TFM Midday Update 5-1-20


Corn futures are lower this morning, unable to follow through so far on yesterday’s strength. May corn is down 0.015 to 3.10, July corn was up 0.0325 to 3.1675 and Dec corn is down 0.0325 to 3.34. While news yesterday of lower ethanol stocks for the first time in five weeks is supportive, weather forecasts are drying out in the US which should aid in planting. US plantings are already running ahead of schedule, so this will continue to pressure prices. Brazil’s safrinha corn crop has struggled a bit with dry weather, and there is talk of potential frost conditions soon as well. July corn has fallen back below the 10-day moving average support level this morning after making a strong close above it yesterday. This is somewhat disappointing and could signal a continuation of the downtrend. However, July corn has respected a near double bottom pattern so far. Funds were thought to have bought about 14,000 corn contracts yesterday.


Soybean markets look soft this morning, falling back below nearby moving average support. May beans are down 0.0525 to 8.45, July soybeans are down 0.0725 to 8.4825 and Nov beans are down 0.0525 to 8.525. Soybean traders are a bit spooked this morning by reports that President Trump is weighing retaliatory measures on China in response to coronavirus. This could destabilize recent progress with China, including the Phase One trade deal, and sizable purchases expected soon. Argentina’s Parana river is at its lowest level in 50 years and is causing logistical issues with shipping soybeans. July soybeans have fallen back below their 20-day moving average level after making their first close above it yesterday since April 9. A close below would weaken the technical picture, though the trend may still be sideways to higher as long as prices hold the 10-day moving average support level. Funds were thought to have bought about 11,000 contracts of soybeans yesterday.


Wheat markets are moderately lower today, though are still hanging within yesterday’s ranges. July CHI wheat is down 0.075 to 5.1675, July KC wheat is down 0.055 to 4.825 and July MPLS wheat is down 0.0725 to 5.0825. Kansas is forecast to see rains over the next week which should provide ample moisture to get through some dryness in extended forecasts. Recent rains in Europe and the Black Sea have also alleviated some production concerns. The US dollar is lower this morning, but the Russian ruble made a bearish key reversal yesterday and may weaken further. July CHI wheat is holding its lower Bollinger band as support while KC and MPLS wheat futures are holding firmly within their recent sideways consolidation ranges. Funds were thought to have bought 5,000 contracts of CHI wheat yesterday.


Cattle futures are sharply higher this morning, with July lives up 3.00 to 88.95 and August lives up 94.50. May feeders are up 2.70 to 119.80 and August lives are up 3.12 to 129.62. Beef values have continue d to rocket higher and slaughter is falling further behind schedule while animals back up in the country. However, Ag Secretary Perdue made comments yesterday that he is expecting plants to reopen in a matter of “days, not weeks”, with new measures in place to keep lines running. He expects lines to be running about 10% behind their usual pace vs 30%+ chain speed reductions at the moment. June live cattle are locked at limit-higher prices and have moved beyond their upper Bollinger band resistance level. Stochastics are nearly overbought as well. May feeders are trying to break above their recent range, and are at their highest levels since April 17.


Hog markets are showing impressive gains so far this morning, with June up 3.65 to 62.60, July is up 2.75 to 63.25 and August is up 1.62 to 64.32. Export demand has been very strong, and slower slaughter pace has kept pork values rallying. Since slaughterhouses are now deemed critical infrastructe, most traders are optimistic that kill lines will be able to ramp up soon, helping to clear some backed up slaughter supplies. June hogs are trading at their highest levels since March 30, and are testing their 50-day moving average resistance for the first time since late January. Prices are vulnerable to a technical pullback, with June trading above its Bollinger band range, and stochastics extremely overbought as well.


Kelly Rubisch

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