TFM Middays 5-26-20


Corn futures are putting together a rather impressive morning so far, with July up 0.0425 to 3.2225, September is up 0.0425 to 3.27 and December is up 0.0375 to 3.365. Surging energy prices are helping to strengthen ethanol margins, and rain across many areas of the Corn Belt may not do any favors to later corn plantings. Still, weather forecasts look mostly favorable for the time being. July corn has traded through its 10 and 20-day moving average resistance levels this morning, and is currently just off the highs of the day. Prices are testing the upper Bollinger Band resistance levels. Too much movement above the Bollinger Band range could leave prices overbought, but a breakout higher could also trigger a fair amount of fund short-covering, especially into the early summer. Funds were thought to have been net even in corn on Friday.


Soybean prices are finding a nice bounce today after disappointing weakness to end last week. July beans are up 0.1275 to 8.46, August beans are up 0.1225 to 8.485 and November beans are up 0.11 to 8.555. Brazilian growing areas got massive rains over the weekend, and this has many worried about crop conditions. There is also a growing consensus that Brazil has oversold their current crop and has been an aggressive marketer of new crop beans as well. Excess rains in parts of the US lately may move some acres over to soybeans, but there doesn’t appear to be much weather uncertainty priced into the market. July soybeans punched through nearby resistance this morning at the 10 and 20-day moving average levels. Stochastics have turned higher after nearly dipping into oversold territory late last week. Funds were though to have sold about 2,000 contracts of soybeans on Friday.


Wheat markets are mixed this morning, with July CHI wheat down 0.025 to 5.0625, July KC wheat is  up 0.0025 to 4.4475 and July MPLS wheat is up 0.0275 to 5.1575. The higher US dollar is likely limiting possible gains today based on forecasts for above-normal temperatures and below-normal precipitation for the next two weeks in the Plains. There were reports that Russia still has 850,000 tonnes of wheat to export before their export quota is filled, which is disappointing because most were under the impression that Russia would not export any more wheat until Q3. July CHI wheat surged higher in the early morning, but has since set back, so far holding the 10-day moving average support level. July KC wheat is trying to stabilize after sharp losses Friday and MPLS wheat made a successful test of support early in the day and is now trying to turn the trend back higher. Funds were though to have sold about 5,000 contracts of CHI wheat on Friday.


Cattle markets are moderately higher this morning, with June lives up 0.95 to 98.65, August lives are up 1.10 to 98.42 and October lives are up 1.42 to 100.82. August feeders are up 3.30 to 132.10 and Sep feeders are up 3.07 to 133.22. Friday’s Cattle on Feed report was seen as very neutral and is not having much impact on price action today. Cash prices were softening up a bit by the end of last week despite increasing slaughter capacity. Beef prices are still very high and are likely suppressing some consumer demand. June live cattle are trading just off the highs of the day so far and are still within Friday’s trading range. Stochastics are overbought though the discount to cash should continue to support, especially into delivery month. August feeders have broken back through the 10 and 20-day moving average levels and may try to continue a bullish breakout.


Hog futures are showing solid gains so far today, with June up 0.97 to 59.75, July is up 2.10 to 58.02 and August is up 1.65 to 55.92. The cash Index is still trending lower. There are mixed feelings on trade relations between the US and China right now, but Chinese pork imports in April were up 170% from a year ago. Carcass cutouts are also continuing their trend lower, but this is not very negative for hog futures because it should help to boost consumer demand. Slower slaughter than usual is still concerning, as hogs are backing up in the country and will cause a surge in pork production down the road. June hogs are still stick in the very tight range between the 10 and 50-day moving average support levels and the 20-day moving average resistance level. Stochastics are still pointing higher, but the slide in cash values may limit the June contract’s ability to rally into expiration. If July and August can hang on to gains into the close, bullish key reversals may signal the trend is turning higher out of oversold levels.


Bryan Doherty

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