TFM Midday Update 4-7-20


Corn markets are finding some buying action this morning, with May up 0.0625 to 3.34, July is up 0.0575 to 3.3925 and Dec is up 0.0425 to 3.525. The US dollar is lower this morning and the Brazilian real is lower which is providing support. South American weather forecasts are still dry and 6-10 day US weather forecasts are showing cold temps and above-normal precipitation. It may be a bit early to trade weather for the corn belt, but it should be monitored. Though the bounce today is impressive so far, corn futures have not made any reversal action. July has traded as high as 3.405 but has not tested Friday’s high at 3.435 or the 10-day moving average resistance at 3.44. Funds were thought to have sold 11,000 contracts of corn yesterday.


Soybean are mixed to lower this morning, falling back from early morning strength. May beans are down 0.0075 to 8.5475, July beans are down 0.005 to 8.6075 and Nov beans are up 0.0075 to 8.66. Palm oil futures are surging again today on fears of reduced production due to coronavirus. The Brazilian real is providing support as well, though China has made recent soybean purchases from Brazil instead of the US. Technical action has been unimpressive so far, with an early test of the 20-day moving average resistance level giving way to mid-morning selling. July beans only reached as high as 8.68 before drifting back towards the lower third of the day’s range. Funds were thought to have bought 2,000 contracts of soybeans yesterday.


Wheat markets are a bit lower this morning after successful tests of nearby support. May CHI wheat is down 0.065 to 5.4925, May KC wheat is down 0.0325 to 4.785 and May MPLS wheat is down 0.0225 to 5.3575. Winter wheat conditions in the US are currently 10% higher than last fall, and poor/very poor ratings were down 5% from the fall. Wheat yields are notoriously difficult to predict, but this at least dispels thoughts of problems in the short term. Spring moisture in the Black Sea region and Europe have been a source of strength. July CHI winter wheat futures plunged lower early in the session but held support at the 50 and 100-day moving average levels. Spring wheat tested its 20-day moving average support, and all three markets have since bounced off session lows. Funds were thought to have bought 4,000 contracts of CHI wheat yesterday.


Cattle markets are locked at limit higher prices, with April, June and August lives up 4.50 to 88.32, 84.80, and 89.32 respectively. May and August feeders are up 4.50 to 113.80 and 121.00 respectively. Beef values have continued to slide lately, and three major packing plants in Iowa and Pennsylvania were recently closed, according to the New York Times. Another plant in Iowa was closed for cleaning that was scheduled for later in the month. Much of today’s bounce appears to be technical in nature. April lives are still trading at an extreme, and historic, discount to the cash market. Neither the live or feeder futures have made reversal action today, so it is unclear if todays bounce is temporary, or if the trend could be turning.


Hog markets are locked 3.00 higher this morning, with April at 44.12, June at 52.65 and July at 57.77. The cash index is down sharply, but the discount of April futures to cash is extremely wide, especially for delivery month. More than 24 cases of coronavirus were reported at a Tyson plant in Iowa, and operations will shut down temporarily. These disruptions may cause production surges down the road, but they could also help to support pork prices in the near term. There are still several gaps left to fill above current price levels, so follow through after yesterday’s reversals could continue. The best traded June contract is still oversold according to stochastics.


Kelly Rubisch

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