TFM Sunrise Update 3-27-20


Corn futures were down 2 overnight and in the upper half of this week’s 15 cent trading range for nearby May contract and 20 cent range for Dec. Despite weekly export sales being above expectations, corn futures struggle with concerns regarding the loss of demand loss due to weakened ethanol and cash market. It is estimated that 36 ethanol plants have idled production after a 40% drop in price, thus causing a sluggish cash market. Looking ahead, corn prices are likely to stay range-bound as traders eye next Tuesday’s key USDA reports. Outside markets show crude and the dollar firm, stock index futures down 500 points after first taking out yesterday’s highs overnight.


Soybean futures were up 6 to 7 cents overnight and are up about 30 cents on the week as higher Chinese crushing markets spark a demand driven price increase. Respectable weekly export sales brought support to soybean and soybean product prices in Thursday’s session. The soybean market will also be watching for any additional headlines regarding Argentina and Brazil and their possible logistics issues due to COVID-19, which could mean more potential demand to U.S. soybeans.


Wheat futures were up 4 to 5 cents overnight after consolidating in Thursday’s session. Thursday’s Weekly Export sales of 27.2 mil bu and a pullback in the dollar underpins prices this week. The global wheat outlook is mixed though as Russia looks to shortages of flour in their nation after the recent price hike in wheat. Meanwhile, India announced the state of Punjab will refrain from their wheat procurement for 3 weeks due, in part to their nation’s coronavirus shutdown. Look for choppy trade as the market looks toward next week’s Planting Intentions and Grain Stocks report.


Live cattle futures called steady to lower. April Cattle futures traded limit down on profit taking in Thursday’s session. A weak close opens the door for additional long liquidation, and retail prices fell from recent highs on Thursday. The futures market is at a big discount to cash markets, which may keep the market buoyant today. Large volumes of cattle sold in all regions Wednesday at $8-10 higher prices. Live trades occurred from $115 to $121/cwt with the bulk from $118-120. The next form of headwinds for the market is the rising unemployment that could have an immediate impact on demand.


Lean hog futures are called mixed to lower after settling limit lower on Thursday. There may be some residual sell orders waiting to be filled on today’s open. Weakening retail demand prices weighed on hog futures in Thursday’s trade.  In addition, the quarterly Hogs and Pigs report confirmed large amount of hogs available, with all hogs at 104% of last year, and hogs for marketing at 104%, reflecting heavy supply. Traders remain wary about the ability of the market to absorb the total meat production in the U.S. without lower prices and/or higher exports.


Lisa Heder

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