TFM Midday Update 3-4-20


Corn futures are mixed this morning in quiet trade compared to the beginning of the week. May corn is up 2-1/2 cents to 3.83-3/4, Jul is up 1-1/2 t 3.85-1/4 and Dec is down 1/4 cent to 3.84-1/4. F.C. Stone raised their forecast for Brazil’s current corn crop to a record high of 101.1 million tonnes due to expanding safrihna acreage. Even with Brazil’s first crop corn harvest moving along quickly, prices in Brazil are rallying, and the Brazilian government held the first auction to sell state-owned corn in an attempt to meet livestock feed demand. Cash market strength in the U.S. is helping the futures market to bull spread and is discouraging storage. Jul corn futures are trading above their 20-day moving average resistance level again today for the second session in a row. A close above would be the first since January 23 and could open up another 7-8 cents of upside before additional resistance. Speculative funds were thought to have bought about 14,000 contracts of corn yesterday.


Soybean futures are trading slightly higher today, breaking through some trend line resistance. May soybeans are up 4-1/4 to 9.07-3/4, Jul beans are up 3-1/4 to 9.16-3/4, and Nov Soybeans are up 9-3/4 to 9.21. January’s crush was an all time record, and many are expecting this trend to continue. F.C. Stone increased their forecast for the Brazilian soybean crop this year to a new record high of 124.2 million tonnes. However, some heat and dryness concerns are beginning to surface in Argentina. Jul soybeans traded at their highest levels this morning since February 21 and have moved back above the lower trend line resistance level from the bear flag continuation pattern. A close above this line would be a bullish technical development and may encourage more buying. Speculative funds were thought to have bought about 6,000 contracts of soybeans yesterday.


Wheat markets are soft this morning with May Chi wheat down 8 cents to 5.19-1/4. May KC wheat is down 5-1/2 to 4.52-3/4, and May spring wheat is down 4-1/4 to 5.29-3/4. The U.S. dollar is stabilizing today, which is a bearish factor, and the Russian ruble is lower today, which is also bearish. Winter wheat conditions in the U.S. are improving on a week-to-week basis, and wheat export activity has been resilient in the face of coronavirus uncertainty. May Chi wheat is still within its Bollinger band range but is oversold according to Stochastics. Moving average crossovers are pointing lower still. May KC wheat is drifting toward the low end of its recent range, and May spring wheat has fallen back below its 10-day moving average support level. Speculative funds were thought to have bought about 3,000 contracts of Chi wheat yesterday.


Cattle markets are moderately higher this morning, stabilizing after disappointing sessions yesterday. Apr lives are up 62 cents to 110.72, Jun lives are up 65 cents to 104.02 and Aug lives are up 72 cents to 104.27. Mar feeders are up 1.35 to 134.87, and Apr feeders are up 1.37 to 135.15. The stock market is higher today, which is helping to reduce some coronavirus uncertainty. This should help retail demand for beef. Cash cattle trade has been quiet today, and today’s online fed cattle exchange ended without any sales. Apr live cattle are trading within a quiet inside session today, currently in the upper third of the day’s range so far. Apr feeders are also in a quiet inside session, trading in the upper third of the day’s range. Nearby resistance comes in at the 10-day moving average level.


Hog markets are moderately higher, keeping with the recent theme of stability and base-building. Apr hogs are up 52 cents to 64.07, Jun hogs are up 92 cents to 79.00 and Jul hogs are up 90 cents to 80.37. The cash hog index is down for the fourth session in a row, and carcass cutout values have been trending sideways to lower. With evidence that China industry is beginning to ramp up after the coronavirus spread, it seems reasonable to expect Chinese purchases of U.S. pork to increase as well. Apr lean hogs are testing overhead resistance again at the 10 and 20-day moving average levels. A close above would be the first since February 21 and would be a bullish development. Before we see major China purchases, though, it seems that traders are fairly content to keep hogs within their current ranges.


Lisa Heder

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