TFM Sunrise Update 3-18-20


Corn futures regained the bulk of yesterday’s extraordinary losses overnight. Nearby corn contracts are faring better, up 6 to 8 cents with the back months up 3 amid an uptick in trade volume noted for the week. The ability for stock index futures and crude avoiding new lows overnight is serving as a positive beacon for commodities ahead of this morning’s USDA Weekly Export Sales. Crude is up $2.40/bbl and the Equity futures continue its wild ride, trading hundreds of points both sides of yesterday’s settlement. Trade estimates for corn sales are the recent standard 600,000 to 1.20 mil tons. Expect volatility to remain high as coronavirus activity and outcomes continue to unfold and as the government takes action against these new developments.


The soy complex is higher this morning led by soybean meal. Meal is leading the complex on ideas that reduced ethanol production will cut into the supply of DDGs and thus increase demand for meal. Beans and soyoil are trading inside yesterday’s lower ranges. Prices rallied yesterday but lost ground late in the session on lower energy and a higher U.S. dollar not to mention a lower Brazilian real. Yet, export activity appears to be picking up. Both currencies are in the green (firm) this morning. May beans advanced a dime overnight to 8.35-1/2. Nov is up 7 to 8.49. Trade estimates for this morning’s USDA Weekly Export Sales are 400,000 to 1.0 mil tons for old crop; 60,000 to 100,000 for 2020-21 crop. Meal numbers are seen coming in at 150,000 to 400,000 tons.


Winter wheat futures are up a dime this morning; Spring wheat up  3 to 4. Prices held together well yesterday and seem to be the counter to weaker energy and more surprising to a stronger dollar. Wheat has been synonymous with an inverse movement relative to how the dollar moves. Yesterday’s gains were impressive and July Chi wheat, now at 5.16-1/2 needed to push through the contract’s 10-day moving average at 5.12 to show any signs of real life. Meanwhile KC wheat continues to outperform the others due to its use in pasta which is growing in demand during the social distancing protocol in place during the COVID19 dilemma.


Cattle futures finished with sharp losses yesterday reversing solid gains from early in the session on renewed coronavirus concerns. Prices traded near limit to limit higher and finished close to limit lower of the 900 point trading range. Bulls are losing their steam after yesterday and volatility is expected to be the norm as bouts of buying interest are tempered by ideas that once grocery stores are restocked, the jump in the beef market will be short-lived.


Hog futures are called mixed to lower. Yesterday’s sharp gains gave way to sharp losses and it looks like the market is poised to set new contract lows today. Traders will closely monitor weight date for indications of a back-up in the country. Meanwhile, technical momentum studies are rising from mid-range, which could accelerate a move higher if resistance areas are penetrated. The discounted April futures contract to cash is also a potential ‘positive’ waiting in the wings for the market.


Carol Tillmann

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