TFM Sunrise Update 07-28-2022

Provided by Stewart-Peterson Inc.



Corn futures traded higher overnight, tacking on 11 cents to 6.22 in the nearby Sept contract, and 12 cents to 6.15 in the Dec.  Heat and dryness is expected across much of U.S. Midwest the rest of July and first week in August.  Technically, prices appear headed back toward their 200-day moving averages that gave way as support levels two weeks ago.  Trade estimates for this morning’s USDA Weekly Export Sales are zero to 300,000 tons for new crop, 200,000 to 625,000 for new crop.  Managed funds were net long an estimated 128,000 contracts heading into the overnight session.  Open interest in row crops continues to wane while wheat grows.  Headlines still suggest Ukraine will increase corn exports to 7-8 mmt.  There is data suggesting, so far in July, Ukraine has shipped 860 mt corn.  The EU corn crop will be smaller than USDA estimates.  The lower crop could force EU to import corn.   The U.S. Central Bank raised U.S. interest rates 75 basis points as expected.  U.S. stocks are mixed.  Crude is higher.  The dollar is higher.  Gold, silver, copper, coffee, cocoa, sugar and cotton are higher.


Soybean futures traded two-sided overnight with a firm tone supported by strong U.S. cash basis and a 30 day U.S. weather forecast calling for warm and dry conditions.  Drier Canada and EU
weather is also noted.  August beans are up 6-1/2 cents this morning to 15.85-1/4.  Nov is up 11-1/2 to 14.21-1/2.  Trade estimates for this morning’s USDA Weekly Export Sales are (200,000) to 300,000 tons for new crop, 100,000 to 500,000 for new crop.  Meal is down $3 to $4 per ton after making new highs near 496.  Soy oil is up 1.40.  Managed funds are net long an estimated 112,000 soybeans, 71,000 soymeal and 22,000 soy oil.  Dalian soybean, soymeal, palm oil and soy oil futures were higher. Matif rapeseed futures is higher and up 11% from Friday’s low.  China’s domestic soymeal buying remains slow.

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Wheat futures were up overnight on continued short-covering and some concern of lower wheat exports from Russia and EU.  Chicago September wheat was up 19-14 cents to 8.09-1/2, Sept KC up 18-1/2 to 8.80-1/4; and, Sept MPLS up 15 to 9.25.  The second day of the U.S. ND annual crop tour estimated the yield in the region near 47.7 versus the 5 year average of 37.9.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 625,000 tons.  Managed funds were net sellers of 6,000 Chicago wheat yesterday and are net long an estimated 6,000 contracts as open interest increases.  There is data suggesting, so far in July, Ukraine has shipped 260 mt wheat.  The deal that will allow for a large increase in Ukrainian exports may not happen unless farmers overcome challenges to harvest crops.  Russia said the agreement could collapse if restrictions on Russia exports are not lifted.  Before the war there were 2,000 seamen and 90 vessels.  Now there are only 450.


Cattle calls are for steady to lower.  We view the cattle markets are in an overall uptrend, but a softer cash tone may out weigh the strength in retail markets.  Prices are consolidating and challenging levels of support.  Light cash trade took place in most areas today with Northern dressed deals marked at mostly $225, $2 lower than last week’s weighted average basis Nebraska.  Southern live business was marked at mostly $135, steady with yesterday’s deals, but $1 lower than last week’s weighted averages.  Retail boxed beef values were softer with Choice dropping 1.12 to 267.99 and Select down 2.07 to 241.81.  Demand was moderate on a load count of 146 total loads.  Feeder cattle saw some price recovery, but charts have turned softer, and may be poised to more downside pressure. Strong grain markets are a limiting factor in feeder prices overall.  The Cash feeder index gained .73 to 170.64, but is still trading at a $9.00 discount to the August futures, which could be a limiting factor in the market.


Hogs are called steady to higher.  Hog futures saw buying strength return from the cash market, and consistent value found in the retail pork trade.  Retail pork carcasses were softer at midday, but rallied off those losses to finish slightly higher at the close, gaining .02 to 126.79 as pork carcasses hold above the $125 level.  Demand was light at 218 loads for the day.  Cash markets exploded higher n Wednesday as morning direct trade trading jumped higher, gaining 13.01 to 129.06 and a 5-day rolling average of 123.76.  The Lean Hog Index is trending higher, reflecting the overall cash market tone.  The index gained .35 to 119.48, and is trading at a premium to the August futures market and should support front month prices.  Weekly export sales will be released this morning and could help provide direction into the open on the day.  The spread between August and October hogs has widened to 22.150 which should help pull the Oct futures higher, given the cash market.  The hog market strength will stay fueled by the cash trade overall, which should help pull premium into the front end of the hog market.



Matt Strelow

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