TFM Midday Update 2-18-20


Corn futures are moderately higher this morning, keeping within their recent range. Mar corn is up 3-1/2 to 3.81-1/4, Jul is up 3-1/4 to 3.88-3/4, and Dec is up 2-3/4 to 3.91-1/2. China is offering trade war tariff exemptions on nearly 700 U.S. goods as of today, though coronavirus concerns are still keeping commodity markets shaken. Brazilian growing areas are beginning to dry out, which should speed up safrinha corn planting. Strong domestic demand is helping to bull spread markets lately. Mar corn is trading back above its 10-day moving average level after falling below last week. Corn prices are still well within their recent ranges, with momentum indicators pointing sideways. Speculative funds were thought to have sold about 13,000 contracts of corn on Friday.


Soybean futures are slightly lower in two-way trade this morning, with Mar down 1/2 cent to 8.93-1/4. Jul beans are down 3/4 cent to 9.14-3/4, and Nov is down 1 cent to 9.21-1/2. Soybeans found support overnight on the announcement that China will be granting tariff exemptions on U.S. goods starting March 2. Markets are also supported by a truck driver strike in Brazil and lower crushing activity in Argentina, though a large Brazilian crop is weighing on prices. The vast majority of private and state agencies are expecting this year’s Brazilian crop to be a record due to expanding acreage. Mar soybeans have tested and held their 20-day moving average support level so far this morning but have been unable to climb above the range started late last week. Jul beans have put in their third consecutive unsuccessful test of their 20-day moving average resistance level so far today. Speculative funds were thought to have sold about 7,000 contracts of soybeans yesterday.


Wheat markets are sharply  higher this morning, with Mar Chi wheat up 15-3/4 to 5.58-1/2. Mar KC is up 12-1/4 to 4.77-3/4, and Mar spring wheat is up 7-1/2 to 5.33. Crop conditions in the U.S. do not seem to be of much concern for most traders currently, but news that China will issue tariff exemptions on many U.S. ag goods starting March 2 was supportive overnight. Talk of lower European production this year, as well as estimates for the Australian crop to come in at a 12-year low, are attracting buyers. Mar Chi wheat has pushed back through its 10 and 50-day moving average resistance levels and is now testing its 20-day moving average resistance level. Mar KC wheat has broken through its 10, 20 and 50-day moving average resistance levels so far this morning, and spring wheat futures have broken through their 10-day moving average resistance levels. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat on Friday.


Cattle markets are mixed to mostly lower this morning with Feb lives down 7 cents to 120.75. Apr lives are down 35 cents to 119.97, and Jun lives are down 27 cents to 111.72. Mar feeders are up 35 cents to 138.87, and Apr feeders are up 20 cents to 141.57. China will issue tariff waivers on many U.S. ag goods starting at the beginning of March, which should be a positive for beef markets. Beef markets made a nice bounce on Friday, possibly ending the steep downtrend in recent weeks. Still, cash cattle were down 2.00 to 3.00 last week, keeping direction mixed. Apr live cattle have tested their 20-day moving average resistance level for the second session in a row today and are currently holding their 200-day moving average support level. Mar feeders are trading in very quiet ranges, still holding above their 200-day moving average support level.


Hog markets are mixed to lower this morning, with Apr up 12 cents to 64.42. Jun is down 70 cents to 80.20, and Jul is down 1.00 to 81.42. China has booked an enormous amount of U.S. pork for 2020, and this is expected to continue, especially after China announced they will be issuing trade war tariff waivers in March. Still, huge domestic production is overwhelming demand, keeping cash hogs and pork values under heavy pressure. Apr feeders are still at a premium to the cash index, which is bearish unless the index can turn higher soon. Apr hogs have tested and bounced back above nearby support at the 10-day moving average, which is a solid technical development. The trend still looks higher, though futures have not moved much since the large selloff at the end of January.


Lisa Heder

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