TFM Sunrise Update 5-26-20


Corn futures are called ‘mixed’ to start this holiday-shortened week of trade after seeing two-sided movement overnight.  Prices look set to begin where they left off on Friday, trading along their contracts’ respective 10 and 20-day moving averages with little reason to deviate from that sideways pattern and Managed Money holding an estimated 245,386 sold contracts, according to the latest Commitment of Traders report.  Weekend weather was active with widely scattered rainfall dropping measurable amounts in a number of states which will weigh on upward price movement.  On the downside, prices are getting some outside market support as crude trades at the top of a 6-1/2 week trading range; The dollar is down sharply; And, stock index futures point higher with gains of more than 500 points on optimism over the country opening back up.  Routine weekly USDA reports are pushed back one day.  Weekly Export Inspections will be out mid-morning, and we’ll get the first set of corn crop ratings, with expectations for 70% good-to-excellent.


Soybean futures traded 10 to 11 cents higher overnight.  As of this morning, Nov beans are up a nickel to 8.49-1/2 while plotting a lateral course along the contract’s 10 and 20-day moving averages. Some base-building is occurring in soybean meal and may be providing support.  A close eye will be kept on US/China relations and whether, or not China fulfills their purchasing commitment and what that means to supply where there is not a lot of cushion in carryout.  Right now, a divergent path has formed between corn’s abundant carryout and that of soybeans.  Friday’s Commitment of Traders report showed Managed Money net long 12,064 contracts of beans, short 29,404 meal; And, long 2,681 soy oil.


Wheat futures were stagnant overnight amid a hike in the dollar.   Despite projected reductions to the European and Black sea region wheat crops, heavy global supplies of wheat continue to act as a wet rag over the ability for price strength.  Forecast weekend rains across portions of the U.S. winter wheat crop came to fruition and should help ratings.  Managed Money is net short the entire wheat complex with an estimated total of more than 16,000 Chicago, 15,000 KC: and 25,000 in Mpls.


Live cattle futures are called steady to firmer.  May Cattle on Feed numbers came in within expectations and are likely figured into the market.  Cattle on feed as of May 1, 2020, came in at 95% vs May 1, 2019, in line with market expectations of 95%  Placements came in at 78% vs expectations of 77% and cattle marketed 76% vs expectations of 75%.  Meanwhile, June cattle is undervalued to cash last week’s trading at $120 and retail values are coming down.  Cash cattle trade will set the tone for the week.


Lean hog futures are called mixed to lower.  Markets are looking weaker on improved slaughter movement and softening retail values.  Prices are likely to stay choppy and the short term technical picture is weak. The Commitment of Traders report showed Managed Money had only exited about 1/2 of their short positions and the long-only position is the smallest since 2011.


Matthew Strelow

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