TFM Midday Update 5-29-20


Corn futures are down this morning after an unsuccessful test of overhead resistance overnight. July corn is 0.035 to 3.24, September corn is down 0.0325 to 3.29 and December corn is down 0.0275 to 3.375. Forecasts for hot temperatures and mixed precipitation are being watched closely. The Brazilian real is lower today and energies are choppy which are also limiting some buying today. The July corn futures contract tested the 50-day moving average but were unable to make a close above that line. July briefly traded above the 50-day moving average resistance level overnight but has since fallen back below in somewhat disappointing price action. Funds were thought to have bought about 28,000 contracts of corn yesterday, and short covering may continue into the early summer.


Soybean futures are moderately lower, with July down 0.0725, August is down 0.065 to 8.4275 and November is down 0.055 to 8.505. Even though there are still simmering tensions between the US and China, China still made a sizable purchase of 132,000 tonnes of US beans this morning. The bullish tilt to this is partially offset by even larger Chinese soybean purchases from Brazil this week. Most of the Corn Belt will see hotter than normal temperatures over the next two weeks, so moisture totals and locations will be watched very closely. Brazil is struggling with coronavirus outbreaks which will likely disrupt shipping logistics. July beans have fallen below the 10 and 20-day moving average support levels this morning, and a close below would be the first since last Friday, and this would likely turn momentum lower. Funds were thought to have sold about 3,000 contracts of soybeans yesterday.


Wheat markets are mostly higher so far this morning, with July CHI wheat up 0.0325 to 5.18, July KC wheat is up 0.04 to 4.68 and July MPLS wheat is unchanged at 5.195. Hot and dry forecasts for the southern Plains in particular have helped KC wheat rally against the Chicago wheat. There are also some concerns about European wheat conditions. The US dollar has sold off to the lowest level since March 16 which has helped attract interest from foreign buyers. July CHI futures back tested their 20-day moving average support level early in the session, and prices have since rallied and are trading at the highs of the day. July KC wheat tested the 20 and 200-day moving average support levels and is trading at its highest levels since May 12. Spring wheat futures are testing their 50-day moving average resistance after drifting lower to start the day. Funds were thought to have bought about 11,000 contracts of CHI wheat yesterday.


Cattle markets are correcting lower from impressive closes yesterday above long-term resistance levels. June lives are down 1.00 to 100.47, August lives are down 1.67 to 99.47 and Oct lives are down 1.50 to 101.30. August feeders are down 1.12 to 134.37 and September feeders are down 1.02 to 135.22. Cash cattle have traded so far this week in a very wide range from 110-120 which has helped to keep the futures trend relatively choppy near recent levels. Tightening packer margins due to the sharp pullback in beef values is a major source of pressure with futures prices at current levels. Increasing coronavirus disruptions in Brazil will keep US exports strong which could help to lower frozen stocks. June live cattle are drifting lower towards their 100-day moving average support level. Yesterday’s close above that level was the first since January. August feeder cattle are down, but are still trading within yesterday’s range. The trend higher is still intact.


Hog futures are trading with moderate lower this morning, with June down 0.65 to 56.27, July hogs are down 0.82 to 54.82 and August hogs are down 0.72 to 54.30. The cash Index has turned higher, and if the trend can continue, that should be a major source of support for the June contract in delivery month. Increasing slaughter pace will likely pressure pork prices moving forward and this is not bullish for hog prices. Still, tight short term supplies are supportive. June hogs have traded in a very tight range today after falling back below the 10 and 50-day moving average support levels at yesterday’s close. Yesterday’s sell off has pulled stochastics into oversold territory which will make the hog markets vulnerable to technical bounces.


Kelly Rubisch

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates