TFM Sunrise Update 6-4-20


Corn futures were narrowly mixed overnight in light volume.  Dec peaked at 3.39-3/4 and is still managing to hold support while, overall looking for direction, and likely being more influenced by other markets.  The dollar rebounded overnight and crude retreated from Wednesday’s multi-week high.  Current weather forecasts are favorable for this year’s corn crop and should keep prevailing headwinds present for price rallies.  Trade estimates for this morning’s USDA Weekly Export Sales are 400,000 to 900,000 tons for old crop; 50,000 to 300,000 tons for new crop.  The next supply and demand outlook from the USDA is next Thursday, June 11.


Soybean futures were unchanged overnight, underpinned by the recent movement in the U.S. dollar vs the Brazilian real.  In addition, China has been more active in U.S. soybean buying this week with announced old and mostly new crop sales the past two days.  Weekly exports could be a key for today’s for price action with the front month July futures contract challenging key resistance levels at the May high of 8.61-1/4.  Trade estimates for sales are 500,000 to 1.0 mil tons for old crop; 100,000 to 550,000 tons for new crop.  Meal is firm, oil lower this morning.


Wheat futures were up a nickel overnight and seem to be building a base of support on the charts as a pattern of higher daily lows form.  However, for winter wheat contracts, prices are mainly consolidating while factoring in the upcoming harvest and a decline in the dollar that has improved export prospects, though Egypt’s latest wheat purchases were sourced entirely from Ukraine.  Trade estimates for this morning’s USDA Weekly Export Sales are 50,000 to 250,000 tons for old crop; 100,000 to 600,000 tons for new crop.  Global wheat supplies still remain heavy, limiting rally potential as futures sag below 100-day moving average resistance areas.  Mpls spring wheat contracts were firm overnight.


Live cattle futures are expected to see early choppy action.  Traders failed to fill the gap on the downside from May 7 in August futures before closing higher which could be viewed as technically supportive; And, as has been the case for weeks,  June cattle futures remain discounted to the cash market and the wide basis from cash to futures could limit downward momentum after the contract probed lower the past four sessions.  Cash trade continues to develop this week with the majority near $117, well within last week’s range.  The strong drop in retail values this week fosters concern, but packer margins are still strong, supporting current cash levels.


Lean hog futures are called mixed with nearby contracts sagging to new lows for the move.  June hog futures finished limit down with weak overall tone in cash hog market reflecting the market’s ability to deal with heavy slaughter supplies.  Deferred contract maintain support above the $50 level.  Packer margins have tightened as retail values correct back to last year’s level.  Export sales could provide some direction if China returns to the U.S. export market.


Lisa Heder

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