TFM Midday Update 2-13-20


Corn futures are drifting lower today, with Mar down 2-3/4 to 3.80-1/4, May is down 2-3/4 to 3.84-1/2, and Jul corn is down 2-1/4 to 3.88. Delays in soybean harvest in Brazil are keeping at least a touch of underlying support this morning, but corn does not seem to have the fundamentals currently to break out of their current range. Most markets seem to be on the defense this morning after 15,000 more cases of coronavirus were reported in China yesterday, though the spread elsewhere may be slowing. Mar corn has fallen through the 10-day moving average after closing above it yesterday. Prices are stuck directly in their tight trading range lately with momentum indicators pointing sideways. The U.S. sold 969,000 tons of corn for the week ending February 6, down 22% from last week and down 9% from the previous 4-week average. Speculative funds were thought to have bought about 12,000 contracts of corn yesterday.


Soybean futures are finding more buyers this morning with bull spreads continuing to strengthen. Mar beans are up 5-3/4 to 8.98-1/4, May beans are up 3-1/2 to 9.07, and Jul beans are up 4 cents to 9.18-3/4. The U.S. dollar is lower this morning and the Brazilian real is trying to put in a bullish key reversal today. The bull spread feature of the market is particularly interesting as we believe that slow U.S. farm selling, as well as rain-delayed harvest in Brazil, is tightening deliverable soybean stocks. Mar soybeans are trading at their highest level since January 29 and are above their 20-day moving average for the first time since January 14. Stochastics have turned increasingly higher after crossing into a buy signal last week. The U.S. sold 645,000 tons of beans for the week ending February 6, down 8% from last week but up 2% from the previous 4-week average. Speculative funds were thought to have bought about 9,000 contracts of soybeans yesterday.


Wheat markets are soft this morning, with Mar Chi wheat down 4-1/2 to 5.43, Mar KC wheat is down 5-3/4 to 4.65-1/4, and Mar spring wheat is down 3-1/2 to 5.27-3/4. Kansas and Nebraska have received almost no rain over the past couple of weeks and now forecast models are beginning to shift towards dry again. It is disappointing that KC is not finding buyers on this weather, though a large European wheat crop and a weak currency are making it difficult for the U.S. to make any major sales. Heavy rainfalls in Arkansas and Mississippi could damage winter wheat crops though this would likely not be much of a market mover. Mar Chi wheat initially traded higher this morning but has since set back lower. Stochastics have fallen back into oversold levels though prices are holding their lower Bollinger Band support levels this morning. Mar KC wheat has traded at its lowest values this morning since February 3 after falling below the 50-day moving average support level that prices barely held onto yesterday. Spring wheat futures are trading at their lowest levels today since December 16 and are deeply oversold. The U.S. sold about 643,000 tons of wheat for the week ending February 6, up 90% from last week and up 10% from the previous 4-week average. Speculative funds were thought to have bought about 4,000 contracts of Chi wheat yesterday.


Cattle markets are slightly lower in early trade this morning, with Feb lives down 37 cents to 118.57, Apr lives are down 77 cents to 117.07, and Jun lives are down 72 cents to 109.20. Mar feeders are down 25 cents to 134.80 and Apr feeders are up 5 cents to 137.22. The coronavirus is still keeping the beef markets on the defensive. Boxed beef values were at their lowest levels since October 17, 2018, and with the USDA raising production for the first half of 2020 on Tuesday’s report, oversupply seems to be a main theme lately. Apr lives are trading in a quiet inside session today. Stochastics are sharply oversold and futures prices have not seen levels this low since late September. There is still a gap to fill at 115.95. Mar feeders are continuing to consolidate near the low end of their recent range but have not broken below the low for the recent move on February 3.


Hog markets are attempting to stabilize today after disappointing setbacks from last week’s gains. Feb hogs are up 22 cents to 55.90, Apr hogs are up 57 cents to 64.35, and Jun hogs are up 27 cents to 81.12. Pork values made a slightly higher close yesterday afternoon which is no doubt helping buyers step in today. Still, coronavirus has not been contained in China and 15,000 new cases were reported yesterday. There is likely still pork demand in China though this does complicate logistics for imports. Apr hogs traded below their 10-day moving average for the fourth session in a row but have since bounced higher for the fourth session in a row. Apr hogs are trading just off the highs of the day and are possibly making a bull flag continuation pattern.


Carol Tillmann

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