TFM Sunrise Update 5-1-20


Corn futures were down 2 to 3 cents overnight and are up about 4 cents for the week.  Strong weekly export sales and spill over strength from other grains and crude oil markets gave corn their strength on Thursday but, prices failed to hold early session gains and fell back from the 10 day moving average as the prospect of extremely large corn supplies and favorable planting weather limit rallies.  Mostly dry conditions in the western corn belt have allowed many producers to complete corn planting this week.  Wetter conditions are noted in the eastern belt and have been a source of slower progress though, it’s only May 1.  Outside markets this morning show stock index futures down 425 points, the dollar weaker and testing its recent lows; And, crude easing from a new overnight 1-1/2 week high.


Soybean futures gave back some of their sizable gains overnight as the trade views rallies as selling opportunities.  May beans lost 7-1/2 cents to 8.42-3/4 and is up about 12 cents for the week supported by confirmation of Chinese export interest with the purchase of 300,000 mt of U.S. soybeans for August and September delivery on Thursday.  In addition, Argentina’s Parana river has fallen to is lowest level in 5 decades causing logistical problems.  This, and a mid-week bounce in the Brazilian real has been a source of support for the entire soy complex.  July beans have pushed through 20-day moving average resistance at 8.50 and traders may be looking at that 8.50 price area as a good psychological level.  The same is true for the Nov contract where the 20-day lies at 8.55 and Nov is trading at 8.51-1/2 as of this morning.


Wheat futures posted strong reversals off early session lows for an improved technical picture on Thursday following a strong week of export sales and growing dry weather concerns in the southern Plains.  In addition, a sharp selloff in the dollar improves export potential.  However, global wheat supplies are still limiting factors that create headwinds to rally attempts.  Prices softened overnight with Chi and KC down 6 to 7 cents, Mpls down 3 to 4.  For the week, July Chi wheat is off 15 cents, July KC down 2; And, July Mpls down 4.  Nearby May winter wheat contracts are firming while in their respective delivery periods.


Live cattle futures are called steady to higher with the new lead month (June) taking over where May futures left off, trading a deep discount to where ever the cash market value ends up.  Strong retail values and June futures’ discount to the cash market brought money flow into cattle markets on Thursday.   The prospect of packing plants starting to reopen help curb fears of an excessive cattle supply which will still take time to work through.  This week’s 3 day total is 221,000 head, 35,000 under last week’s low number and 140,000 under the 3 day total last year.  With President Trump’s order and the benefit of safety improvements in the plants, one can expect the restoration of more normalized volumes.


Lean hog futures are called mixed to lower as the daily charts look primed for some consolidation after a rocky road of trading including sharply higher closes yesterday.  A strong retail market and firm cash provides support to the market in general.  Weekly export sales of 50,000 mt helped provide the higher settlements on Thursday.  Market participants will be watching news about the prospects of processing plants beginning to reopen and get the supply chain moving again which would also be supportive.


Kelly Rubisch

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