TFM Midday Update 5-11-20


Corn futures are mixed this morning, with May up 0.005 to 3.195, July is down 0.0025 to 3.19 and December is down 0.005 to 3.355. Front month crude oil and front month ethanol futures are higher, but deferred contracts are beginning to drift. Trade relations with China have begun to improve over the past two weeks despite public tensions. Planting progress is moving along ahead of schedule, though cold temperatures over the past few days may slow things down a bit. July corn futures made their first weekly close higher on Friday in three weeks, and the trend has begun to flatten out. Unsuccessful tests of the 20-day moving average were a bit disappointing and may be contributing to the lack of buying today. Traders are likely closing out positions ahead of tomorrow’s USDA Supply and Demand report which will likely determine the trend in the near term. Funds were thought to have bought about 5,000 contracts of corn on Friday.


Soybean futures are moderately higher so far this morning, with May up 0.0625 to 8.55, July is up 0.0575 to 8.5625 and November beans are up 0.045 to 8.60. Traders are optimistic that China will continue to be a bigger buyer of US beans, and continued negotiations between US and Chinese trade officials have been supportive. Tomorrow’s USDA Supply and Demand report is expected to show 2020 ending stocks anywhere from 300mbu to 683mbu. With such a wide range of estimates, an outcome near either end of the range could make for a volatile session. July beans tested their 50-day moving average resistance level overnight but have since settled in just below. Stochastics are nearly overbought, but the trend is higher, and last week’s successful test of long term support was impressive. Funds were thought to have bought about 6,000 contracts of beans on Friday.


Wheat markets are mixed to mostly lower this morning, with July CHI wheat down 0.015 to 5.205, July KC wheat is down 0.03 to 4.77 and July MPLS wheat is 0.025 to 5.185. Wet forecasts last week were not able to attract much in the way of new selling action. The Russian ruble is lower this morning, and the US dollar appears to be recovering from recent pressure. A positive tone to trade relations with China is providing some support, even though US wheat has not been a major focus for China lately. July CHI wheat traded higher overnight but couldn’t punch through some moving average resistance levels and has since fallen back below it’s 10-day moving average support level. KC wheat futures are still firmly within their recent trading range and spring wheat futures are continuing their breakout higher. Funds were thought to have sold about 1,000 contracts of CHI wheat yesterday.


Cattle markets are taking sharp losses to start the week after some toppy-looking closes last Friday. June lives are down 0.97 to 93.67, August lives are down 2.25 to 97.95 and Oct lives are down 2.65 to 101.65. May feeders are down 3.50 to 124.40 and August feeders are down 2.95 to 134.00. Beef values are still surging to record highs, and live cattle futures are at an even wider discount to the cash market after a 10.00 jump in the country last week. Slaughter numbers are slowly increasing which should continue to support the cash market but will be slower to alleviate beef shortages. Last Friday’s closes, though higher, were well off the day’s highs and made futures look vulnerable to a technical setback. Stochastics are still overbought and futures are well above their Bollinger Band range. Follow through selling will likely take cattle prices lower in the near term despite growing fundamental strength.


Hog markets are moderately lower today, with June down 0.50 to 61.20, July is down 0.95 to 60.77 and August is down 1.15 to 59.27. Pork values are at their highest levels since October 2014, and with slaughter plants gradually coming back online, the cash index is rallying. Even though China spot pig prices are selling off, China has still been a major buyer of US pork this year. Technicals look a bit sour today, with June futures slipping below the 10 and 50-day moving average support levels. A close below could open up some additional downside in a correction from current overbought levels. Deferred contracts look a bit more negative, trading at the lows of the day and well below support.


Kelly Rubisch

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