TFM Sunrise Update 6-8-20


Corn futures continued to build up steam amid steady short-covering strength overnight.  Dec corn was up 2-3/4 cents to 3.48 and is poised to reach 3.50 for the first time since mid-April when the market was succumbing to Covid-19 demand problems.  With Managed Money holding their second largest short position in corn, the improved technical picture opens the door for additional short covering and technical buying.  This afternoon’s weekly USDA crop conditions will likely improve from last weeks jump of 4% to 74% good-to-excellent as weather is not a near-term concern.  Weekly Export Inspections will be out mid-morning today, Weekly Ethanol Stats on Wednesday; Then, the June monthly Supply/Demand report on Thursday following Weekly Export Sales.  Overall ethanol stocks are back down to their lowest level since early January.  Over in the livestock sector both hog and cattle slaughter numbers are back near “normal” levels.  Corona virus outbreaks remain a threat to corn demand, but it seems most of the concern has been somewhat alleviated.


Soybean futures traded narrowly mixed overnight with a firm tone.  Nov beans, at 8.80, broke through the contract’s 100-day moving average resistance area for the first time since Jan 21.   The movement in the U.S. dollar vs the Brazilian real stays supportive for the complex.  Importers were more active in the market last week, purchasing 45 mil bu of U.S. soybeans.  With U.S. soybeans at a discount to Brazil, this activity is likely continue this week.  Malaysian palm oil prices were closed for holiday.  Weather-wise, in the Midwest, things will be mainly dry across the region through today and then by Tuesday, the remnants of tropical storm Cristobal will be working into MO and will go on to impact most of IA, MN and NW 1/3rd f IL and most of WI later in the day into Wednesday.


Wheat futures were two-sided overnight as the markets stages for the winter wheat harvest that is getting under way.  With high temperatures in the mid-90s and strong winds, the wheat crop is maturing quickly.  For the Southern U.S. Plains, the 6-10 day outlook looks to be dry in most areas for this period.  Overseas, rain in Europe last week brought relief to parched wheat belts but more moisture is needed to prevent this summer’s harvest from  shrinking further compared with last year’s bumper crop.  Overall, burdensome global supplies keep pressure on the market, but a weakened U.S. dollar is supportive.  Look for the wheat markets to trade in a consolidation pattern while respecting support levels.


Live cattle futures are called mixed to lower.   Weak closes on Friday create concerns for additional long liquidation amid a short-term technical picture that looks softer.  A strong drop in retail values last week is also concerning for the cash market that slipped toward the end of the week with most regions paying $105-108/ cwt, which is down $12-15/ cwt from the prior two weeks.  Economic concerns still weigh on the market, as well as backed up heavy cattle that need to be moved.


Lean hog futures are called ‘steady’.   Lean hog futures closed mixed for the week with June sharply lower.  For the week, June lost $9.40, July,  $3.10 and August closed up 63 cents.  All contracts were able to hold above the April lows.  However, the August through December contracts all posted bullish weekly reversals.  A strong export demand tone helps support deferred contracts above the $50 level.


Matthew Strelow

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