TFM Sunrise Update 6-12-20


Corn futures are called mixed after trading inside Thursday’s ranges overnight.  USDA made few adjustments in the supply/demand tables in Thursday’s WASDE report, but did restate the overall large supplies with projected new crop carryout at 3.23 billion bushels.  Despite the heavy numbers and weakness in outside markets, corn futures posted reversals and a positive closes on Thursday.  The improved technical picture that shows the major trend possibly turning higher may lead the market to additional short covering where Managed Money holds a near-record position.  The key now is weather over the next 30-50 days.  6-10 day forecasts are beginning to look hot and dry.


Soybean futures were firm overnight posting gains of 1 to 2 cents.  USDA made minimal changes to the supply/demand picture, but an upward adjustment to record soybean crush totals revises 2020/21 carryout below 400 mil bu to 395 mil, down from 585 mil bu a year ago and 909 mil two years ago.  This keeps overall supplies very manageable.  Weekly export sales were a very strong combined 2.2 MMT last week, and an announced sale of 720,000 mt of soybeans to China, keeps the demand side of the market supportive.  USDA increased China soybean imports 2 mmt to 94 and estimated next year at 96 mmt.  Bean meal and oil were also firm overnight.


Wheat futures were down 3 cents in Chicago overnight, 1 to 2 in KC; And, up 1-1/2 cents in Mpls.  An adjustment higher in the world wheat supplies to a whopping 316.1 mmt vs expectations for 307.7 mmt combined with improved winter wheat harvest prospects keeps pressure on the winter wheat contracts.  This keeps world supplies high and competitive vs U.S. wheat supplies as the dollar forges a near-term bottom.  US south plains weather should be warm and dry which should help harvest.  Black Sea weather is dry.


Live cattle futures are called mixed.  The lack of deliveries against the June contract brings support into the front month.  Cash trade developed with most trade from $107- $108, down -$4 from last week.  Major cash trade is likely wrapped up for the week, with somAe clean-up transactions likely today.  Retail values firmed at midday for choice carcasses, retail movement and export sales improved recently.  Technically, traders pushed the August live cattle contract low enough on Thursday to fill the gap left from May 7 and, coincidentally reach the 40-day moving average support line for the first time since April 30.


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.  Weekly export sales were lack luster and China moved off the top buyers last week  Large supplies of slaughter hogs keep the supply picture looking heavy though slaughter weights have come down for the fourth week in a row.


Matthew Strelow

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