TFM Sunrise Update 5-6-20


Corn futures were unchanged overnight while trending sideways above contract low support.  Another hike in the dollar is seen as a weighing factor and despite the strong planting pace, corn futures are underpinned by a bottom forming in the crude market after jumping more than 20%.  Weekly Ethanol Stats today will be out today, exports tomorrow.  While stockpiles will stay heavy, the market may be focusing on usage in the hope that the worst is behind the ethanol market.


Soybean and meal futures traded two-sided overnight and look to enter today’s trade with a firm tone.  Soyoil was lower after running out of steam from news that Argentine bio-diesel exports have been halted.  Bean export demand is on the up-swing following another announced sale of soybeans to China on Tuesday.  This trend is expected to continue into the summer barring negative consequences of geopolitical moves between the U.S. and China over Covid-19 and trade.  Overhead resistance stems from the record planting pace of the 2020-21 crop and the resumption of the widening of he U.S. and Brazilian currencies.


Wheat futures were down 4 in Chicago last night, fractionally lower in KC; And, mixed in Mpls.  Rains across Europe and Black Sea Region are improving crop conditions and giving bullish traders little to work with, particularly with the dollar moving higher 3 days in a row.  Cold, dry conditions across the southern plains and a slower than anticipated spring wheat planting are noted, however, there was a mild gain in this week’s Crop Ratings.  Look for choppy, two-sided trade as the market awaits confirmation of any frost damage to the crop.


Live cattle futures are called steady to lower after failing to hold early gains in a technically overbought market.  We saw some liquidation on Tuesday on news of increased slaughter capacity coming online which aided the retreat in a tired-looking day of trading for the market.  Some caution is also noted after retail values rose to record levels for an eighth consecutive day.  Negative trade in hogs may have added to that sentiment.  The June discount to cash offers support.  Weekly On-line cash cattle markets are set to dial-up mid-morning today.


Lean hog futures are called stead to lower.  Strong retail values stay supportive in the hog market.  However, the technical picture turned softer and is due for a pullback after a strong run off the April lows.  The back-log of market-ready hogs will remain a thorn in the market’s side moving forward.  There was good news though in that the large Smithfield plant in Sioux Falls, SD, which has the ability to process nearly 5% of the country’s total production, is partially reopened.  In addition, for the month of March, pork exports reached a record high and 36.1% improvement year-over-year with China and Canada primary importers.


Lisa Heder

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