TFM Sunrise Update 6-30-20


Corn futures eased 1 to 2 cents overnight following a short covering and position squaring rally for the end of the month that regained half of last week’s losses.  Yesterday afternoon, Weekly crop conditions improved 1% to 73% good to excellent.  The dollar is at a one-month high this morning and may also be weighing on commodities ahead of today’s USDA Grain Stock and Planted Acres Report.  Expectations are for quarterly corn stocks as of June 1 to be at a 3-year low of 4.951 billion bushels, down 250 mb from last year.  Planted acres are expected to be near 95.2 million acres, down from the March 31 intentions of 96.9 million acres when farmers were surveyed earlier that month.  This report, historically is a market mover for corn and with the counter-seasonal price movement this year amid a heavily short managed money position, the perception of weather issues could mean a price recovery should funds feel the need to exit.


Soybean futures were unchanged overnight.  Weekly crop conditions improved 1% to 72% good to excellent. Tuesday’s USDA Grain Stock and Planted Acres Report brings expectations for quarterly soybean stocks as of June 1 to be at a second highest in history at 1.392 billion bushels, but down about 400 million bushels from last year.  Planted acres expected to be near 84.7 million acres, increased from the intentions of 83.5 million acres established in March.


Winter wheat futures were lower overnight after surging off of recent lows on Monday, led by short covering and position squaring.  July Chicago wheat dipped cents and Sept 4-1/2.  KC wheat lost 2-1/2 cents.  MPLS was up 3.  Tuesday’s USDA Grain Stock and Planted Acres Report brings expectations for Grain stocks to be 980 million bushels, but down about 120 million bushels from last year. Planted acres for all wheat is expected to stay unchanged near 44.7 million acres.  Spring wheat acres acres are also expected to be unchanged from March at 12.6 mil.  Elsewhere, initial yield reports of Russia are showing nearly a 50% reduction from last year, albeit on fewer than 1 million acres harvested so far.


Live cattle futures are called flat/firm after seeing August trade higher with a trading range outside Friday’s, which is a bullish technical set-up within a narrowing pennant.  Strength in midday retail carcass values provided support in cattle markets on Monday.  Demand will be the key for cattle prices in the short term as the industry works through large backed up slaughter supplies.  Cash trade was undeveloped on Monday, and will likely lead the direction of cattle futures this week.  Prices have been n consolidation over the past handful of weeks.


Lean hog futures are called steady to higher.  After a bearish Hogs and Pigs report, hog futures were oversold and saw a corrective bounce led by stronger retail values on Monday.  Follow through buying will improve the technical picture and bring about additional short covering with Friday’s gaps in Aug and Oct futures posing upside targets for technical traders.  Regardless, the supply of slaughter hogs is extremely heavy and will limit rally potential in the near-term.


Matthew Strelow

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