TFM Sunrise Update 4-15-20


Corn futures weakened further overnight with May setting a new contract low at 3.25 after consolidating in Tuesday’s action.  Dec corn is within a penny of taking out Friday’s contract low of 3.45-1/2. Nearby crude is making a new low and stock index futures are down almost 400 points, thus weighing on outside markets like corn.  Corn prices are extremely undervalued, but concerns for demand loss limit rallies.  In addition, there may be weather premium left in the market that will allow prices to soften without any delays to this year’s planting season in the U.S.  Once temperatures warm up in the Midwest, farmers are ready to go with decent ground moisture reported in many areas.  Weekly Ethanol Stats will be out today followed by Weekly Exports tomorrow.


Soybean futures were firm overnight along with a bounce from new contract lows in meal overnight.  Meal contracts have been a notable source of pressure on the complex due to the significant drop in feed demand.  May and Nov beans were up 2-1/4 cents to 8.49-1/4 and 8.67-3/4, respectively.  However, the strong discount of the Brazilian real to the U.S. dollar, which widened overnight, make it difficult for U.S. beans to gain export business overall, so look for nearby beans to remain in a holding pattern while respecting the downward sloping 10-day moving average resistance.


Wheat futures were down rather hard overnight on follow-through from Monday’s negative reversals and an upward reversal in the dollar overnight.  May Chi wheat fell as much as 14-3/4 cents to 5.34, a fresh 3-1/2 week low, and May KC dropped 12-1/4 cents to 4.71-1/2.  Despite, cold temperatures forecast for this week across U.S. wheat country offering support regarding possible freeze or frost damage to winter wheat crops and dryness concern to the Russian wheat crop propping up global wheat prices, global supplies are still viewed as heavy overall and U.S. export prices are struggle against the competitive world wheat values.  This week, Egypt bought 120,000 tons of Russian wheat, and Ethiopia postponed a tender of 200,000 tons of option-origin milling wheat.  APF-Inform raised their 2019-20 Ukrainian wheat export forecast by 2.6% to 19.5 mil tons.


Live cattle futures called steady to firmer.  Higher closes on Tuesday represents the value in the cattle market as selling in June live cattle dries up.  The contract is at 83.80 compared to last week’s cash at $105/cwt.  The contract’s 10-day moving average at 84.50 is serving as resistance during the current down-trend.  The Fed Cattle Exchange today will shed some light on packer interest.  Plant closings and labor concerns highlight the issue surrounding packing capacity and the slowdown in the flow of cattle.  Retail values have stabilized the past couple sessions, and strong retail values may limit selling and provide support for cash markets.


Lean hog futures called steady to lower, but look for uneven trade as illustrated in Tuesday’s trade.  The discount of April futures to the Lean Hog Index will keep support in the front month and give technical traders ammo to try an fill gaps left from daily price drops during the first week of April.  Summer months, meanwhile, are probing for a price floor as processing plant closures mean concerns about handling the large supply of slaughter-ready hogs, a fundamentally weak factor for the cash market.


Kelly Rubisch

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