TFM Midday Update 4-8-20


Corn futures look weak this morning, unable to follow through on yesterday’s pop. May is down 0.0275 to 3.2875, July is down 0.0325 to 3.34 and Dec is down 0.03 to 3.48. there are rumors that Chinese buyers are looking to procure 500,000 tonnes of corn from the US soon after a flurry of purchases from Taiwan and Korean overnight. However, continuing with the recent theme, ethanol demand, or a lack thereof, is the main driver today. Poet announced yesterday that they are idling three plants which will reduce ethanol demand by 110mbu. Today’s weekly ethanol report was predictably negative, with the lowest weekly production total since the report started in 2009. Weekly production was down 32.9% from the same week last year. July corn was mixed to higher overnight but fell after the weekly ethanol report. Prices have not fallen through yesterday’s lows and are still making an inside session. Funds were thought to have bought about 15,000 contracts of corn yesterday.


Soybean futures are slightly lower today in choppy, two-way trade. May beans are down 0.0125 to 8.535, July is down 0.0075 to 8.6025 and Nov beans are down 0.0175 to 8.65. Gains in the US dollar today are being partially offset by a bounce in the Brazilian real. Palm oil production in Malaysia’s top producing state has been suspended to combat the spread of coronavirus, and this should help to support the soybean complex. July soybeans tested overhead resistance again today at the 20-day moving average but were met with sellers. Today’s unsuccessful test would be the fourth in fifth sessions. Funds were thought to have been net even in soybeans yesterday.


Wheat markets are mixed to higher this morning, with May CHI wheat down 0.015 to 5.4875, May KC wheat is up 0.04 to 4.7725 and May MPLS wheat is up 0.03 to 5.275. Markets are continuing to draw support from elevated demand and export quotas in various countries. However, it does not appear as though global supplies will dwindle anytime soon. Traders are expecting to see the second highest global stocks to use ratio since 1968/69 on tomorrow’s report. Forecasts for below normal temperatures through the middle of the month in winter wheat growing areas in the US are keeping buyers interested. Winter wheat markets are still trapped between moving average support and resistance lines, though KC has crept toward the higher end of the day’s range and CHI wheat has looked compositely weaker. Spring wheat futures are trading just off the highs of the day are testing their 10 and 50-day moving average resistance levels. Funds were thought to have sold about 4,000 contracts of CHI wheat yesterday.


Cattle markets are showing solid follow-through strength today, with April lives up the expanded 4.50 limit to 92.82, June lives are up 2.20 to 87.00 and August lives are up 1.82 to 91.15. May feeders are up 5.77 to 119.57 and August lives are up 6.00 to 127.00. Beef values have continued to slide, though cash trade yesterday was steady with last Friday’s trade. Now that we are in delivery month, steady cash trade should be very supportive for futures considering the near 13.00 discount of futures to cash. There is still a possibility that cash markets will weaken in the coming weeks, especially if demand for slaughter supplies dwindles due to packer plant shutdowns. June lives are trading well off the day’s highs after a sharply higher open. May feeders are trading towards the high end of the day’s range, retaining strength much better than the lives.


Hog markets are moderately lower today, with April down 1.02 to 43.10, June down 0.47 to 52.17 and July down 0.47 to 57.30. The cash index is still moving lower quickly, and pork prices are at their lowest levels since late 2009. The lack of follow-through today is disappointing, especially given the sharply higher opening trades. The best traded June contract opened nearly 3.00 higher, briefly testing the 10-day moving average resistance level. Prices then quickly sold off, closed the gap and are now in negative territory.


Lisa Heder

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