TFM Sunrise Update 5-22-20

The CME and Total Farm Marketing offices will be closed Monday, May 25, 2020 in observance of Memorial Day


Corn futures were off a penny overnight and are unchanged for the week heading into the three-day Memorial Day holiday weekend.  Further weakness in the soybean market could spill over into the corn market and test this week’s lows.  Dec corn, at 3.31-3/4, is one cent above this week’s low and 6-1/4 cents above the contract low from April 21 while now trading below the 10 and 20-day moving averages.  Today is the last trading day for June options in grains.  Meanwhile, this market is acting like more of a follower overall, being influenced by the movement in wheat and outside markets.  Crude is down 1.89, giving back half of this week’s rally.  The dollar is showing a direct opposite move for the week; And, stock index futures have been flat since Tuesday.  Managed Money is estimated net short 238,000 corn contracts heading into today’s trade.


Soybean futures are down 3 to 4 cents this morning and breaking near-term support as the difficult close on Thursday and new contract lows in meal overnight opens the door for more technical selling and long liquidation.  Managed Money is estimated net long 20,000 soybeans; net short 20,000 lots of soymeal, and; net short 3,000 soyoil.  Rising tensions between the United States and China over the corona virus outbreak have soybean markets on the defensive and raising red flags regarding China not meeting the terms of the Phase 1 deal.  Nov beans are now at a fresh two-week low of 8.42 and have slipped below the contract’s 10 and 20-day moving averages.  Though still in a sideways near-term trend, a bearish target lies at the contract low of 8.31 from May 21.


Wheat futures saw their mid-week rally collapse overnight after settling well off their session highs in Thursday’s trade.  Strength in global wheat prices and this week’s U.S. winter wheat tour helped trigger the short covering rally.  The tour’s figures fell below the U.S. Department of Agriculture’s estimate this month for a 305.5 million-bushel Kansas crop with an average yield of 47.0 bpa.  However, that buying surge appears to have evaporated ahead of the three-day weekend and amid a jump in the dollar overnight.  For the week, July Chicago wheat, at 5.09-1/2 is up about a dime for the week and trading back above $5.00 after spending the week oscillating around that psychological level for the first time in two months.  Managed Money is estimated net long 3,000 contracts of SRW wheat.  July KC is at 4.50 and up a nickel for the week.  Sept Mpls wheat is off 2-1/4 cents to 5.26-1/4 and also up a nickel for the week.  In overnight tender Activity -S. Korea bought 36,200 tons of U.S. wheat, passed on 54,000 tons of additional U.S. wheat; Jordan retendered 120,000 tons of optional-origin wheat; Philippines seek 168,000 tons of optional-origin feed wheat; And, Japan bought 110,500 tons U.S./Canadian/Australian wheat in a routine purchase.


Live cattle futures are expected to see early two-sided trade with cash cattle trade at $120/cwt in multiple regions supporting the June contract that closed at 98.80 on Thursday.  The online exchange this week had no sales with cattle offered at $115 that drew zero bids.  The slaughter volume improved 28,000 head over last week.  Expectations are for slaughter to post around 530,000 this week, a slowdown in the rate of improvement but still headed the right direction.  Look for position-squaring to keep today’s trade choppy on the heels of President Trump’s Tuesday announcement that U.S. should consider terminating trade deals as he looks to help U.S. ranchers hit hard by the corona virus outbreak.  The May Cattle-on-Feed Report is on tap for later this afternoon after the markets close.  Expectations are for total cattle ‘on fee’ to be 95% of last year; ‘Placements’ at 75%; And, ‘Marketings’ at 77% is reflective of the issue facing the cattle industry due to the corona virus outbreak.


Lean hog futures are called mixed.  Prices showed signs of stabilizing yesterday after trending lower the past two weeks.  Front months will be supported by the discount to the lean hog cash index.  The July futures contract, at 57.17, holds the bulk of open interest and is lagging the front month June by more than $2.00.  Deferred contracts are expected to keep an uneven pace while watching for direction in retail markets and concentrating on cash trade going forward.


Matthew Strelow

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