TFM Sunrise Update 5-19-20


Corn futures called mixed to firmer after trading mostly unchanged overnight.  The technical picture remains neutral, though holding contract low support in a seasonal window where prices potentially move higher due to all the uncertainty around what the growing season holds.  The dollar is lower this morning, falling to a two-week low and giving commodity prices some support.  Crude oil is also viewed as an aid to underlying support for corn as that market continues to make a comeback with the likelihood of more people driving automobiles in the coming weeks and months following the Covid-19-related shutdown.  Corn planting progress was pegged at 80% complete last week, within expectations, though areas in the eastern corn belt are saturated and much of the far northern states lag in getting the crop in the ground.


Soybean futures were higher overnight, but are now trending weaker late in the overnight session.  We view this market as being in a consolidation price pattern awaiting its next direction.  Nov beans continue to find an equilibrium area of price at the 8.50 level, and soybean oil contracts are trading at a fresh 5-week high.  A 2% rise in the Brazilian real coupled with improved demand prospects are supportive, but need more confirmation in terms of export sales.  Soybean planting is at 53% complete vs 5-year average of 38%.


Wheat futures were mostly flat overnight but look to stay under pressure amid heavy global supplies of wheat. The technical picture supports the potential for more selling interest after falling below the $5.00 price level in July Chicago contract, leaving the market vulnerable to additional long liquidation.  The winter wheat crop is rated 52% good to excellent, down 1% from last week.  Spring wheat is at 60% planted, 20% below 5-year pace of 80%.


Live cattle are futures called steady to firmer after June live cattle traded to its highest point since March 11 on Monday.  Strength in last week’s cash market has June, at 98.72 playing catch-up from the wide cash-to-futures basis.  Improving technicals and money flow are supportive to the cattle market.  Meanwhile, retail values are tumbling quickly with more supplies available, and overall product demand was brisk on Monday.


Lean hog are futures called mixed while trending lower.  June hogs, at 57.65 will need to penetrate 59.57 to break the down-trend channel that has formed since trading above 60.00 two weeks ago.  Slaughter chain-speed concerns keep selling pressure alive in the hog market as the lean hog market has been trying to get control on the growing supply of readily available hogs.  Slaughter paces have improved, and retail values are supportive.


Matthew Strelow

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