TFM Midday Update 4-28-20


Corn futures are mixed this morning in choppy, two-way trade. May is down 0.015 to 3.04, July is down 0.0025 to 3.13 and Dec is up 0.0075 to 3.3025. Yesterday’s Crop Progress report was 27% complete vs 20% on average which was considered bearish. Iowa corn planting is running 19% ahead of the average pace and Minnesota planting is running 21% ahead of the average pace due to relatively dry conditions. Energy prices have rebounded a bit which is supportive and yesterday’s Export Inspections total nearly beat the high end of expectations. Traders are still waiting on large Chinese purchases that would be a part of the rumored 20mmt purchases. July corn pushed through yesterday’s lows early on in the session but has since recovered toward the middle of the day’s range. The trend is still lower though corn is not collapsing after a negative start to the week which may be somewhat encouraging. Funds were thought to have sold about 20,000 contracts of corn yesterday.


Soybean futures are drifting lower again today after more unsuccessful tests of nearby resistance. May beans are down 0.0425 to 8.25, July beans are down 0.0425 to 8.3225 and Nov is down 0.0075 to 8.395. Soybean planting progress is still low enough that traders are not overly concerned about quicker than usual planting. Weekly Export Inspections came in near the upper end of the trade estimates and the Brazilian real may be trying to carve out a near term bottom. The weak real has been a major pressure point lately and still appears as though South America is undercutting U.S. exports, especially to China. July beans tested their 10-day moving average resistance level overnight and were unable to break above for the fourth session in a row. Stochastics and other momentum indicators are still pointing lower despite last week’s bullish key reversals. Funds were thought to have sold about 4,000 contracts of soybeans yesterday.


Wheat markets are choppy but mostly higher this morning, with May CHI wheat up 0.0025 to 5.2125, May KC wheat is up 0.0375 to 4.7425 and May MPLS wheat is down 0.0175 to 4.9575. There is a lot of rain in the forecast for France in the next two weeks which will likely eliminate dryness concerns for the milling wheat crop in most areas. Production concerns in other major exporters are not urgent, though crop conditions in the U.S. dropped this week which is likely the key source of support this morning. Winter wheat G/EX ratings are now 10% below the same week last year and P/VP ratings are up 7% from last year. July CHI wheat has dropped below yesterday’s lows but has recovered back within its Bollinger band range. Meanwhile, KC and MPLS futures have held support and are putting in a modest bounce so far. Funds were thought to have sold about 4,000 contracts of SRW wheat yesterday.


Cattle markets are mixed this morning in choppy trade, with April lives up 0.67 to 85.47, June lives down 0.05 to 84.00 and August lives are down 0.10 to 90.30. May feeders are up 0.35 to 118.50 and August feeders are up 0.77 to 128.05. With many states working toward reopening businesses, restaurant business should pick up as well. For the time being, cattle traders seem mostly confident that they have priced in the lower slaughter lately due to plant shutdowns. This is still a developing story, so things can change. A few head traded in KS yesterday at 100, which should be supportive. June live cattle traded above their 20-day moving average resistance level for a good portion of the morning but have since fallen back below, continuing to consolidate. May feeders bounced off support this morning and are keeping with the higher trend.


Hog markets are sharply higher this morning on impressive follow-through from recent technical strength. June and July hogs are up their 5.50 expanded limit to 60.77 and 63.92 respectively, and August is up 5.30 to 67.40.  While slaughter capabilities are still questionable, the cash index is rallying along with pork values. Packer margins are extremely high right now, and since headlines regarding plant shutdowns have gained traction, some are expecting some kind of government assistance to keep plants open and meat supplies available. June futures are trading at their highest level since March 31. Prices are trading into overbought territory, so a technical correction could come fast on reversal action, especially given low open interest.


Carol Tillmann

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