TFM Sunrise Update 5-21-20


Corn futures were flat again overnight in a sideways, lifeless trading cycle along contracts’ 10 and 20 day moving averages.  Weekly Export Sales will be out today with trade estimates ranging between  700,000 and 1.40 million metric tons (MMT) combined for old and new crop sales last week.  Last night’s GFS weather model run showed a large ridge of high pressure build into the central U.S. May 31 – Jun. 4; the ridge was shown to be larger, stronger, and farther northeast than what the midday GFS model suggested and this led to the significant decrease of rainfall in a swath of the Corn Belt Jun. 2 – 4.   Traders have today and tomorrow to position themselves either in line with, or opposite of the large short Managed Money holding in corn going into the three-day holiday weekend.  The market, overall, still needs significant weather events, or news to change direction.  Most of the sentiment is bearish and China’s decision to release 4 MMT of their corn reserves next week dampens prospects of coming to the U.S. market for supplies.


Soybean futures were mixed overnight within 4-1/2 cent trading ranges.  Soybeans prices will stay in a sideways price pattern looking for an overall direction ahead of the weekend as pennants form on the daily charts featuring five days in a row of higher lows.  Weekly export sales are expected to be between 800,000 and 1.60 MMT, combined for old and new crop.  The soybean product markets may provide support as both soybean oil and, in particular, meal charts are oversold and have recovery potential.


Wheat futures gained stature overnight following a dramatic price hike in Wednesday’s trade as strength in global wheat prices trigger short-covering.  The return of dryness concerns in Black Sea region, shrinking production forecasts in Russia, and this week’s U.S. winter wheat tour were major factors in turning the bearish tide mid-week.  Global supplies remain heavy and may create some headwinds to the rally.  However, July Chicago wheat, up as much as 7-12/4 cents last night to a 1-1/2 week high of 5.21, has jumped 25 cents since yesterday’s intra-session low was put in.  The contract’s 200-day moving average is at 5.28-1/2 and will serve as a bullish target.  July KC wheat was up to 4.60-3/4 last night on gains of 7-1/2 cents.  Sept MPLS got to 5.35-1/2, up 3-3/4.  Trade estimates for this morning’s USDA Weekly Export Sales are 100,000 to 250,000 tons for old crop; 100,000 to 400,000 tons for new crop.


Live cattle futures are called lower after settling for the lower half of the recent consolidation trading pattern of the past two weeks in all but the front month live contracts.  Bearish developments in feeders are also noted.  Today is the last trading day for May feeders.  Long liquidation on Wednesday is expected to linger this morning with some position-squaring noted ahead of Friday’s cattle-on-feed report.  Cash cattle trade stays strong with $120/ cwt trade in multiple regions on Wednesday.


Lean hog futures are called choppy to lower following rather tame trade and limited daily price movement in Wednesday’s session.   A jump in retail values ushered in some buying into the hog markets on Wednesday, and weekly hog weights finally slipped a little, but cash weakness limited the potential rally and kept the trend since May 4th clearly lower.  Look for more ‘trend’ trading today, unless traders square-up short positions early ahead of the three-day holiday weekend.


Matthew Strelow

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