TFM Midday Update 2-3-2020


Corn futures are drifting lower this morning, following Friday’s lows amid lower momentum. Mar corn is down 3 cents to 3.78-1/4, May is down 2-3/4 to 3.84-3/4, and Jul is down 2-3/4 to 3.88-1/4. Some are calling for China to purchase U.S. corn soon due to feed needs during the coronavirus outbreak. U.S. corn is very cheap on the world export front, though the U.S. dollar is higher today. Last week’s export sales report showed sales beating the high in the market expectations, but still, prices have remained choppy. Jul corn is trading at its lowest levels this morning since 12/12, currently holding its lower Bollinger band support level. Stochastics have fallen to oversold levels, and moving average lines are crossing to the downside. Speculative funds are thought to have bought about 11,000 contracts of corn on Friday.


Soybean futures are attempting to stabilize this morning, with Mar up 2 cents to 8.74-1/2. May is up 1-1/2 to 8.88-1/4, and Jul is up 1-1/4 to 9.01-3/4. The Chinese stock market took its biggest losses overnight in over four years, as coronavirus continues to spread. China has not given any signs of making purchases of U.S. beans soon, and there were reports this morning that China may be seeking flexibility with the U.S. on phase 1 trade pledges. Still, Jul beans are trading over 80 cents below recent highs and may be trying to stabilize. Jul soybeans filled the gap Friday from late May at 9.00-3/4, though there is another gap near contract lows at about 8.80. Stochastics are giving sharply oversold readings. Speculative funds were thought to have sold about 4,000 contracts of soybeans on Friday.


Wheat markets are lower this morning, with Mar Chi down 4-1/2 to 5.49-1/4. Mar KC wheat is down 5-3/4 to 4.59-3/4, and Mar spring wheat is down 2-3/4 to 5.31. Fundamentals are still friendly, with U.S. winter wheat acreage contracting. The virus in China should have little to no impact on world wheat demand, so if the U.S. dollar can turn lower, U.S. wheat futures should find buyers. Egypt’s tender last week was filled only by France, which is weighing on international wheat futures. Mar Chi wheat is holding its 50-day moving average level this morning after its first test since 12/12. Mar KC wheat is trading below its 50-day moving average for the first time since 12/12, and a close below would be the first since 12/11. Mar spring wheat made its first close below the 50-day moving average support level on Friday since 12/13, and prices have yet to bounce back above that level today. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat on Friday.


Cattle markets are slightly lower this morning, with Feb lives down 12 cents to 21.25. Apr lives are down 22 cents to 119.45, and Jun lives are down 37 cents to 111.20. Mar feeders are down 1.22 to 134.85, and Apr feeders are down 92 cents to 136.60. Friday’s Cattle Inventory report was neutral to slightly positive, though cash trade in the country last week was down 2.00 from the previous week. Beef values are also sluggish and currently at their lowest levels since mid January. Apr lives tested their 200-day moving average support level early in the session but have since pulled back. Mar feeders are trading at the lows of the day and within just 65 cents of the recent lows made on 1/30. Both the live and feeder markets are still oversold.


Hog markets are mixed this morning, with Feb down 1.55 to 55.57. Apr hogs are down 10 cents to 61.50, and Jun hogs are up 90 cents to 77.75. Pork bellies are at their lowest levels since late September, though the CME lean hog index has put in a modest uptrend since the beginning of the year. China has still not made much in the way of large purchases of U.S. pork lately, which is weighing on markets. Feb hogs have made new lows again today and are trading near the lows of the session, while Apr and Jun have bounced a bit higher to help stabilize after the recent sell-off. All hog markets are sharply oversold though do not have a technical  sign of a bottom yet.


Lisa Heder

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