TFM Midday Update 3-5-20


Corn futures are correcting a bit this morning from impressive strength earlier in the week. May is down 3-3/4 to 3.81-1/4, Jul is down 2-3/4 to 3.83-1/2, and Dec corn is down 2 cents to 3.83-1/2. Expanding livestock production in China and talk of a more vulnerable Chinese corn crop this year due to lack of fertilizer availability both seemed to point toward greater potential of Chinese purchases of U.S. corn. The U.S. dollar is sharply lower again today after some stabilizing price action yesterday. Ethanol production for the week ending February 28 was up nearly 2.4% from the previous week and was up nearly 5.4% from the same week last year. Most of the pressure today seems to be coming from outside markets, with the Brazilian real again at new lows and the stock market showing losses today of over 500 points. Export activity could pull back with the spread of coronavirus. Jul corn futures have fallen back below the 20-day moving average level after closing above it yesterday for the first time since January 23. A close below this line would be a negative technical development and could bring a further pullback, but today’s price action has been quiet thus far. Speculative funds were thought to have bought about 13,000 contracts of corn yesterday.


Soybean futures are a bit soft this morning, retesting some nearby support after a strong week so far. May soybeans are down 7-1/2 cents to 8.99-32/4, Jul beans are down 7-1/2 cents to 9.07-3/4, and Nov soybeans are down 6-1/4 to 9.11-1/4. Soybean meal is correcting lower this morning after posting a sharp rally the past two weeks. Soybean crush has been impressive in the U.S. lately, and China crush activities are ramping back up. The Brazilian currency is down sharply this morning, trading at a new all-time low yet again. The U.S. sold 345,000 tons of soybeans for the week ending February 27, up 2% from the previous week but down 35% from the previous 4-week average. Jul soybeans are back-testing support at the 10 and 20-day moving average levels this morning. The move above these moving averages this week has been impressive, and a successful test could further embolden buyers. On the other hand, a break below these support levels would be a negative technical development and may lead to a test of recent lows near 8.90 or even further selling action into the gap from last May at 8.80. Speculative funds were thought to have bought about 7,000 contracts of soybeans yesterday.


Wheat markets are mixed this morning, with May Chi wheat up 5 cents to 5.23-1/4. May KC is down 2 cents to 4.51-1/4, and May spring wheat is down 3-1/2 to 5.25-3/4. Improving crop conditions in the U.S. are still a pressure point, especially in the KC wheat growing areas. Chi wheat futures may be holding up with a bit more determination, as less acreage was planted and wet conditions may not lend themselves to record yields come harvest. The U.S. dollar is sharply lower this morning, which is also helping to limit losses. The U.S. sold 542,000 tons of wheat for the week ending February 27, up 42% from the previous week and up 27% from the previous 4-week average. May Chi wheat is consolidating in its recent range and currently trading near the highs of the day. May KC wheat has put together a choppy trading session so far, and May spring wheat has fallen back below the 10-dya moving average resistance level after briefly trading above it early in the morning. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat yesterday.


Cattle markets are finding some overflow selling from the weak equity markets this morning. Apr lives are down 1.57 to 109.70, Jun lives are down 1.20 to 103.32, and Aug lives are down 40 cents to 104.15. Mar feeders are down 17 cents to 134.67, and Apr feeders are down 77 cents to 134.77. With the stock market down hard this morning, one does not have to look far for the source of pressure in cattle markets. With beef values already on the defensive lately due to a pullback in consumer confidence, additional volatility is not bullish for cattle. Increasing cattle weights and slaughter numbers are also bearish, as supply pipelines back up. A few head of cattle traded in the country yesterday at 113, 1.00 to 2.00 lower than last week. Apr live cattle are trading near the lows of the day and are still oversold according to Stochastics. Price action has been relatively quiet thus far. Apr feeders are trading at the highs of the day so far and will look to test their 10-day moving average resistance level for the third session in a row.


Hog markets are mixed this morning, with Apr down 5 cents to 64.25. Jun is unchanged at 78.82, and Jul hogs are up 12 cents to 80.27. The cash hog index was higher today, ending the 4-day streak of losses. Carcass values have been choppy lately, as markets hold their breath for major China purchases. This week’s export sales total was disappointing, and with domestic production running so far ahead of last year, the U.S. market is especially vulnerable to export disruptions. Apr hogs are trading on either side of their 10 and 20-day moving average levels. A close above these lines would be the first since February 21 and could encourage additional buying. Jun and Jul hogs are also testing nearby resistance at the 10-day moving average level for the second session in a row.


Lisa Heder

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