TFM Sunrise Update 07-06-2022

Provided by Stewart-Peterson Inc.



Corn futures were mixed overnight near yesterday’s session and fresh 5-month lows.  September and December futures are down 3-1/2 cents this morning to 5.88-3/4 and 5.75, respectively.  Both contracts are now well below their 200-day Moving Averages carried by a broad sell off in the grain, oilseed and outside markets entering the month of July.  New highs in the dollar is also noted as a pressure point for markets.  On Tuesday, Managed funds were net sellers of 24,000 corn and are now estimated to be net long 179,000 contracts.  USDA Weekly Crop Ratings fell 3 points from last week to 64% Good-to-Excellent.  Illinois is 65, Indiana 48, Ohio 49, Minnesota 68, Iowa 77, Nebraska 62 and North Dakota 77.  U.S. stocks are mixed this morning, the dollar is making new highs; Crude is firm.  Gold, silver, copper and cotton are lower.  Coffee, sugar and cocoa are higher.  Rains continue in the north U.S. Midwest.  Central and south are drier and warmer next week.


Soybean futures stayed volatile overnight, forging new lows for the move before recovering.  August beans are up 8-1/2 cents to 14.47-3/4.  Nov is up 11 to 13.27.  August meal is up 3.20 to 413.60.  Aug Soy oil is  up .15 to 59.78.  On Tuesday, Managed funds were net sellers of 23,000 soybeans, 4,000 soymeal and 12,000 soy oil.  They are now estimated to be net long 94,000 soybeans, 58,000 soymeal and 12,000 soy oil.  Soybean and soymeal futures are trying to find support from an oversold technical picture.  Dalian soybean and soymeal were lower. Dalian soy oil is down 7% and palm oil 10%.  USDA dropped U.S. 2022 soybean crop ratings to 63% Good-to-Excellent versus 65% last week and 59% last year.  Arkansas is 69, Illinois 62, Indiana 50, Ohio 48, Minnesota 68, Iowa 77, Nebraska 61 and North Dakota 68.

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Winter futures slumped to a new multi-month low overnight on follow-through before seeing a technical bounce of 18 cents in the Chicago September contract to 8.25.  On Tuesday, Managed funds were net sellers of 13,000 Chicago wheat and are now estimated to be net short 33,000 contracts.  Sept KC wheat gained 14 cents to 8.76 overnight.  Sept MPLS spring wheat was up 4-1/2 to 8.94-1/2. USDA raised U.S. 2022 winter wheat crop ratings to 31% Good-to-Excellent versus 30% last week and 47% last year. US winter wheat harvest is 54% versus 41% last week and 43% last year.  Kansas is 83.  The agency also raised U.S. spring wheat crop rating to 66% G/E versus 59% last week and 16% last year.  U.S. weekly wheat exports were only 4 mil bu vs 13 last year.  Season to date exports are near 53 vs 70 last year.  The agency’s goal is 775 vs 805 last year. U.S. HRW export prices are below Russia and U.S. SRW prices are cheapest in World.


Cattle futures are called steady to higher after starting the week lower following the 3-day weekend.  Money flowed into the cattle market to end last week as the August contract looked like a value compared to the cash market, triggering some short covering, and buying overall.  The heavy supply of front-end cattle turns out to be a limiting factor. The cash market will still be the key for price direction in the near-term, as the market hits a typically slower demand window.  The big picture continues to suggest the live cattle market could have problematic demand due to continued inflation and higher interest rates.  Additionally, the U.S. dollar reached its highest level since 2002 overnight.


Hog market calls are steady to lower.  The cash market may be showing signs of topping out, and that could be limiting the upside potential in hog markets.  The cash market may be starting to signal a peak, at least that is what the futures market may be trading.  Prices are working sideways and consolidating overall, looking for a reason to break one way or another.  As Chinese Covid restrictions ease, export demand for pork should continue to rise. Another bullish factor comes from African Swine Fever in Germany that is spreading to the country’s most important pig rearing region. China is expected to ban German pork imports for years to come and the outbreak will have long-lasting consequences.


Matt Strelow

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