TFM Sunrise Update 3-20-20


Corn futures are higher this morning after rebounding yesterday. May corn got to 3.52-1/2 on gains of 7 cents overnight. Dec reached 3.67 on gains of 4.3/4 cents. A nearly 1000 point bounce in stock index futures overnight helps to draw a bit of a bottoming structure on the charts for many commodities at week’s end. However, in light of coronavirus concerns we’re not convinced prices are ready to make a giant move higher. The key may be energy prices that rebounded nicely yesterday but have been absolutely decimated over the last three weeks due to demand concerns and an energy price and production war between Saudi Arabia and Russia. That market is up another 2.60 overnight. If, in fact lows are being formed, the trade can begin factoring in weather forecasts. NOAA and the U.S. National Weather service released their first look at April weather Wednesday and another look at the April through June weather. The forecast also provided a glimpse at the summer weather trend. The dominating theme was wetter than usual conditions for much of the Midwest during the spring. The two entities strongly disagrees one another on the outlook for the late spring and summer.


Bean futures were stronger overnight on follow-through after strong advances yesterday on continued talk that China is in the market to buy U.S. beans. Where there’s smoke, there’s likely fire and this is providing some ‘risk on’ attitude among traders. May beans, at 8.53-1/4 are actually up about a dime for the week based Sunday night’s opening trade. Nov beans are back to even at 8.60 while shrugging off the downside target of $8.00 per bushel that many believed inevitable just a couple days ago. Bean oil and meal are also seeing good gains to begin the day.


Wheat futures were mixed to higher overnight on rumors that China is buying U.S. wheat. A retreat in the greenback overnight and forecasts for up to a 12.5% cut in Ukraine’s wheat output is also noted. Bull spreading is evident in Chi as nearby contracts surge 7 to 11 cents and back months slip 3 to 4 cents. The market wasted little time moving more than 30 cents higher at one time yesterday. Strong gains on futures after the reversal on Tuesday looks encouraging.


Cattle futures are called firmer after limit higher finishes in the live and feeder markets yesterday. Look for expanded limits to be enacted again today. Strength in cash and consumers buying significant amounts of meat to take home while they hunker down through the coronavirus has provided support. Packers won’t press cash prices any higher but will let the futures catch up. Cash prices were quiet yesterday. This week’s advance has kept packers active in the cash markets and prices that started at $105/cwt on Monday then reached a high of $113 on Wednesday.


Hog futures are called steady to higher on follow-through after strong gains, especially in front-month Apr yesterday as traders respond to positive export news to China. In addition, the steep rise in pork cutouts and cash markets gives traders confidence in buying hogs. But let’s face it, if the stock market show signs of bottoming, all of the commodity markets will benefit, meats included.


Carol Tillmann

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