TFM Sunrise Update 3-24-20


Corn futures are called mixed for today while trading about a dime off of last week’s contract lows. Concerns about ethanol margins, highlighted by news stories of ethanol plants curbing production continue to act as a wet rag over the corn market from a demand standpoint. The backdrop of these concerns is due to weaker energy prices, which are primarily under pressure from either concerns of less demand from coronavirus or from the price war between Russia and Saudi Arabia. Corn was flat overnight, stock index futures sharply higher on coronavirus stimulus hopes, crude up $1.50/bbl and the dollar lower.


Soybeans were lower overnight led by the nearbys which were off 6 to 7 cents. Most contracts settled close to double digits higher to begin the week as good demand, particularly on expectations that soymeal demand could soar due to a slowdown in the ethanol grind, is providing support. In addition, dry conditions in southern Brazil, where the crop is still in the growing stage has provided a bid underneath market. May soybean meal futures took out yesterday’s fresh 5-1/2 month highs overnight before retreating in a technical pullback after becoming overbought, thus bringing bean futures with it. Stochastics for beans remain mid-range, but trending higher which could re-enforce a move higher if resistance levels are penetrated.


Wheat futures were down overnight in a ‘turn-around Tuesday’ pullback. Chi May wheat is down a nickel to 5.58 after rallying 70 cents since hitting a 6-month low on Mar 16. May KC wheat is down 3 to 4.86-1/2. Traders, overnight backed away from pushing prices further after an impressive day yesterday, as prices pushed through overhead resistance on a downward channel line and closed above the 50-day moving average in Chi. This would suggest the stage is set for further advances, as quality wheat could be a premium to the world market.


Cattle futures are called higher after locked limit higher trade yesterday triggering expanded limits for today. Consumer demand is excellent, as retail shelves have been basically bought out over concern of coronavirus. The anomalies created by government “stay at home” mandates are creating a volatile environment in beef markets that can be expected to continue. For now, there is a surge in demand and prices, and the futures market is struggling to factor in the confusion over the fundamental situation.


Hog futures are called higher on follow through after locked limit higher yesterday. Expanded limits are in play for today.  The strength in pork cut-out values, expectations for improved demand from elsewhere in the world, like China, along with continued short covering, is providing underlying support. Technically, the charts are taking on a positive posture that could lead to more follow-through.


Lisa Heder

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