TFM Sunrise Update 6-19-20


Corn futures are firm this morning, thus pointing higher for today’s trade.  Old crop corn contracts have tested and held their 10-day moving average support levels a number of times this week, and while funds still appear to be selling corn, spotty crop conditions and unclear weather forecasts over the next week are keeping prices supported.  Export sales this week were a bit soft, but China corn prices are at their highest levels since 2015, even as authorities continue to release supplies from state reserves.  Rain totals and coverage this weekend will drive the near term direction.


Soybean futures were up 3 to 4 cents overnight.  We don’t expect much price action outside of the recent consolidation range ahead of the Grain Stocks and Acreage report.  Nov beans have traded at 8.79-1/2 for two straight weeks.  On one hand, one could argue that this technical set-up fits a flag pattern, which would be bullish.  On the other hand, prices have put in multiple unsuccessful tests of the 100-day moving average resistance levels.  This is arguably a bearish technical set-up.  With conflicting technicals, weather will likely dictate price action ahead of the report.


Wheat prices were firm overnight, likely because they’ve become sharply oversold and are prone to a technical bounce.  However, fundamentals are mostly bearish.  Russia will be selling wheat to Egypt this week, and the US dollar has made a nice recovery lately that will make it difficult to attract foreign buyers of US wheat.  Keep in mind that the USDA is expecting record world inventories this year. Hot and dry conditions in the northern Plains could keep the trend higher for Spring Wheat.  Conditions are already declining and could continue to drop if the Plains miss rains this weekend.


Cattle markets are called steady to lower as the trade awaits this afternoon’s Cattle on Feed report.  Beef prices have begun to collapse again during the second half of this week which has the potential to impact cash trade.  Beef prices are below year-ago levels for the first time since mid-April.  Cash markets have already started to reflect the lower beef prices this week, but prices could continue to slip further.  Neither the live or feeder cattle futures markets have seen a big break despite weakening fundamentals.  This may suggest that there is a lack of speculative selling at these prices when the beef demand is expected to pick up in the coming months.


Hog futures are called steady to higher.  While pork values are stabilizing in recent sessions, the cash index cannot seem to do much but fall lower.  Futures are deeply oversold and have traded in very quiet ranges so far this week.  The downtrend momentum appears to be waning, but if the cash market were to start moving lower quickly, futures would likely follow.  However, if the cash index can turn higher, the oversold technicals may cause a quick jump in futures prices.


Matthew Strelow

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