Market Update 5/18/2020

Monday May 18, 2020

US$ gained .62 at 100.43 This is burdensome



The July corn futures were unchanged for the week.  Talk about indecision and boring at the same time.  No, the USDA report Tuesday was not friendly with stocks estimated at 3.3 billion bushels coming at us.  There is a chance we have seen the low in ethanol demand and the summer could very well spark usage of unleaded gasoline.  The big question is still production and acreage both of which look huge at this point in time.  Technically the market is as range bound as it can be so look out for a change.  July failed at resistance this morning just below the 323 number.  Crude oil is on a terror which is good and will remain volatile.  Exports need to do better and have been trying.  The funds are short 230,000 corn futures, should they decide to lighten that number it would be the rally we have been waiting for.


Soybeans lost 12 cents last week probably due to good planting and a not really bullish USDA report.  Yes, supplies came in slightly lower but the bottom line is that world-wide we are not running out of soybeans.  Having said that the US 2020 production is critical.  Of course we need to find more China buying to get a real rally.  The July contract has a way to go to test resistance at 860 and if we do not blow through there prior to July 10 the window will be closed. 


June live cattle futures 232 for the week ending near limit up on Friday at 9700.  So, with cash trade at 115 and higher which way should the futures move?  Should and do and two different animals.  The futures trade was well over 200 higher this morning but continues to be extremely and I do mean extremely volatile.  There are several positives in this market however we have such a hole to come out of it will still take a long time.  Processing appears to be picking up and that must continue.  The weather is improving going toward summer and dining out is supposed to be coming back. Those are two pretty big factors.  Just let me say that like all of these commodity markets this one is fragile. Try to be ready for anything.


Wow, milk futures gained 312 last week ending at 1685.  We have not seen that kind of number for a long time.  Continue risking 30-40 cents on put options as appropriate.  

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