TFM Sunrise Update 5-11-20


Corn futures were firm overnight with July up 2 to 3.21-1/4 and Dec up 1-1/2 to 3.37-1/4, though the contract did eclipse Friday’s one-week high of 3.38-1/2.  Cold temperatures over the past few nights may have nipped some early emerged corn crops in the upper Mid-west.  So far, there is not expected to be significant damage and warmer weather is forecast.  USDA will give us the latest crop ratings after the close today.  Meanwhile, improved demand prospects and a Chinese purchase of corn last week should show up aid today’s Weekly Export Inspections; And, a healthy rise in energy prices fuel the prospects for better days for the ethanol industry.  Tomorrow, excessive corn supplies in the May 12 WASDE report are anticipated but, we wouldn’t be surprised to see the market attempt to put in a bottom following the release.  The average trade guess for US 2019/20 corn carryout is near 2.224 bil bu vs the 2.092 USDA April estimate;  Average trade guess for US 2020/21 corn carryout is near 3.389 bil bu.  Managed Money was short 190,000 corn contracts as of Friday’s Commitment of Traders report.  Outside markets show crude down 50 cents, the dollar up 30 points and stock index futures down 150.


Soybean futures were as much as 8-1/2 cents higher overnight before trimming gains while gaining a foothold on the cold weather and the possibility of improved demand from China.  One forecast has China’s 2020/21 soybean exports raised 2 million tons to 92 mil.  July and Nov beans peaked overnight at fresh 3-1/2 week highs of 8.58-1/2 and 8.62-1/2, respectively.  We view the market as being choppy going into tomorrow’s USDA WASDE report.  The average trade guess for US 2019/20 soybean carryout in Tuesday’s USDA report is near 488 mil bu vs 480 USDA April estimate;  Average trade guess for US 2020/21 soybean carryout is 430 mil bu. Managed Money is seen net long 8,900 Soybeans; net short 11,700 lots of Soymeal, and; net short 6,700 Soyoil.


Wheat futures were mixed overnight and trading near their night session lows heading into the day session.  July Chi wheat, at 5.20-3/4 is fractionally lower and stuck below 200-day moving average resistance currently up at 5.29.  July KC is unchanged at 4.80.  The world still has ample supplies of wheat and that will limit rallies.  Demand is a key for the wheat market as the end of the marketing year moves closer.  Looking ahead to Tuesday’s USDA report: The average trade guess for US 2019/20 wheat carryout is near 968 mil bu vs 970 USDA April estimate;  Average trade guess for US 2020/21 wheat carryout is near 814;  Average trade guess for US 2020 winter wheat crop is 1.245 mil bu vs 1,304 last year, HRW 739 vs 833 and SRW 280 vs 239. Managed Money is net long 3,800 contracts of SRW wheat, long 7,800 HWR wheat; Short 24,000 spring wheat.


Live cattle futures are called steady to higher as June live cattle responds to the wide array of cash market values that wound up at $115/ cwt on Friday, $10-15 higher than last week.  June continues to play catch-up while trading at a discount, but is trending sharply higher on a day-to-day chart.  The contract reached 98.47 on Friday before falling back and closing at 94.65.  Retail carcass values are at record levels, providing underlying support in the cattle market.


Lean hog futures are called steady to lower. Strong retail values and cash firmness support the front month contracts.  The market is overbought, but the June contract’s discount to futures may limit selling pressure.  June closed down 2.20 to 61.70 on Friday, down $1.50 for the week.  Deferred contracts closed weak on Friday making the technical picture look softer and that rocky end to the week could bring additional long liquidation.


Lisa Heder

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