TFM Sunrise Update 6-26-20


Corn futures were up 1 to 2 cents overnight after closing off their intra-day lows in yesterday’s session.  New crop contracts made new lows, and the weakened technical picture is likely to keep money flowing into the short side of the market, particularly with near ideal weather boosting yield prospects and economic concerns on the rise.  Managed Money is now estimated short 316,000 corn contracts.   July options expire today and will keep price movement active at times.


The soybean complex was mostly unchanged overnight amid a lack of fresh export news and lingering pressure from other grains.  Prices pushed to the bottom of the trading range on Thursday, but climbed off lows by the end of the session aided by a recovery in meal.  Weekly export sales yesterday were within expectations at 1.1 million metric tons combined for old and new crop.  Other than that, fresh market-moving news is scarce heading into next Tuesday’s Quarterly Grain Stocks and Planted Acreage report, and reliance of the Phase I trade agreement with the Chinese is problematic for equities and a number of commodity markets.   Heading into today, Managed Money is estimated to be net long 21,000 soybeans; net short 53,000 lots of soymeal, and; short 10,000 soyoil.


Wheat futures were unchanged overnight while continuing to consolidate near recent lows.  Global wheat supplies are heavy and prices weak.  In addition, on going winter wheat harvesting of good quality grain limits rally potential.  Look for prices to trade an ‘inside day’ this morning, respecting yesterday’s trading ranges.  Managed Money is estimated net short 40,000 contracts of SRW wheat.


Live cattle futures are called mixed.  A softer cash tone and weak retail values kept cattle prices in check on Thursday.  August live cattle, at 96.07 had been trading at a large discount to cash, but cash is now around 96.50/ cwt.  Demand will be the key for cattle prices in the short term as the industry works through large backed up slaughter supplies.  Weekly export sales and shipments last week were ahead of the 4-week trend and will also be key in the weeks ahead.


Lean hog futures are called lower because yesterday’s post-trade Quarterly Hogs and Pigs report came in heavier than expected;  Total hogs were at 105% of last year at a record of 79.6 million head.  Market hog inventory was 106% of last year at 73.3 million head, reflecting the backed up supplies of hogs due to COVID-19.  This heavy supply will likely pressure the market and forge new contract lows in the front months.  For August, the contract low resides at 50.42, 90 cents below yesterday’s close.


Matthew Strelow

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