TFM Sunrise Update 4-29-20


Corn futures were unchanged overnight as the market awaits the inevitable bearish news from this today’s Weekly Ethanol Statistics that are expected to show the low corn usage for ethanol production.  Weekly Exports will be released early tomorrow morning.  Selling pressure is to likely stay active in the corn market on those demand concerns amid the impacts of COVID-19.  Additional selling pressure will be seen in the May contract with first notice day on Thursday and traders exiting long May positions.  Weather remains mostly favorable allowing for the planting pace to get off to a strong start for this year’s corn crop.  All in all, other than crude trying to form a bottom and a lot of unknown weather ahead for the growing season, the corn market is facing many headwinds at price levels that are already deflated.


Soybean futures were idle overnight weighed down by weakness in soybean meal demand with the back-up of livestock going on.  An upward curve in the Brazilian real offers some support, but charts are tilted negative with a possible retest of last weeks low in the cards as U.S. planting progress runs ahead of schedule.  The entire soybean complex has all contracts trending lower beneath all of their respective moving averages.


Wheat futures were down 5 to 7 cents in Chicago overnight, steady in KC and down 3 in Mpls, thus setting the stage for some mixed trade today.  ‘Mixed’ also describes the market factors traders have to work with as month of April comes to an end.  Demand into the end of the market year will be the key.   For now, global wheat prices softened with improved weather forecast in Europe showing the potential for much need rainfall.   U.S. wheat crop ratings have slipped and dryness concerns over the southern Plains may allow prices to find some support, as well as a stalled U.S. dollar.  Meanwhile, Chi wheat is becoming technically oversold which might suggest selling interest is close to drying up and that could lead to some upward price movement.


Live cattle futures are called steady to higher.  Cash trade is undeveloped, but strong retail values provide support to cattle prices.  The Fed Cattle Auction later this morning will give us a glimpse of this week’s cash market.  Choice carcasses have rallied over $30 this week to $330 level and the discount of April futures to cash supports buying potential for the front month.  That contract will expire tomorrow and closed yesterday at $85.525.  The natural role of the marketplace is for processors to step in and go long the market and take delivery.  June lives closed at 84.70.  Meanwhile, an announcement that President Trump will use an executive order to keep livestock packing plants open will be monitored to see if there is an impact on slaughter numbers and working through backed up cattle supplies.


Lean hog futures are called steady to higher. The announcement that President Trump will use an executive order and the Defense Production Act to assure operations of the meat plants stay open and the delivery of food remains steady and sufficient for our nutritional needs helped rally most hog contracts yesterday and should provide some sound footing for today.  Traders will monitor the situation to watch for the potential impacts on slaughter numbers and working through backed up hog supplies.  Strong retail markets and firm cash provides support to the market in general but, the premium of futures to cash and lean hog index will act as a drag on the front months.


Kelly Rubisch

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