TFM Midday Update 5-6-20


Corn futures are drifting lower again this morning, with May down 0.02 to 3.11, July is down 0.03 to 3.14 and Dec is down 0.0275 to 3.315. Planting activities continue to progress, and energy prices are making a bit of a correction lower so far today. China has bought corn from the US lately despite reported tensions. July futures have traded within a range today of just 0.05, and after testing their 10-day moving average resistance level overnight, are drifting to new lows for the day. Despite being in a clearly defined downtrend, corn prices have not made new lows since April 21. Funds were thought to have bought about 1,000 contracts of corn during Tuesday’s session.


Soybean futures look soft this morning as prices drift toward recent lows. May is down 0.0575 to 8.325, July is down 0.07 to 8.325 and Nov is down 0.065 to 8.40. While soybean prices look cheap and China purchases have increased lately, there are still worries that renewed tensions between the US and China may undermine attempts to meet Phase One trade agreements. Given the most recent soybean balance sheet numbers from the USDA, US soybean ending stocks are still expected to decline this year, but fears of reduced demand could throw a wrench into that. July beans are trading near the lows of the day and are testing some long term support. Lows from mid-March were made at 8.29, so soybeans could be at a crossroads. Funds were thought to have been net even in soybeans yesterday.


Wheat markets are under selling pressure this morning but are holding strong within recent consolidation ranges. July CHI wheat is down 0.0675 to 5.14, July KC wheat is down 0.0725 to 4.7675 and July MPLS wheat is down 0.0375 to 5.065. The US dollar is higher today and the Russian ruble is correcting lower after its energy-driven bounce. Wheat conditions through most areas of the US are improving, and dryness concerns across Europe and the Black Sea region have died down with recent rains. Wheat is also under pressure from the rest of the grains complex. July CHI wheat is still trading within yesterday’s range, and with stochastics drifting into oversold territory, sellers may be drying up. July KC wheat futures are testing their 50-day moving average support level for the eighth session in a row, and MPLS futures are lower after an unsuccessful test of their 10-day moving average level. Funds were thought to have bought about 2,000 contracts of CHI wheat yesterday.


Cattle futures are trading mixed to mostly higher today in very quiet ranges. June lives are up 0.20 to 86.67, August lives are up 0.15 to 92.60 and Oct lives are unchanged at 96.52. May feeders are down 0.25 to 119.35 and August feeders are down 0.25 to 119.35. Beef values are still rocketing higher to record prices, but slaughter appears to have also picked up. Slaughter for the week so far is up 4% from last week which is giving many traders hope that new safety guidelines can help get plants back online, and stay online. Early week cash trade came in at 95.00, near the low end of last week’s trade. June live cattle have remained inside yesterday’s session so far today, and appear a bit hesitant to rally through resistance despite positive news regarding daily slaughter. Feeder markets are still within weeks-old ranges and are beginning to creep towards their 50-day moving average resistance levels.


Hog markets are a bit lower this morning, with June down 0.10 to 64.15, July is down 0.45 to 62.47 and August is down 0.40 to 62.27. Pork values are still rallying, though daily slaughter has not been able to rebound quite yet. Tyson’s plant in IA and Smithfield’s plant in SD are reopening this week which should help to improve demand for slaughter supplies in the country. Exports have been very strong lately, but some are growing worried that tensions between the US and China may end up slowing China’s purchases of US pork products. June hogs are still holding their 50-day moving average support level, but with stochastics deeply overbought, near term upside looks somewhat limited. However,  the trend higher is still intact, and expectations for increasing slaughter capacity is positive.


Kelly Rubisch

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