TFM Midday Update 5-15-20


Corn futures are choppy to mostly higher today, with July up 0.0125 to 3.1875, September up 0.005 to 3.225 and Dec unchanged at 3.3175. Energy prices are helping to support corn, with crude oil futures breaking through some long term resistance at yesterday’s close. There are also reports that several ethanol plants across the country have recently begun to ramp up production, but planting is still well ahead of schedule, and many dry areas of Brazil got rain over the past few days. Today’s trading range has been very tight, but July corn is trying to break through its 10 and 20-day moving average resistance levels. A close above those levels does not guarantee a changing trend (as evidenced by Tuesday’s session), but it would be a solid way to end the week. Funds were thought to have sold about 8,000 contracts of corn yesterday.


Soybean futures are only slightly higher at mid morning after a more impressive bounce earlier today. July beans are up 0.015 to 8.385, August beans are 0.0175 to 8.4075 and Nov beans are up 0.0125 to 8.45. Malaysia lowered export duties overnight which boosted palm oil and soybean oil prices, and Chinese purchases of US beans have become more frequent in recent weeks. However, US weather has been nonthreatening so far, and many analysts are expecting final US acreage to come in higher than the current USDA estimate at 83.5M. July soybeans tested their 10 and 20-day moving average resistance levels overnight, trading as high as 8.43. Prices were unable to break through that resistance, and have since set back to the lower third of the day’s range. Momentum indicators are pointing lower, but it still appears as though traders are hesitant to take beans below long-term support from March. Funds were though to have sold about 1,000 contracts of soybeans yesterday.


Wheat markets are mixed to mostly lower this morning, with July CHI wheat down 0.03 to 4.99, July KC wheat is down 0.005 to 4.5125 and July MPLS wheat is unchanged at 5.08. The market may have priced in better weather in most areas of the US , but there is talk that the southern Plains may be somewhat dry again. Parts of Russia and Ukraine are also dry which helped wheat futures to stabilize yesterday. However, a weak morning for the grains complex, as well as a lack of global supply tightness has caused wheat prices to drift back lower today. CHI wheat futures jumped higher overnight after an impressive close higher yesterday. Yesterday’s price action looked as though wheat prices were trying to dig out a near term bottom. Prices today have held yesterday’s lows but the action does not look very strong. KC and MPLS futures are trading within yesterday’s ranges so far and are near the lows of the day. Funds were thought to have been net even in CHI wheat during yesterday’s session.


Cattle markets are mostly higher this morning, with June lives up 1.92 to 96.05, August lives up 0.22 to 97.22 and Oct lives down 0.07 to 99.87. May feeders are up 0.35 to 124.15 and August feeders are up 0.62 to 131.65. Slaughter levels have continued to improve this week which has helped bolster demand in the country for slaughter supplies. Beef prices may have priced themselves out of strong consumer demand after rallying more than 100% in about a month. Beef prices have begun to pull back, though this should not affect beef production as margins are still extremely strong. June live cattle are still trading within their recent consolidation range despite overbought stochastics. There is still a gap on the charts that prices could fill on a pullback, but cash market strength has kept the June contract supported. Feeder markets are also within consolidation ranges but the front month futures have fallen below nearby support.


Hog markets are choppy so far today, with June up 0.50 to 59.25, July is down 0.52 to 58.27 and August is down 0.77 to 56.95. Pork values have been mixed for the past few sessions, and many are expecting a pullback soon, especially with slaughter numbers improving. Weights are also at record highs which should contribute to rebuilding pork inventories. June futures tested and held their 20-day moving average support level this morning for the second session in a row. but prices have not been able to break through the 50-day moving average resistance level. August futures are trading below their 20-day moving average support level, and the August contract is still trending lower, and is well into oversold territory.


Bryan Doherty

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