TFM Sunrise Update 2-12-20


Corn futures are expected to trade two-sided today after trading narrowly mixed overnight. Prices remain flat and uneventful as the market marks time measuring South American weather and soon U.S. weather. Wet conditions in parts of the South could delay early corn planting. USDA provided little measure of support on Tuesday leaving ending stocks and corn for feed usage unchanged. There was an uptick in ethanol demand in the report, and we’ll get Weekly Ethanol Stats later this morning.


Soybean futures were mostly flat overnight with a slightly higher tilt after closing off session lows in Tuesday’s trade aided, in part by bean oil prices rising from oversold levels. Yesterday’s USDA report was a non-event. Attention will focus on exports, coronavirus, and South American weather. Technicals indicate prices are holding but are vulnerable to break. We’re encouraged that carryout is half of what it was a year ago. This could be a long term bullish setup, particularly if China becomes an aggressive buyer.


Wheat futures are called steady to lower on follow through. Chi wheat contracts were down slightly overnight, easing 1 to 2 cents after posting a 6-week low so far this week. KC was down 2 to 3. Confirmation of large world inventories and a negative looking chart suggest more downside. Stay defensive as the dollar continues to strengthen.


Cattle futures are called steady to lower. The technical picture was bruised yesterday and if prices fail to show rebound today, we expect further downside as concerns over heavy second quarter supplies and weaker short-term demand loom. Today’s price action could be critical.


Hog futures are called mixed. Daily slaughters are too big. We sound like a broken record but without new export activity or at least the perception of big Chinese purchases, hog prices will continue to remain choppy. Q4 export sales were outstanding. Huge domestic supplies have helped drive the market sharply lower, but the cheap price combined with China’s high priced pork should suggest aggressive imports.


Carol Tillmann

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