TFM Midday Update 4-15-20


Corn markets are breaking to new lows this morning, with May down 0.065 to 3.195, July is down 0.0575 to 3.265 and Dec corn is down 0.0375 to 3.4275. Energy prices have been unable to rally despite OPEC production cuts, and most markets are operating today with a “risk-off” attitude. There is also concern that feed demand will pull back with slower slaughter. July corn is trading at the lows of the day and down to new contract lows. Without anything increasing demand or decreasing supply in a major way, the near-term direction is lower. Funds were thought to have sold 11,000 contracts of corn yesterday.


Soybean futures are drifting lower this morning, with May down 0.0675 to 8.4025, July is down 0.055 to 8.50 and Nov beans are down 0.0625 to 8.5925. China soybean futures were up nearly 5% overnight, due to tight supplies, but without any major China purchases lately, US beans were unable to find support. Packing plant closures have reduced perceived demand for soybean meal. In addition, the USD is sharply higher against the Brazilian real. July beans have fallen to new lows for the move this morning as momentum indicators point further lower. A retest of the March lows looks likely at some point despite oversold stochastics. Funds were thought to have sold about 11,000 contracts of soybeans yesterday.


Wheat markets are down hard this morning, as traders shrug off fears of winter wheat damage due to cold weather recently in the US plains. May CHI wheat is down 0.1825, May KC wheat is down 0.14 to 4.6975 and May MPLS wheat is down 0.0925 to 5.1175. Export activity appears to be slowing down, despite Egypt’s recent purchases at a time of year when they aren’t usually tendering. Keep in mind that global wheat stocks are still at record highs. July CHI wheat futures have fallen below the 50% retracement level of the recent rally and July KC wheat has fallen below the 62% retracement level of the recent rally. Funds were thought to have sold about 4,000 contracts of CHI wheat yesterday.


Cattle markets are only moderately lower this morning despite increasing fears of packer shutdowns. April lives are down 0.77, June lives are down 0.80 to 83.00 and August lives are down 1.35 to 88.17. May feeders are down 1.10 to 113.75 and August feeders are down 1.77 to 124.57. Very light cash trade was reported yesterday @ 95.00, sharply lower than 105.00 last week. Volatility could begin to quiet down with April lives now at a much more normal discount to cash. Beef values are trending higher out of recent lows though are not surging due to lower production yet. June lives are trading in a quiet inside session after yet another unsuccessful test of the 10-day moving average resistance level. May feeders are showing very similar price action so far.


Hog futures are mostly lower this morning, with April up 0.05 to 45.70, June is down 0.35 to 43.60 and July is down 0.17 to 50.80.  If slaughter pace cannot ramp up quickly, animals with begin to back up in the country and force heavy production later. The April contract is converging with cash ahead of expiration, but the June contract is trading at a discount to cash vs a normal seasonal premium of nearly 16.00. The market is clearly expecting cash values to keep falling as production lines slow down. June futures are trading in a quiet inside session and are just off the highs of the day. Technical are still sharply oversold.


Kelly Rubisch

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