TFM Sunrise Update 5-14-20


Corn futures were flat/weak overnight ahead of today’s expiration of the May contract.  Selling pressure in other grains combined with heavy projections for 2020-21 marketing year ending stocks  weighs on the corn market, but prices are showing resiliency.  This morning’s Weekly Export Sales may help turn prices, at least two-sided today.  Trade estimates range from 1.1 to 2.1 million metric tons (mmt) split between the current and next marketing year.  Overnight tender activity showed-Algeria seeking 40,000 tons of optional-origin corn.  Meanwhile, managed money is estimated to be net short 183,000 Corn.


Soybean futures were mixed overnight and did see slightly positive movement before slumping to 1-week lows along with weakness in meal and soyoil.  Chinese demand is supportive with announced sale of 396,000 MT on Wednesday.  Weekly export sales are expected to be 700,000 to 1.5 mmt combined between this and next crop year.  A 100 million bushel adjustment in export targets left soybean old crop carryout at 580 bushels and above expectations on Tuesday’s USDA report, helping lead the selling pressure mid-week. Managed Money is estimated to be net long 15,000 Soybeans; net short 12,000 lots of Soymeal, and; net short 10,000 Soyoil.


Wheat futures saw follow-through selling overnight after throwing in the towel and tumbling lower on Wednesday.  July Chicago wheat dropped below $5.00 to 4.97 on losses of 4-1/4 cents.  July KC hit 4.48-1/4 on losses of 6 cents; Both fresh 2-month lows as the short term trend turns decisively bearish.  USDA’s projection for 310 MMT of global wheat supplies in Tuesday’s Supply/Demand report were 20 MMT above expectations and confirmation more than keeps pressure on wheat prices. The dollar is trending higher and poised to break out to the upside, causing more resistance to wheat trade.  Overnight tender activity shows Tunisia seeking 67,000 tons of optional-origin wheat; Ethiopia seeking 600,000 tons of optional-origin wheat; Jordan re-tenders for 120,000 tons of optional-origin wheat; and, Algeria bought 500,000 tons of optional-origin wheat.  Managed Money is estimated net short 12,000 contracts of SRW Wheat.


Live cattle futures are called ‘mixed’ based on the selling pressure and profit taking on Wednesday that could bring additional selling pressure.  However, early indications for cash this week are that the wide-ranging values seen the past few weeks look to continue.  If so, the higher priced transactions should stay supportive for futures.  In addition, retail values remain at record levels, which should support price and the potential cash market.


Lean hog futures are called steady to lower amid a weakening trend and signs of topping on the daily charts.  Disappointing trade on Wednesday opens the door for the potential for additional follow through selling this morning.  Hog weights in IA and southern MN continue to stay at record levels due to the disruption to processing from Covid-19.  This is time of year where weights normally move lower.   Firm cash prices do offer some support under the market.


Matthew Strelow

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