TFM Midday Update 5-19-20


Corn futures are a bit higher this morning, well off the session’s highs, but still finding follow-through buyers on positive closes yesterday. July corn is up 0.025 to 3.2325, September corn is up 0.0225 to 3.265 and December corn is up 0.02 to 3.3475. Yesterday’s Crop Progress report showed corn plantings at 80% complete vs 44% for the same week last year and 74% on average. This was a bit below market estimates and was slightly supportive. Dry areas of Brazil have seen rains lately, but the Brazilian real has jumped sharply higher vs the US dollar which makes US supplies more attractive for foreign importers. July corn is trading at its highest levels this morning since April 24 after two consecutive closes above its 10 and 20-day moving average levels. Dec corn is trading above those resistance levels for the first time since May 12, and a close above would be the first since January 23. Funds were thought to have bought about 3,000 contracts of corn yesterday.


Soybean futures are moderately lower this morning, with July down 0.0375 to 8.4125, August beans are down 0.03 to 8.4475 and November beans are down 0.0275 to 8.50. Planting progress was seen at 53% complete vs 16% complete for the same week last year and 37% on average. This was still below market estimates and provided some support overnight. The US dollar is under pressure vs a rallying Brazilian real. Still, prices are so far unable to hold together above the 10 and 20-day moving average levels. July beans made their first close above those resistance levels yesterday since last Tuesday, but have fallen back below this morning. Lower closes today could turn momentum lower again, but without any extremely negative news, it seems unlikely that beans could attract enough sellers to push prices below the March lows. November beans are testing their 10 and 20-day moving average support levels, and a close above would not do much technical damage at all. Funds were thought to have bought about 6,000 contracts of soybeans yesterday.


Wheat futures are mixed this morning, with July CHI wheat up 0.0375 to 5.0075, July KC wheat is down 0.0175 to 4.4475 and July MPLS wheat is up 0.06 to 5.1075. All winter wheat G/EX conditions dropped by 1% to 52% this week, but improving conditions in Kansas are likely the major reason KC wheat futures are down and CHI futures are higher. Weekend rains in the Plains will also alleviate some dry conditions for the HRW crop. The Russian ruble is continuing its rally, and the pullback in the US dollar is a positive development. CHI futures are still trading in an inside session while the KC futures are extending their current downtrends deeper into oversold territory. Spring wheat futures are testing their 10 and 20-day moving average resistance levels this morning, and a close above should turn the near term trend higher. Funds were thought to have sold about 2,000 contracts of CHI wheat yesterday.


Cattle markets are slightly lower so far this morning, with June lives down 0.55 to 98.17, August lives are down 0.60 to 98.27 and October lives are down 0.55 to 100.50. August feeders are down 0.67 to 131.87 and September feeders are down 0.70 to 133.05. Slaughter so far this week is running 9% ahead of last week but is still down 22% from the same week last year. Improving daily kills are helping to get cattle more current, with average weights dropping last week to 814lbs vs 816 the previous week. Choice boxed beef closed at the lowest level yesterday since May 4 as beef inventories begin to increase, and consumer demand pulls back due to high prices or buying restrictions. Cash cattle trade has been quiet so far this week. June live cattle are trading in a tight, inside session so far today. It looks as if new sellers are hesitant to step in front of the improving fundamentals, but overbought techncials may put a damper on rallies in the short term.


Hog futures are choppy so far this morning with June up 0.07 to 57.72, July hogs are down 0.40 to 57.25 and August hogs are down 0.27 to 56.52. Slaughter for the week so far is up 6% from last week but is still down 18% from the same week last year. The cash index is down again today despite increasing slaughter rates, which is a bit concerning. Pork values made their lowest close yesterday since May 4. June hogs closed below their 20-day moving average support level yesterday afternoon which may open up some additional downside, but for now, June is still holding the 62% retracement of the April rally. Lower momentum in July and August futures appears to be waning.


Lisa Heder

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