TFM Sunrise Update 5-15-20


Corn futures were mostly steady overnight and have been consolidating with a weaker bias this week.  Dec, at 3.32 is down a nickel for the week, influenced by other grains and non-threatening weather.  All in all, corn is hanging in there with Managed Money holding a sizable short position in the market and energy prices ticking higher.  There were reports that several ethanol plants are ramping up production and weekly export sales are running better than needed to meet USDA’s marketing-year target.  Look for choppy, two-sided action as the corn market trends sideways.


Soybean futures were firm overnight with Nov up 3 cents to 8.46-3/4 which is where the contract’s 20-day moving average is trending slightly lower.  Beans are down about a dime for the week.  Despite improved Chinese demand bean prices have struggled this week on competition from Brazil and a stronger dollar versus the Brazilian real, making the Brazilian soybeans more competitive to the global export markets.  This has been a source of pressure in meal this week as those contracts slump toward contract low support.


Wheat futures were up 3 to 5 cents overnight in a mild technical correction from a week’s-worth of losses.  Heavy global supplies of wheat have embattled the market and sent price discovery toward key support levels.  Wheat has become technically oversold and due for a correction.  However, the market is subject to a break to a lower level if support fails.  July CBOT wheat is back above 5.00 at 5.06 following a brief drop below that level yesterday.  Support lies at 4.94-1/4, the low from March 16.  July KC wheat is at 4.55 and is also below all of it’s moving averages, as is July MPLS wheat currently trading 2 higher at 5.10.


Live cattle are futures called steady to firmer.  Early indications are for cash trade to be steady to firmer and as high as $114/cwt, keeping support in the June contract which is trading at a deep discount at 94.00.  Deferred contracts have been under pressure with fears that the slaughter pace backing up could linger into the longer range months.  Retail values have seem to topped out in value this week, with improved slaughter as plants reopen from COVID-19 issues.


Lean hog futures are called mixed.  The strong move in the cash index and strength in hog retail carcass values keep support in the front month contracts, but July has been trending lower while losing ground 6 of the last 8 sessions from the May fourth peak.  Deferred contracts are seeking direction with concerns about the slaughter pace backing up hogs into the summer months.  The hog slaughter pace is down about 300,000 head from last year for the week.  Meanwhile, China continues to lead the world in U.S. pork imports followed by Mexico and Japan.


Matthew Strelow

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