TFM Sunrise Update 6-5-20


Corn futures forged a new 7-week high overnight on follow-through after an improved technical close on Thursday where July corn closed above the 50 Day moving average for the first time since January.  Resistance will be 330-3/4, last week’s high.  Dec corn got to 3.43-1/2, up 3/4 cent.  Another push lower in the U.S. dollar against other global currencies and an uptrend in crude provides outside-market support.  For the week, corn is up about a nickel and funds have been steadily shedding their large net-short positions at a time of year where seasonal price strength occurs.  As of today, they are still estimated to be net short a whopping 251,000 contracts.  Last night’s GFS weather model run was notably wetter across much of the Corn Belt Jun. 14 – 16; some of the increase was necessary due to the potential for the northeastern edge of a ridge of high pressure to be in the region which would support complexes of thunderstorms moving along it.


Soybean futures were up 3 cents amid support from the movement in the U.S. dollar vs the Brazilian real.  The real has gained 17% the past month which will give U.S. exports an advantage.  Importers have been more active in U.S. soybean exports this week with announced old and mostly new crop sales the past three days. April sales were poor, but soybean sales were relatively strong in May and that could continue since the U.S. oilseed is now cheaper than its Brazilian competitor.  Strong move in prices this week may be met with some producer selling,  limiting gains into the weekend.  Nov beans, at 8.80, have broken out  to the upside, leading to a short-term uptrend, and are up 28 cents for the week.  Standing in the way is the contract’s 100-day moving average resistance line at 8.83-1/2, and then the 200-day at 9.19.  Heading into today, Managed Money is estimated net long 24,000 Soybeans; net short 39,000 lots of Soymeal, and; net long 9,000 Soyoil.


Wheat futures are called mixed to firmer after trading 2 to 4 cents higher overnight, though within Thursday’s wide and higher trading ranges that included new monthly highs.  Managed Money is estimated net long 8,000 contracts of SRW Wheat.  The trading ranges for the week have been fairly wide, but winter wheat contracts are now up roughly a nickel for the week.  Chicago wheat contracts are now butting up against their respective 200-day moving averages, which, along with an overall heavy global supply picture, may stall buying interest heading into the weekend.  However, multiple factors favor the bulls including forecasts for drier conditions in Europe and the Black sea region, and hot temperatures in the Southern Plains combine with the dollar trading at 2-1/2 month lows making U.S. exports more attractive.  Cumulative sales have reached 102.1% of the USDA forecast for the 2019-20 marketing year vs a 5-year average of 99%.  In tender Activity, Jordan seeks 120,000 tons of optional-origin wheat; Philippines passed on 55,000 tons of optional-origin feed wheat.


Live cattle futures are called steady to lower.   June options expire today and First notice day for the June contact on Monday should lead to uneven trade in the front month cattle contracts.  June and August futures are at a discount to the cash market and the wide basis from cash to futures is viewed as supportive.  Light cash trade continued for  this week with the majority near $117, well within last week’s range as most business is likely done for the week.  Declines in retail values this week is concerning, but packer margins are still strong, supporting current cash levels.


Lean hog futures are called mixed.  June hog futures finished lower with a soft overall tone in cash trying to deal with heavy slaughter supplies.  Packer margins have tightened as retail values have corrected back to near last year’s level.   Export sales stayed supportive longer term as April shipments to China were up 257% over last year, setting an all-time monthly record.  Deferred contracts maintain support above the $50 level.


Lisa Heder

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