TFM Midday Update 4-20-20


Corn futures are under pressure from a continued collapse in energy markets. May corn is down 0.04 to 3.1825, July corn is down 0.0375 to 3.255 and Dec corn is down 0.04 to 3.395. May crude oil, which expires today, is down 7.32 to 10.95 and June is down 2.14 to 22.90. Meanwhile, China corn futures are at their highest levels since 2015 as feed mills and refineries resume production. Some cold and wet weather in the forecasts for the southern and eastern parts of the corn belt are supportive, but overall, weather in the US is mostly nonthreatening. July futures have not made new lows this morning, but the new crop Dec contract has. The USDA is currently expecting 97m planted acres this year and some are projecting 2020/21 carryout to reach over 3bbu. Funds were thought to have bought about 7,000 contracts of corn Friday.


Soybean futures have extended their recent downtrend this morning, with May down 0.0225 to 8.3025, July is down 0.0275 to 8.395 and Nov is down 0.03 to 8.48. Energy weakness is hurting demand for soybean and vegetable oils, and a strong crush pace has added to oil inventories. Demand for meal is strong, with lower DDG supplies in the US and the rebuilding hog herd in China. July soybeans traded as low this morning as 8.36 but have since recovered to the middle of the day’s range. Prices are well within range of testing the lows from March at 8.29. Stochastics are oversold, though the trend is still lower. Funds were thought to have sold about 2,000 contracts of soybeans on Friday.


Wheat markets are shooting higher today on insufficient rainfall in Russian and the Black Sea. May CHI wheat is up 0.26 to 5.595, May KC wheat is up 0.2575 to 5.0475 and May MPLS wheat is up 0.0975 to 5.165.  IKAR recently lowered their Russian crop projection by nearly 3% and there is some speculation that Russian export quotas may be met earlier than initially expected. Excessive rains in the southern Midwest and Delta regions are also of concern. July CHI wheat is trading at its highest level this morning since April 13 and July KC wheat is at its highest level today since Jan 22. Prices could be a bit overbought in the short term, but momentum lower appears to have stopped. Funds were thought to have bought about 4,000 contracts of CHI wheat Friday.


Cattle markets are choppy today, quiet within relatively tight trading ranges. April lives are up 0.17 to 94.92, June lives are unchanged at 86.30 and August lives are up 0.05 to 91.15. May feeders are down 1.00 to 118.27 and August feeders are up 0.37 to 128.77. Cash cattle trade was able to perk up to 105 last Friday, up 5-10 from early week trade. Packing plant shutdowns are hurting daily kill numbers, and it is unclear how chain speeds will recover, or not, in the coming days and weeks. Cutout values have bounced, likely due to reduced kill. June lives have made an unsuccessful test today of their 10-day moving average resistance level and have settled in near the middle of the day’s range. The trend still appears to be higher, but there is much uncertainty about demand for slaughter supplies moving forward


Hog markets are showing strong, triple digit gains today, with June up 2.72 to 46.45, July hogs are up 2.15 to 54.07 and August hogs are up 2.25 to 58.65.  The sell-off in the cash index appears to be slowing, but that is dependent on packing plants’ ability to stay open. Pork values are rallying due to reduced kill schedules lately, and there is significant concern that animals will begin to back up in the country and gain excessive weight, thereby forcing heavier production down the road. June hogs made a test of their 10-day moving avenge resistance level early this morning but have since set back and are currently trading just below that level. A close above that would be the first since March 25 and could open up more room for a bounce if plants can stay open.


Lisa Heder

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