TFM Midday Update 3-6-20


Corn futures are a bit softer this morning, with May down 2-1/2 cents to 3.79-1/4. Jul is down 2 cents to 3.81-3/4, and Dec corn is down 1/4 cent to 3.83-1/2. Crude oil is down hard this morning, pressuring ethanol margins, therefore corn demand. The stock market is down hard, which is a pressure point as well, though the U.S. dollar is trading at its lowest levels today since June, which is supportive. Jul corn tested overhead resistance at the 20-day moving average level but did not break through it. Currently, Jul corn is trapped between its 10 and 20-day moving average levels with momentum indicators pointing sideways to lower. Speculative funds were thought to have sold about 8,000 contracts of corn yesterday.


Soybean futures are a bit softer this morning, with May down 3-1/2 to 8.93-1/2. Jul is down 3-1/4 to 9.01-3/4, and Nov beans are down 2 cents to 9.06-1/2. The Brazilian real is higher today, which is providing some support in addition to sharp weakness in the U.S. dollar. There were reports yesterday afternoon that China has issued 1-year tariff waivers to major Chinese crushers, which should increase demand for U.S. beans. Brazilian harvest is progressing quietly, which is a pressure  point, as deliverable stocks build. Jul soybeans closed yesterday below their 10-day moving average support level, a bearish technical development. Jul beans are still below this level today, and another close below could attract more sellers. The Jul soybean contract still has a gap on the chart from May 13 of last year at 8.80. Speculative funds were thought to have sold about 8,00 contracts of Soybeans yesterday.


Wheat markets are moderately lower this morning, a disappointing developments with the sharp weakness in the U.S. dollar. May Chi wheat is down 5-1/4 to 5.13-1/2. May KC is down 5 cents to 4.41-1/4, and May spring wheat is down 2-3/4 to 5.19-1/4. The risk-off sentiment in the ag space, and commodity space in general, is likely the main pressure point on futures today. News that China granted tariff exemptions to wheat imports is supportive, and there is a distinct lack of buyer interest, despite the sharply lower dollar today. The U.N. kept global wheat production essentially steady from last year, with lower production in the U.S., Europe and Ukraine offset by increased production from Australia, Canada, India and Russia. May Chi wheat is holding recent lows made on February 28 but is trading near the lows of the session so far. May KC wheat is trading at the lows of the day so far and is also holding lows from February 28, while May spring wheat is testing nearby support at the lower Bollinger band level. All three markets are oversold according to Stochastics. Speculative funds were thought to have bought about 1,000 contracts of Chi wheat yesterday.


Cattle markets are moderately lower this morning, showing some resilience in the face of heavy pressure in equity markets. Apr lives are down 1.17 to 107.47, Jun lives are down 75 cents to 101.90, and Aug lives are down 72 cents to 103.05. Mar feeders are down 1.22 to 132.40, and Apr feeders are down 1.65 to 132.00. At the time of this writing, the Dow Jones Industrial index is down over 550 points for the day so far. This does not inspire consumer confidence and disposable income spending, so many are expecting beef demand to make a significant pullback. This is coming at an unfortunate time when beef production is surging. Cash cattle trade this week is already down 1.00 to 3.00 from last week, but the Apr live cattle are still trading at a discount to cash. Apr live cattle are trading in the upper third of the day’s range so far, but today’s session left a gap from yesterday’s trading range. Prices tested the lower Bollinger band support level but are still oversold according to Stochastics. Apr feeders have rallied back from sharp losses early on and are now in the upper third of the day’s range. Earlier in the session, Apr feeders traded at their lowest values since September 10.


Hog markets are showing moderate but impressive follow-through from yesterday’s technical developments. Apr hogs are up 67 cents to 66.05, Jun hogs are up 30 cents to 79.67, and Jul hogs are up 10 cents to 80.75. The cash index is higher again today, and pork values are climbing at a relatively steady rate. Hog markets seem to be finding buyers on reports that China industry is beginning to ramp up after the spread of coronavirus has begun to pull back. With increased consumer spending in China, most traders are expecting a surge of U.S. pork exports to China. Apr hogs are trading at their highest value today since February 21 after breaking through resistance levels at yesterday’s close. Jun and Jul hogs are also trading moderately higher but have stiff resistance overhead at the 20-day moving average levels. Momentum indicators in all three contract months are pointing higher.


Lisa Heder

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