TFM Mid-Day Update May 31, 2019


Corn futures are trading lower this morning, hesitating on news that President Trump is threatening to impose a 5% tariff on all Mexican goods. Jul corn is down 6 cents to 4.30-1/4, Sep corn is down 6-1/4 cents to 4.39, and new crop Dec corn is down 5-1/2 cents to 4.46-3/4. Mexico is a huge importer of U.S. corn, so the tariff threat from the President could open the door for retaliation. Still, this does not have anything to do with corn not getting planted, and a drop of 7-10 mil acres of corn is possible. Weather models are shifting to wetter weather again, also limiting corn planting for this year. Dec corn traded as low overnight as 4.40-1/2, and has since recovered to about half way up the day’s trading range. The area around 4.50 to 4.55 in Dec corn appears to be a major point of resistance. The U.S. sold 906,800 tons of corn for the week ending May 23, up noticeably from the previous 4-week average and up 94% from the previous 4-week average. Funds bought 48,000 contracts of corn yesterday and are thought to be net long about 33,000 contracts.


Soybean futures are slightly lower this morning, recovering from some losses during the overnight session. Jul beans are down 1-1/2 cents to 8.87-1/2, Sep beans are down 1 cent to 9.01-1/4, and new crop Nov soybeans are down 1-1/2 cents to 9.14. the recent rally in corn prices has likely not been enough at this point for producers with wet ground to plant uninsured corn acreage. This could lead to increased soybean acres this year. Wet forecasts ahead could keep delaying soybean plantings, but a dryer trend in some of the northern states of the U.S. from June 5-13 could speed up soybean plantings. The Nov contract traded as low as 9.05-3/4 overnight, but has since rallied back to a near steady position for the day. The U.S. sold 455,800 tons of soybeans for the week ending May 23. This was down 15% from last week, but up 92% from the previous 4-week average. Funds bought 16,000 contracts of soybeans yesterday and re thought to be net short about 102,000 contracts.


Wheat markets are lower in sympathy with corn this morning, with Jul Chi wheat down 8-3/4 cents to 5.05-3/4, Jul KC wheat is down 4 cents to 4.75, and Jul spring wheat is down 4-1/4 cents to 5.59-1/4. The weather forecast in the great Plains is still showing greater than normal rains, which will keep the quality and disease issues as a main concern. This will likely effect the protein and quality of the KC wheat crop. However, the IGC raised their global grain production and grain stocks estimates today. Jul Chi wheat closed above its 200-day moving average for the first time yesterday since October, but has since fallen back below. The KC wheat futures made their highest close yesterday since February, and are trading just off of those levels today. The U.S. sold 153,000 mt of wheat for the week ending May 23. This is up sharply from last week and up 63% from the previous 4-week average. Funds bought 13,000 contracts of wheat yesterday and are thought to be net short about 21,000 contracts.


Cattle markets are slightly higher so far this morning, recovering mildly from yesterday’s technical breakdown. Jun lives are up 27 cents to 110.35, Aug lives are up 27 cents to 105.32, and Oct lives are up 17 cents to 105.85. Aug feeders are down 70 cents to 137.52, and Sep feeders are down 12 cents to 138.40. Beef values have been very choppy, and cash trade has been slipping. Today’s buying action in the live cattle markets appears to be a bit of short covering or bargain buying after yesterday’s sharply lower closes. The best traded Aug live cattle contract has traded so far today as its lowest level since April 2018. Aug feeders traded at a new all-time low, but have since taken back much of the early session losses. Beef export sales for this week were seen at 21,600 tons.


Hog markets are showing moderate losses again today, with Jun down 1.10 to 82.57, Jul is down 80 cents to 87.07, and Aug hogs are down 85 cents to 88.05. Jun hogs have fallen back below their 200-day moving average support levels, while the Jul and Aug contracts have fallen back below their 100-day moving average levels. Carcass values have been losing value quickly, and with news today that the U.S. will be putting tariffs on Mexico is very negative. Mexico is a big buyer of U.S. pork, so with tensions between the U.S. and China and now the U.S. and Mexico, pork supplies could back up quickly.



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