is up slightly this morning as it approaches resistance levels not tested since October. The U.S. dollar is sharply lower this morning, helping to support, though drier weather in Brazil is helping to speed up soybean harvest. Talk that China has developed an African swine fever vaccine is supportive longer term for meal demand. There are also indications that most of China’s soybean crushers have resumed normal operations over  the past handful of days. Jul soybeans have broken through some trend line resistance after making their first close above the 10 and 20-day moving average levels yesterday since January 2. A close above this trend line resistance could accelerate moves higher and make those holding short positions even more sensitive to bullish developments. Speculative funds were thought to have sold about 6,000 contracts of soybeans yesterday.


Wheat markets are following suit higher with the rest of the grain complex today, with May Chi wheat up 6-3/4 to 5.30. May KC wheat is up 3-1/2 to 4.61-1/4, and May spring wheat is up 8 cents to 5.36-1/4. Winter wheat conditions in the U.S. are improving quickly with beneficial weather, though sharp pressure in the dollar to a 7-week low is enough to attract buyers. Despite fears of an economic slowdown due to coronavirus, wheat export activity has remained constant, with Turkey most recently tendering to buy 305,000 tonnes of milling wheat. May Chi wheat is currently testing its 200-day moving average resistance level, and a close above will be the first since Feb 26. May KC wheat tested its 10 and 100-day moving average resistance levels this morning but has since backed off. May spring wheat is testing its 20-day moving average resistance level. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are higher this morning, though have fallen off of the day’s lows with Apr lives up 90 cents to 111.05. Jun lives are up 80 cents to 104.77, and Aug lives are up 60 cents to 104.92. Mar feeders are up 1.15 to 134.87, and Apr feeders are up 57 cents to 135.62. Some stability in the stock market today is helping cattle markets rebound, especially given the tight relationship between beef demand and consumer confidence. Cash cattle trade so far this week has been quiet, though the five- area weighted average price was down nearly 5.00 from the previous week and was 14.00 below the same week a year ago. Some are worried that a reduction in demand at a time when supplies in the U.S. and Brazil are increasing could cause cattle to back up in the country. Apr live cattle gapped higher this morning but are now trading at the lows of the day, still above yesterday’s highs. Stochastics are still oversold, and prices are well below nearby resistance at the 10-day moving average level. Apr feeders quickly rallied this morning to test their 10-day moving average resistance level but have since backed off and are trading at the lows of the day.


Hog markets are showing solid gains so far this morning, with Apr up 1.05 to 63.85. Jun hogs are up 67 cents to 77.70, and Jul hogs are up 77 cents to 78.75. The cash index and pork values have been relatively choppy lately, not providing much direction, but the prospects for sizable Chinese purchases of U.S. pork look promising. Though China has reportedly come up with an African swine fever vaccine, that will have longer term implications than meeting immediate protein needs. Apr hogs tested resistance this morning at the 10 and 20-day moving average levels but have since backed off and are trading at the lows of the session. Today’s session has left a gap from yesterday’s session, again highlighting the volatility of current hog trade.


Lisa Heder

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