TFM Sunrise Update 6-3-20


Corn futures were mixed overnight with the dollar continuing to erode into new lows for the move and crude ticking higher.  Good technical closes on Tuesday may bring some additional short covering with funds heavily short the corn market and help turn the curve on the near-term moving averages.  Weekly Ethanol Stats today should reveal further improvement in the energy sector as gasoline demand gets back on track and create an opportunity for the market to keep posting mild gains.  Meanwhile, Day one of a Prevent Plant corn crop tour in North Dakota and northern MN is showing spotty field conditions in the Red River Valley area, with some farmers asking for a shot of rain and others dealing with too much moisture.  Planting is starting to wrap up in parts of the region and corn acres are down considerably. There is talk of prevent plant in some cases, but most of the ground is getting seeded with other crops, if not corn.


Soybean futures were up 3 cents overnight amid Chinese purchases of U.S. soybeans and a strengthening Brazilian real currency, which was up again last night, supporting the market.  Chinese Ag futures (Sep) settled up 3 in Soymeal, up 34 in Soyoil, and up 78 in Palm Oil.  November soybeans, at 8.64 this morning, posted their highest close since March and settled above the 50-Day moving average for the first time since January on Tuesday.  On the upside, the 100-day moving average stands as a bullish target at 8.85 for the new crop contract.


Wheat futures traded 3 to 4 cents higher last night and may be finally taking notice of the weakening dollar that would improve export potential for U.S. supplies.  In tender activity, Egypt bought 120,000 tons of Ukrainian wheat.  Global competition and overall global wheat supplies will continue to limit rallies with improved weather forecasts for Europe and Black sea.  And, winter wheat harvest is beginning in the Southwest.


Live cattle futures are called steady to lower.   June cattle futures stay at a discount to the cash market and the wide basis from cash to futures could provide support, but cash trade will be the key to market strength or weakness ahead.  We’ll get the online cattle auction later this morning.  Initial cash this week is at $118/cwt, down slightly from last week’s highs, but still within last week’s range.


Lean hog futures are called mixed.  The weak overall tone in the cash hog market reflects dealing with heavy slaughter supplies thus keeping pressure on the front month hog futures.   The steep drop in cutout values means supplies are just too heavy to maintain price traction.  Deferred contracts maintain support above the $50 level.


Lisa Heder

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