TFM Midday Update 3-9-20


Corn futures have pushed to new contract lows this morning, under pressure from uncertainty in the equity markets and a dump in energy prices. May corn futures are down 6-1/4 to 3.69-3/4, Jul is down 6-3/4 to 3.72-1/2 and Dec corn is down 6-1/2 to 3.75. With Corona virus still spreading across the U.S., many stock indices hit limit lower prices this morning. This causes a wave of risk off of activity across financial markets, including ag commodities. In addition, over the weekend, Saudi Arabia and Russia entered a price war in oil. Apr crude oil futures traded as low this morning as 27.34. Apr crude is now trading near the highs of the day at 33.75, still nearly 8.00 lower than Friday’s close. Despite all the negative outside market pressures, corn futures are holding it together with some impressive determination. Jul corn futures gapped lower this morning and tested contract lows at 3.70. Prices have since bounced back and are trading near the middle of the day’s range. Prices are still within their Bollinger band ranges, though momentum is pointing lower. Speculative funds were thought to have sold about 12,000 contracts of corn on Friday.


Soybean futures are down hard this morning with May down 23 cents to 8.68-1/4, Jul is down 23 cents to 8.77, and Nov is down 21 cents to 8.84-1/2. Enormous selling pressure in the energy markets this morning has pushed palm oil prices sharply lower. This, in turn, creates selling any soybean oil in soybean markets. The U.S. dollar is sharply lower this morning which is helpful, but the Real is still slipping to new lows and South American harvest pressure persists. Jul soybeans traded as low this morning as 8.76, filling the gap from May 13 of last year. The next downside target appears to be contract lows at 8.66, but volatility will keep things on edge. Jul soybeans are sharply below their Bollinger band support level. Speculative funds were thought to have sold about 6,000 contracts of soybeans on Friday.


Wheat markets are finding overflow selling action from the rest of the ag markets today with May Chi wheat down 2 cents to 5.13-3/4, May KC wheat is down 8 cents to 4.38-1/4, and May spring wheat is down 5-3/4 to 5.19-1/2. The U.S. dollar traded at its lowest levels this morning since September 2018, a very supportive factor for a global crop like wheat. Russian wheat exports are running 13% behind last year, but remember that last year was a record for Russia. European wheat futures were down hard overnight, seeing about a 5% drop. May Chi wheat is trading near the highs of the day so far, showing impressive results among enormous outside market pressure. Stochastics are still giving oversold readings. May KC wheat has also rallied back to the upper 1/3 of the day’s range after trading at its lowest level since mid-December. May spring wheat trade its lowest levels today since September 4, but is back within its upper 1/3 of the day’s range. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat on Friday.


Cattle markets are experiencing sharp selling pressure this mornign with Apr lives down 2.47 to 103.27, Jun lives are down 2.67 to 97.35, and Aug lives are down 2.85 to 98.22. Apr feeders are down 4.15 to 125.90 and May feeders are down 4.50 to 125.65. Huge selling pressure in the stock market is the main bearish development today in the cattle markets. Consumer confidence is dropping, and with fears of spreading Corona virus effecting travel, beef demand will be further reduced. Reduced beef demand may back up beef pipelines relatively quickly, further pressuring prices. Apr lives gapped lower this morning, opening at limit lower prices. Prices have since come off and traded as high as 105.22, but in the late morning, prices have fallen back to near limit lower prices. Apr feeders are trading just off of the day’s lows near limit down prices. Momentum indicators are pointing lower though futures are sharply oversold.


Hog markets are showing triple digit loses so far today with Apr down 2.57 to 63.35, Jun is down 2.00 to 77.75, and Jul hogs are down 2.05 to 78.90. The cash index is higher today and pork values may be stabilizing. Hog markets are finding most of their selling pressure today from outside factors and liquidation. While pork demand is not nearly as dependant on economic conditions as beef, lower travel and reduced attendance at social gatherings will not increase pork demand. Apr futures opened limit lower today, trading through resistance at the 10 and 20-day moving average levels, but has since backed off to near the lows of the day. Jun and Jul futures have shown similar price action, though have been trading within the middle of the day’s range so far.


Kelly Rubisch

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