TFM Sunrise Update 6-1-20


Corn futures were flat overnight. Dec corn is at 3.37-3/4 where the contract’s 40-day moving average resides and is holding support levels.  Managed Money is still holding a large short position and may be poised for additional short covering as seen on Thursday.  Friday’s Commitment of Traders report that reflects holdings as of last Tuesday showed Managed Money short more than 276,000 corn contracts, though that number may be closer to 255,000 as of today.  The dollar continued to soften overnight and crude is firming as gasoline demand increases amid the opening of the country from Covid-19.  Very warm to hot temperatures will occur in the U.S. Great Plains early this week and the warmth will expand into the Midwest for a while during mid-week, but temperatures may not be quite as hot as far to the north as once expected.  U.S. Midwest will experience better late season planting conditions over the next two weeks and warm weather will promote aggressive crop development.  Weekly Crop Progress updates will be out after the markets close today.  The trade is expecting 95% of the corn crop planted.


Soybean futures were unchanged overnight with Nov beans tracking 10, 20 and 40-day moving averages near 8.50.  Caution regarding U.S.-China relations will prevail after the President said he was ordering his administration to begin the process of eliminating special treatment for Hong Kong to punish China for its plans to impose new security legislation.  China may reduce its imports of agricultural products from the United States if Washington issues a severe response to Beijing’s push to impose national security laws on Hong Kong.  Meanwhile, U.S. soybean planting is running ahead of the average with this afternoon’s update expected to show 77% complete.  Managed Money is estimated net short 1,000 Soybeans; net short 43,000 lots of soymeal, and; are net long 4,000 soyoil.


Wheat futures were down 3 to 5 cents overnight at all three exchanges.  Money managers kept their bearish CBOT wheat views through May 26, trimming them to 12,204 futures and options contracts from 16,476 in the week before.  They significantly expanded their net short position in Kansas City wheat futures and options to 25,743 contracts through May 26 from 15,038 a week prior.  In Minneapolis, bearish bets are still in control, though money managers trimmed 2,483 futures and options contracts off their record short through May 26 to 22,918 contracts.  Hot, dry forecasts in the southwestern states provide a measure of support under the wheat market looking to finish out the winter wheat crop.  Global competition and overall global wheat supplies limit rallies.  Hard red Spring wheat planting is expected to be 88% complete compared to the 97% average. 


Live cattle futures are called steady to higher after June live cattle closed above the contract’s 100-day moving average last week for the first time since February.  June remains at a discount to the cash market and the wide basis from cash to futures provides support.  Money flow has been supportive of the market as funds have been slowing growing a long position around 15,000 contracts.  Cash trade will be the key to market strength ahead.


Lean hog futures are called mixed.  Improved retail values and the weakness of the futures to the cash index stay supportive of front month contracts.  Concerns regarding U.S. and China relations have weighed on the market, limiting any near-term potential rallies.  Tyson meats had closed their plant in Storm Lake, IA for deep cleaning due to Covid-10, but is supposed to reopen today.


Matthew Strelow

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