TFM Midday Update 1-29-20


Corn futures are trading a bit lower this morning, with Mar and May down 2 cents to 3.84-1/2 and 3.90 respectively, and Jul down 2-1/2 cents to 3.94-3/4. U.S. corn is the cheapest in the world, and this has attracted USDA flash sales for the past four days in a row. Harvest in North Dakota is still less than half completed which could total up to around 232 million bushels still standing in the fields. Still, corn futures have not been able to rally very quickly out of the recent setback. Mar corn closed yesterday’s gap but was unable to break through nearby resistance, and prices have been unable to push through the same resistance levels so far this morning. This does not indicate a very strong bounce even though shrinking open interest yesterday could indicate short covering. Speculative funds were thought to have bought about 21,000 contracts of corn yesterday.


Soybean futures are down very slightly this morning, with Mar down a 1/4 of a cent to 8.94-3/4, May down 1/2 of a cent to 9.08-1/2, and Jul down 1/4 of a cent to 9.22. Palm oil put in a bit of a recovery bounce overnight, helping the soybean product futures prices to stabilize. There is also talk that China could soon enact duty-free imports from many U.S. ag products due to food shortages lately. Prices yesterday were able to stabilize but could not rally. Soybeans were up sharply overnight, with Mar trading as high as 9.03 but have since backed off to trade with very slight losses. Speculative funds were thought to have sold about 3,000 contracts of soybeans yesterday.


Wheat markets are sharply lower this morning in some follow-through selling on recent weakness. Mar Chi wheat is down 8-1/2 to 5.61-1/4, Mar KC wheat is down 7-1/4 to 4.74-3/4, and Mar spring wheat is down 6-1/4 to 5.36. The U.S. dollar is sharply higher again today, trading at its highest values again since December 2. This makes U.S. wheat more expensive on export markets and may lead to more exports out of countries like Australia, France, and Canada. China has bought wheat from those countries lately and this could contradict the USDA’s estimate for huge ending stocks in China. KC wheat conditions in the U.S. are declining which should provide some support. The Mar Chi wheat is again trading below its 20-day moving average support level, and a close below would be the first since December 11. Mar KC wheat is trading at its lowest levels today since January 8 and a close here would be the lowest since December 26. Mar spring wheat is testing its 50-day moving average support level for the first time since December 20 and close here would be the lowest since December 13. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.


Cattle markets are down slightly this morning, with Feb lives down 10 cents to 122.05, Apr down 32 cents to 120.37, and Jun lives down 32 cents to 112.15. Cattle slaughter has been strong lately and feeder imports from Canada are also higher. Friday’s Cattle Inventory report is expected to show numbers reflecting these trends. Beef values are continuing their recent pullback and economic instability caused by coronavirus may slow travel and restaurant business, therefore impacting beef demand. The best traded Apr live cattle contract is testing its 200-day moving average support level for the first time since October 8. Futures are sharply oversold according to technical indicators and speculative funds still had huge ownership positions as of last Tuesday. Mar feeders have held yesterday’s lows and may be stabilizing at current levels.


Hog markets are showing triple-digit losses today, with Feb hogs down 1.05 to 65.17, Apr down 1.72 to 69.62, and Jun hogs down 1.40 to 82.57. The CME Lean Hog Index is still trending higher and pork values are at least stable. Still, most are not expecting China to be a major importer of U.S. pork until coronavirus can be contained. Apr hogs are making new lows for the move and trading at their lowest values since August 7. Hogs are technically oversold though momentum is still pointing lower.


Carol Tillmann

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