TFM Midday Update 5-27-20


Corn futures are just a bit higher this morning, with July up 0.0075 to 3.1975, September is up 0.0075 to 3.2475 and December is up 0.0025 to 3.3425. Forecasts for most of the Corn Belt are showing hot and dry conditions for the next two weeks. This could stress corn in parts of Iowa, Minnesota, the Dakotas and Nebraska that haven’t seen any rain in the past week. Corn plantings were seen yesterday at 88% complete vs the average market estimate at 90% and 84% on average. Some concerns about Brazilian safrinha corn conditions are also supportive. July futures made a disappointing close yesterday after early-session strength. July has held so far today above the 10-day moving average resistance level, but a close above does not guarantee a turning trend. Corn prices have traded above these levels recently, but the overall trend has stayed sideways. Funds were thought to have bought about 3,000 contracts of corn yesterday.


Soybean futures are trading slightly higher this morning, with July up 0.01 to 8.48, August is up 0.01 to 8.4975 and November beans are up 0.01 to 8.56. US and China trade relations are still on rocky footing, and there is an enormous amount of uncertainty regarding the outcome. China has been a big buyer of US beans lately but this of course is subject to change. Heat and dryness in the western part of the Corn Belt for the next two weeks should keep sellers a bit hesitant to push prices too low. In addition, the Brazilian real has surged to a 3 1/2 week high, making US beans more attractive for global buyers. July soybeans tested their 20-day moving average support early in the session but have since bounced back. Nearby resistance at the 50-day moving average level is still holding. A close above would be the first since January 17 and would likely lead to a technical breakout. Funds were thought to have bought 11,000 contracts of beans yesterday.


Wheat markets are mixed this morning, with July CHI wheat down 0.01 to 5.0575, July KC Wheat is up 0.03 to 4.5025 and July MPLS wheat is down 0.0225. Support from lower yield estimates from the Wheat Quality Council tour were likely offset by higher yield estimates published by Planalytics. A lower US dollar has helped to keep prices supported after winter wheat G/EX ratings increased by 2% this week to 54%. July CHI wheat tested the 20-day moving average overhead resistance earlier this morning and is currently holding the 10-day moving average support level. July KC wheat has broken through the 10-day moving average resistance level, and a close above could turn the trend higher. Spring wheat futures are making an inside session, with momentum indicators pointing sideways. Funds were thought to have sold about 1,000 contracts of CHI wheat yesterday.


Cattle markets are moderately lower so far today, with June lives up 0.77 to 100.17, August lives are up 0.72 to 99.97 and October lives are up 0.85 to 102.47. August feeders are up 1.17 to 134.47 and September feeders are up 0.82 to 135.25. A surge in cornavirus cases in Brazil has helped to keep cattle markets supported, as many are expecting slaughter disruption in Brazil to shift export business to the US. Cash cattle traded yesterday between 110.00-120.00 vs 115.00-120.00. Today’s online Fed Cattle Exchange did not yield any sales. Boxed beef prices are still plummeting with a reduction in consumer demand and increasing beef supplies. June live cattle are trading above the 100-day moving average resistance level for the first time since January 24, and a close above would be a significant technical development. August feeders are confirming yesterday’s breakout higher.


Hog prices are moderately higher today, with June hogs up 1.30 to 61.80, July hogs are up 1.37 to 60.95 and August hogs are up 1.52 to 58.72. The cash index is trending lower despite increasing daily kills which is disappointing. Hog traders are watching developments on US-China trade relations. China pork supplies are thought to be running low after large releases of state supplies this year to combat rising food prices. So far this year, China has imported 170% of the pork they imported for the same time last year. US pork values have been choppy and are holding up much better than beef prices. June hogs closed above their 20-day moving average resistance level yesterday and are continuing higher today after a test of that line earlier in the morning. July and August hogs are trading above their 50-day moving average level and closes above would be the first since late January.


Bryan Doherty

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