TFM Midday Update 4-21-20


Corn markets look weak again this morning, with may down 0.0725 to 3.07, July is down 0.075 to 3.1475 and Dec corn is down 0.07 to 3.30. Pressure from collapsing energy markets is continuing to weigh on corn prices, and planting activities are progressing without threatening weather forecasts. There are also concerns about feed demand moving forward due to slower livestock replacements if slaughter plants cannot stay open and provide an ample cash market. July corn traded as low today as 3.09, and while futures are oversold, there is no sign of a bottom. Open interest has been increasing on the sell off, as funds pile into the short side of the market. Funds were thought to have sold about 22,000 contracts of corn yesterday.


Soybean futures made new lows this morning as the recent downtrend accelerates. May beans are down 0.0925 to 8.1725, July beans are down 0.0875 to 8.275 and Nov beans are down 0.0775 to 8.38. China is expecting soybean imports to increase by nearly 4mmt this year, and given how cheap US beans are getting, it seems reasonable to expect that China will resume buying activities at some point. Product prices are under pressure from energy markets and expectations of lower feed usage, though current USDA acreage expectations are supportive longer term. July soybeans traded as low this morning as 8.185 but have since recovered to the middle of the day’s range. Technicals are deeply oversold, though there is no technical sign of a bottom. Funds sold about 5,000 bean contracts yesterday.


Wheat futures are down slightly this morning, unable to hold on to yesterday’s gains, but also staying relatively resilient given negatively in the rest of the grains complex. May CHI wheat is down 0.025 to 5.4625, May KC wheat is down 0.01 to 4.945 and May MPLS wheat is down 0.06 to 5.0475. Winter wheat conditions declined in yesterday’s Crop Conditions report and forecasts are turning hot and dry in the Plains. There are also expectations for Russian export quotas to be met sooner than initially expected. Winter wheat contracts are trading well inside of yesterday’s ranges, and though yesterday’s closes were well off the highs of the day, the trend has not necessarily turned lower. Funds were thought to have bought about 10,000 contracts of wheat yesterday.


Cattle markets are lower today, with April lives down 2.72 to 90.80, June lives down 1.95 to 83.15 and Aug lives down 1.50 to 88.60. May feeders are down 1.52 to 115.75 and Aug feeders are down 2.10 to 125.55. Cattle markets are more resilient to slaughter disruptions than hog markets because cattle can be moved out to pasture. Boxed beef values made a huge jump yesterday afternoon, and will likely continue to rally as long as there are concerns about production capabilities. Those same concerns will damage demand for slaughter supplies. June lives gapped lower this morning below support and are trading in the lower third of the day’s range so far. Techincals are still mixed, and direction will depend on the market’s perception of slaughter capacity.


Hog markets are mixed this morning, with June up 1.37 to 47.62, July is down 0.25 to 53.52 and August down 0.95 to 57.70. The cash index is still trying to stabilize, and fears of significantly reduced slaughter appear to have subsided, at least in the very near term. This will continue to develop on a daily basis. Pork values are rallying very quickly due to lower production lately, and the market’s anticipation that this is likely to be the case for a while. China demand is expected to remain strong. June futures are trading above their 10-day moving average resistance level, and a close above would be the first since mid-March and would likely open up some additional room for a technical bounce.


Lisa Heder

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