TFM Midday Update 5-22-20

The CME and Total Farm Marketing offices will be closed Monday, May 25, 2020 in observance of Memorial Day


Corn futures are trading a bit lower this morning, with July down 0.0125 to 3.165, and September and December corn are both down 0.015 to 3.215 and 3.315 respectively. Plants are ahead of schedule, but continued forecasts for rains in the northern Corn Belt may pull some acreage to other crops. Energy price are lower today which are hurting ethanol margins, and Memorial Day travel is expected to be at a record low. July futures have shown very sleepy price action lately and today is no different. July futures have traded within a range so far this morning of just 0.0225, just below nearby resistance. Momentum indicators are pointing lower, but it doesn’t appear that current price levels are likely to attract strong new selling action at this time of year. Funds were thought to have sold about 8,000 contracts of corn yesterday.


Soybean futures are slightly higher this morning, making an impressive run at a recovery from weakness yesterday and overnight. July is up 0.025 to 8.375, August is up 0.02 to 8.4025 and November is up 0.02 to 8.4725. Soybean traders have been nervous lately over the sense that tensions between the US and China are ramping up. Political tensions in Hong Kong are also flaring up which could cause disruptions between the US and China. However, at the annual gathering of Chinese lawmakers last night, the Premier reiterated China’s commitment to working with the US on the Phase One trade agreement signed last year. Technically, today’s session looks quite interesting. Divergence in the RSI indicator was alluding to waning downward momentum after yesterday’s close, and buyers stepped in quickly today on successful tests of support. The trade session is far from over, but the mid morning recovery is impressive. Funds were thought to have sold about 10,000 contracts of soybeans yesterday.


Wheat futures are down hard this morning, failing to regain any of the early week strength. July CHI wheat is down 0.105 to 5.055, July KC wheat is down 0.0925 to 4.4525 and July MPLS wheat is down 0.05 to 5.13. Rains in the central Plains over the next five days (at least) should help to improve conditions and alleviate any pesky dry conditions. The US dollar is higher today in recovery from recent losses. Technically, the wheat markets looked very vulnerable after a strong open yesterday and very weak closes. Still, pressure today was more than many were expecting. July CHI wheat held its 50-day moving average support level yesterday but has already fallen below the 10 and 20-day moving average support levels. KC futures tested their 10-day moving average resistance levels this morning and have fallen sharply lower while the spring wheat markets try to hold their 10 and 20-day moving average support levels. Funds were thought to have bought about 2,000 contracts of CHI wheat yesterday.


Cattle markets are choppy this morning, with June lives up 0.30 to 98.70, August lives are up 0.25 to 97.87 and October lives are down 0.17 to 99.45. August feeders are down 0.15 to 128.85 and September feeders are up 0.40. Higher slaughter this week has lead once again to higher mid week cash trade. There was trade reported yesterday in multiple states at 120.00, the high end of last week’s range. This could even build through the end of the week to higher prices. Choice beef prices were down hard again yesterday afternoon, but Select values have been rallying which suggests that the higher-priced Choice meat has priced itself out of strong consumer demand. June live cattle are trading in a quiet inside session so far today, and though stochastics are still overbought, they have done a good job of avoiding a sell off. The discount to cash is likely the key, especially as we move closer to delivery month. August feeders are trading in the middle of the day’s range, trying to stem the losses taken yesterday.


Hog futures are moderately lower so far today, with June down 0.42 to 58.92, July is down 1.05 to 56.12 and August is down 0.97 to 54.35. The cash index is lower for the fifth session in a row, and pork values are continuing to pullback despite a positive Cold Storage report. Yesterday’s Export Sales report showed net cancellations instead of sales driven mostly by heavy cancellations by China. This is concerning, especially given the recent tensions between the US and China. June futures are currently testing their 20-day moving average resistance level, and have so far held their 10 and 50-day moving average support levels. A successful breach of resistance could turn the trend higher, especially given oversold stochastics.


Bryan Doherty

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