TFM Midday Update 6-1-20


Corn futures are trading a bit lower this morning, with July down 0.0225 to 3.235, September is down 0.0225 to 3.2775 and December is down 0.0225 to 3.365. Fears of less trade with China, along with less threatening weather forecasts are keeping prices on the defensive. Most traders are also expecting this afternoon’s Crop Progress report to show improving crop conditions. Energy prices are correcting a bit lower this morning after Friday’s bullish breakout. The front-month July contract has traded between resistance at the 50-day moving average and support at the 10 and 20-day moving average levels. Prices are currently in the middle of the day’s range, and though July corn has not taken out the 50-day moving average resistance level, the lack of sharp selling so far is impressive considering US-China tension. Funds were thought to have sold about 11,000 contracts of corn on Friday.


Soybean futures are trading very slightly higher so far today in a volatile, two-way session. July beans are up 0.02 to 8.245, August beans are up 0.0175 to 8.4525 and November beans are up 0.02 to 8.5375. Markets initially rallied overnight on increasing Chinese purchases of US beans lately, but news that Chinese officials have ordered major state run firms to halt purchases of US farm goods has caused the soybean futures to set back. Some are even questioning the viability of the Phase One trade deal if tensions continue to escalate. Still, the Brazilian real is rallying against the US dollar and there doesn’t seem to be much weather uncertainty baked into soybean prices at the moment. July beans have traded as high this morning as 8.49 and as low as 8.34. Prices are currently holding their 10 and 20-day moving average levels, and the 50-day moving average levels are holding strong. Momentum indicators are still pointing sideways. Funds were thought to have sold about 5,000 contracts of soybeans on Friday.


Wheat markets are soft this morning, with July CHI wheat down 0.0175 to 5.19, July KC wheat is down 0.0775 to 4.6275 and July MPLS wheat is down 0.045 to 5.205. Hot and dry forecasts for the southern Plains, coupled with developing drought conditions in parts of Kansas, Colorado, Oklahoma and Texas are not enough to stem selling today in the KC market. The lower US dollar is helping to limit losses, but the uncertainty of the future of the Phase One trade deal between the US and China is overwhelming bullish weather and export developments. CHI wheat futures sold off sharply early in the session, but checked the 20-day moving average support level and have since bounced near the highs of the session. KC wheat futures traded below nearby support at the 20-day moving average level but have rallied back above, and MPLS futures fell below the 50-day moving average support level but have been able to hold the 10 and 20-day moving averages as support. Funds were thought to have bought about 5,000 contracts of CHI wheat on Friday.


Cattle markets are mixed to mostly lower this morning, with June lives down 1.07 to 98.65, August lives are down 0.47 to 99.12 and October lives are up 0.07 to 101.50. August feeders are down 0.02 to 135.32 and September feeders are up 0.20 to 135.95. Cash cattle prices were very choppy last week, and the 5-Area Average price drifted slightly from the previous week. Despite the shorter kill week due to the Memorial Day holiday, weekly kill came in just 31,000 head less than the previous week. Beef exports have begin to pick up, and though China is a big buyer of US beef, they are generally not one of the key customers. This may keep the cattle markets somewhat shielded from the fear of souring relations. June lives are trading just off the highs of the day so far after a sharp sell off early this morning, and the August feeders are now testing their 100-day moving average resistance level after a successful test of the 20-day moving average support level.


Hog markets are showing moderate losses so far today, with June down 1.47 to 55.37, July down 1.27 to 55.72 and August down 1.32 to 55.40. The cash index is lower, which is a major source of pressure for the June contract in delivery month. Pork values are dropping due to improving slaughter and elevated weights, and elevated tensions with China are another very bearish force. There have already been reports this morning that Chinese buyers have cancelled a number of US pork orders. Still, production disruptions in Brazil are keeping prices supported as foreign importers may shift their attention to the US. July hogs are trading within a tight range so far this morning, and despite lower prices, are near the highs of the day so far. Friday’s unsuccessful tests of nearby resistance do not make the charts look friendly and prices are nearly oversold.


Bryan Doherty

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