TFM Midday Update 2-4-2020


Corn markets are trading higher this morning, with Mar up 2-1/2 to 3.81-1/4. May is up 2-3/4 to 3.87-1/4, and Jul corn is up 2-1/2 to 3.92. China’s Coronavirus outbreak and non-threatening South American weather continues to weigh on prices, though most markets appear to be shedding some of the negativity today with the stock market up sharply. Export inspections yesterday were somewhat disappointing, and cumulative expectations year to date are 52.3% behind last year’s pace. Mar corn futures traded as high as 3.83-1/2 this morning but have since backed off after an unsuccessful test of the 50-day moving average resistance level. Stochastics may be starting to bottom out, but momentum is still pointing sideways. Speculative funds were thought to have sold about 15,000 contracts of corn yesterday.


Soybean futures are trading slightly higher this morning, with Mar up 1-3/4 to 8.78-3/4. May is up 1-3/4 to 8.92-1/2, and Jul beans are up 1-3/4 to 9.06-1/4. Soybean oil prices may have put in a low, providing some support, and Brazil’s export pace is pulling back. Brazilian harvest is running about 10% behind last year, and December crush was a record for that month. Price action today has been a bit disappointing, with Mar trading as high as 8.87 overnight but then falling back to modest gains mid morning. Stochastics are still sharply oversold, and yesterday’s hook reversal was impressive. Speculative funds were thought to have bought 4,000 contracts of soybeans yesterday.


Wheat markets are trading with moderate gains today, with Mar Chi wheat up 4-1/4 to 5.59-3/4. Mar KC wheat is up 3-1/4 to 4.70, and Mar Mpls wheat is up 1-3/4 to 5.34-3/4. The U.S. dollar is higher again today, which is limiting gains, but also makes the bounce even more impressive. Export demand is strong, and forecasts for cold weather over central Russia are supportive as well. Snow cover is light after the warmest January on record. Export shipments are running 12.2% ahead of last year’s pace and 5% ahead of the 5-year average pace. Mar Chi wheat tested and held its 50-day moving average support level yesterday and is retesting resistance at the 20-day moving average today. Mar KC wheat also held its 50-day moving average support yesterday and is retesting its 10-day moving average resistance level. Mar spring wheat tested resistance at the 50 and 100-day moving average levels but has since backed off below them. Speculative funds were thought to have bought about 2,000 contracts of Chi wheat yesterday.


Cattle markets are mixed this morning, with Feb lives up 12 cents to 121.80. Apr is steady at 120.72, and Jun lives are down 5 cents to 111.95. Mar feeders are up 15 cents to 136.80, and Apr feeders are down 10 cents to 138.25. Though short term cattle supply looks relatively tight, the supply picture into the spring turns considerably heavier. Beef values are drifting to their lowest values since mid January, and cash trade so far this week has been at the low end of last week’s range. Prices gapped higher this morning but have since fallen back after unsuccessful test of resistance. Apr lives traded at their highest level since 1/27 but couldn’t hold onto the gains. Mar feeders also tested resistance at the 10-day moving average level but have since backed off and are trading at the lows of the day. Both live and feeder markets are still oversold, though the trend has not turned higher.


Hog markets are mixed to mostly lower this morning, with Feb up 52 cents to 56.82. Apr hogs are down 67 cents to 62.05, and Jun hogs are down 25 cents to 78.02. China is selling 10,000 tonnes of frozen pork from state reserves on Friday, and many are not expecting any major purchases of U.S. pork until those auctions are complete. China’s national average spot pig price is up 3% for the week so far and up 10.5% year to date. Pork values in the U.S. are drifting lower despite the jump at mid session yesterday. Apr hogs opened higher today but ran out of steam early on and are now trading at the lows of the day, back into oversold territory. Jun hogs have shown similar price action though are still holding their lower Bollinger band support level.


Lisa Heder

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