TFM Sunrise Update 6-11-20


Corn futures are called mixed as the trade awaits today’s USDA WASDE report scheduled for release at 11 AM CT.  Markets were unchanged overnight and Dec is sitting at the contract’s 10-day moving average at 3.41-1/4 with Managed Money back to an estimated 282,000 short corn contracts, the second largest amount on record.  Expectations are for slight adjustments in demand that would raise corn carryout by approximately 50 million bushels.  Old crop carryout is estimated to move to 2.10 billion bushels, and new crop to 3.360 bil.  This large supply will limit keep a lid on rallies, particularly without weather concerns.  The worst is behind for ethanol demand, which could help support the corn market.  Weekly ethanol production rose 9% week over week, but still well behind last year. Trade estimates for this morning’s USDA Weekly Export Sales are 500,000 to 800,000 tons for old crop, Zero to 300,000 tons for new crop.  Outside markets show crude down $1/bbl on signs of an overbought market, and the dollar is correcting higher.  Stock index futures are down 500 points.


Soybean futures, as well as meal and oil contracts were softer overnight.  Beans fell 2 to 3 cents and have had a stagnant showing for the week after surging higher last week.  Chinese Ag futures (Sep) settled up 33 yuan, up 15 yuan in Corn, unchanged in Soymeal, down 46 in Soyoil, and down 42 in Palm Oil.  Malaysian palm oil prices were up 19 ringgit at 2,368 (basis August) supported by a surge in Jun 1-10 export estimates.  The USDA WASDE report is expected to have little impact on soybean numbers, but slight carryout increases are expected.  The falling U.S. dollar and strengthening Brazilian has been a beacon of hope for the U.S. export program, but the spread took a step backward overnight.  Weekly export sales numbers should be supportive.  Trade estimates are 400,000 to 900,000 tons for old crop, 300,000 to 800,000 tons for new crop.


Wheat futures weakened 3 to 4 cents overnight in the winter wheat contracts.  100-day moving averages are providing a technical ceiling over the Chi and KC contracts as harvest gears up.  Today, USDA is expected to show some reduction in the U.S. wheat harvest, but may it not be enough to outweigh the heavy global supply, though firm global prices offer a hint of support U.S. wheat futures as well as the recent downturn in the U.S. dollar.  Tender activity shows Egypt buying 120,000 tons of Russian wheat; Tunisia seeks 134,000 tons of optional-origin wheat; And, Philippines bought 56,000 tons of optional-origin feed wheat.  Estimates for this morning’s USDA Weekly Export Sales are Zero to 300,000 tons for old crop, 200,000 to 500,000 tons for new crop.  Mpls spring wheat futures are flat to a penny higher this morning guided by their respective 10-day moving averages that are tilting upward on the charts.


Live cattle futures are called mixed based on the consolidation pattern building in the Aug live cattle contract which.  August represents most of the open interest and trade volume for the complex with June set to go off the board at the end of the month. The lack of deliveries against the June contract is supporting that contract.  Cash trade is developing slowly again this week with early trade around $104 live and some talk on Wednesday of $108, but small trade.  Retail values continue to soften, adding additional caution to the cattle market.


Lean hog futures are called steady to lower.  Front month contracts have been seeing selling pressure due to cash weakness, soft retail values, and large slaughter supplies.  These contracts are testing nearby support and should find some stability, but the fundamentals do not support much of a recovery.  The back months had been building a nice uptrend before giving up much of their mojo in Wednesday’s session on profit taking.  Weekly export sales could help provide some market direction today.  Exports have been a bright spot as they accounted for the highest percentage of monthly production on record.   Prices in China are up almost 2% this week, up over 9% this month and up almost 104% versus a year ago.


Matthew Strelow

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