TFM Midday Update 4-1-20


Corn markets look soft this morning, with May down 0.0475 to 3.36, July down 0.06 to 3.40 and Dec down 0.085 to 3.49. Yesterday’s Prospective Plantings report showing expectations of nearly 97m acres of corn this year was very bearish. While the market does not likely expect this number to materialize without ethanol production restarting soon, traders have shifted their attention back to slow demand. Outside markets aren’t providing any support, and the higher dollar makes U.S. supplies expensive on the export front. July corn is trading just off the lows of the day and is within 0.02 of contract lows. Stochastics have pulled back to oversold levels. Funds were thought to have sold about 9,000 contracts of corn yesterday.


Soybean markets are down hard this morning, with May down 0.18 to 8.68, July beans are down 0.17 to 8.725 and Nov beans are down 0.11 to 8.665. Yesterday’s Prospective Planting s and Quarterly Grain Stocks report was considered supportive on both fronts. However, actual plantings are expected to increase if ethanol demand remains extremely weak. Soybean fundamentals have not changed materially from yesterday’s report, so the market is likely finding sellers on shifting exchange rates between the USD and Brazilian real, along with stagnate technicals. July beans have fallen below the 10 and 20-day moving average support levels and have also fallen below trendline support. Momentum indicators appear to be turning lower. Funds were thought to have bought about 3,000 contracts of beans yesterday.


Wheat markets have taken a hard turn lower this morning, with May CHI wheat down 0.1725 to 5.5125, May KC wheat is down 0.15 to 4.78 and May MPLS wheat is down 0.1325 to 5.26. According to yesterday’s USDA data release, all wheat acres are at their lowest levels since 1919 and quarterly stocks came in just below expectations. Neither of these developments are bearish, but the sharp jump in the dollar and stabilizing action in the Russian ruble are pressure points. Technicals are a bit overdone as well, with stochastics making a bearish crossover from overbought territory. All three wheat markets have fallen below their 10-day moving average support levels. Funds were thought to have bought about 1,000 contracts of CHI wheat yesterday.


Cattle: Cattle markets are showing sharp losses so far this morning, with April lives down 3.07 to 98.75, June lives are down 2.95 to 89.12 and August lives are down 3.37 to 90.22. May and August feeders are both down the 4.50 limit to 118.40 and 124.40 respectively. Beef values made their largest single-session decline yesterday since 1987, and traders continue to worry about excess beef inventories coupled with very low demand and a huge decline in restaurant business. Cash trade has been quiet so far this week, though the market appears to be pricing in a pullback, as April lives are down hard during the first day of delivery month. June lives have traded in an inside session so far today and are near the middle of the day’s range. May feeders opened just above their limit-down price and have been locked lower for the majority of the session so far.


Hog markets are down their 3.00 limit this morning, with April locked at 49.20, June at 57.32 and July at 61.72. A huge pullback in pork values lately has reflected overwhelming fresh supplies and the potential for more hogs to back up in the country if packing plants run reduced kill schedules due to the spread of coronavirus. Pork production has begun to pull back from last week though is still sharply ahead of the same time last year. June hogs gapped lower this morning and quickly sold off to limit-down prices. June is still within its Bollinger band range though stochastics are sharply oversold.


Kelly Rubisch

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