TFM Midday Update 5-8-20


Corn futures are a bit higher today and are trying to break through some long term resistance. May corn is up 0.0525 to 3.2125, July corn is up 0.0325 to 3.215 and Dec corn is up 0.0275 to 3.3675. Traders are more hopeful today that China will be a strong buyer of US corn and DDGs later this year, especially after yesterday’s export sales report showed a weekly sale of 686,000 tonnes of corn to China. Stronger energy prices are also supportive, and ethanol production has bounced in recent weeks. Still, planting progress is well ahead of schedule and this will continue to limit gains. July futures are testing their 20-day moving average resistance level this morning, and a close above would be the first since March 4. Dec corn is also testing its 20-day moving average resistance level and a close above would be the first since Jan 23. Funds were thought to have bought about 12,000 corn contracts yesterday.


Soybean prices are following through nicely on Thursday’s strength, and are pushing through some important resistance. May beans are up 0.105 to 8.52, July beans are up 0.075 to 8.5175 and Nov beans are up 0.08 to 8.6525. There are reports that China and US officials are negotiating on trade despite recent tensions which should be bullish. Weather related shipping delays have likely shifted China’s attention to the US despite the weakness in the Brazilian real. July beans are trading at their highest levels this morning since April 23 and are well above the 20-day moving average resistance level. November soybeans are at their highest prices since April 16, and the lack of a large carry in the market lends itself to anticipated supply tightness this fall. Funds were thought to have bought about 10,000 contracts of soybeans yesterday.


Wheat futures are moderately lower this morning despite strength in other grains today. July CHI wheat is down 0.035 to 5.19, July KC wheat is down 0.0175 to 4.77 and July MPLS wheat is up 0.0225 to 5.1325. Forecasts showing plenty of moisture in the next two weeks in the US is a major limiting force today, and dryness concerns in most other major wheat-growing countries have been alleviated recently as well. However, there are some concerns about frost over the weekend, and this has kept prices choppy. July CHI wheat prices opened back below their 10-day moving average level and are trading just off the lows of the day below that resistance. July KC wheat is still holding within its sideways range and spring wheat futures are retesting highs from yesterday. Funds were thought to have bought about 5,000 contracts of CHI wheat yesterday.


Cattle markets are mixed this morning, with June lives up 4.30 to 98.27, August lives are up 1.22 to 101.17 and Oct lives are up 0.22 to 104.20. May feeders are down 1.60 to 128.67 and August feeders are down 0.50 to 137.65. Cash cattle trade has made a significant rally this week. Cash cattle made their peak last week at 105.00, but traded at 107.00 on Wednesday and as high as 115.00 earlier this morning. Slaughter has picked up a bit from last week, so packers are doing their best to take advantage of record high beef prices while they have the opportunity. China’s beef purchases from the US this year are running at a record high as well. June lives are at their highest prices today since March 25 in a very volatile session. Prices gapped sharply higher, quickly sold off hard, and have since rallied again after cash trade news. May feeders are trading in the lower third of the day’s range but are still overbought.


Hog markets are moderately lower this morning and still trying to correct out of overbought territory. June is down 1.30 to 62.60, July hogs are down 1.92 to 61.57 and August hogs are down 2.00 to 60.65. Pork values and the cash index are sharply higher, and slaughter is slowing increasing with a few large plants reopening. The market is still worried about mass liquidation of hogs in some areas, though it is unclear how widespread this will end up being. June futures are still holding their 50-day moving average support level despite the losses so far today. Prices may be forming a bull flag continuation pattern which could point to higher prices, especially if hog slaughter can continue to reliably ramp up.


Lisa Heder

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