TFM Sunrise Update 6-9-20


Corn futures were down 2 cents overnight influenced by a combination of outside market pressure and strong early crop ratings.  Managed Money is estimated net short 259,000 corn contracts heading into today’s trade.  The USDA, on Monday afternoon rated 75% of the U.S. corn crop in good to excellent condition in its weekly crop progress report, up 1 percentage point from a week ago and in line with the average estimate in a Reuters analyst poll.  Corn planting progress reached 97% by Sunday, matching an average of analyst expectations. The figure was up from 93% a week earlier and ahead of the five-year average of 94%.  Meanwhile, crude is down 94 cents per barrel, the dollar is attempting an upward correction; And, stock index futures are choppy to lower.  Tropical Depression Cristobal will move from south to north across the western half of the Corn Belt today promoting a band of significant rain and localized flooding; Rain will be most significant from AR through eastern MN and NW WI.


Soybean futures were down 2 to 3 cents overnight and are tailing off multi-week highs set in Monday’s session.  Malaysian palm oil prices were up 43 ringgit at 2,391 (basis August) at mid-session as an export duty exemption leads to demand hopes.  Chinese demand was absent Monday breaking a string of 5 consecutive days with export sales announcements and may need to return for the next leg higher.  USDA rated 72% of the crop as good to excellent, up from 70% the previous week.  Analysts on average had expected a smaller improvement of 1 percentage point.  The USDA said soybean planting was 86% complete, up from 75% a week earlier and ahead of the five-year average of 79%.  Analysts on average had expected the government to report soybean planting as 87% complete.


Wheat futures were down 4 cents in Chicago overnight, even in KC and down 2 in Mpls.  USDA said the harvest of winter wheat was 7% complete, up from 3% last week and matching the five-year average.  However, the figure fell short of trade expectations.  Analysts on average had expected progress to reach 12%, with estimates ranging from 9% to 18%.   51% of the winter wheat crop is in good to excellent condition, unchanged from the previous week.  Analysts on average had expected a decline of 1 percentage point.  The USDA rated 82% of the U.S. spring wheat crop as good to excellent, up from 80% a week earlier, while analysts on average had expected no change.  The agency reported the spring wheat crop at 97% planted, behind the five-year average of 99% but just ahead of the average analyst estimate of 96%.  Weekly crop progress sees plant nearly complete at 97%, and crop ratings improving 1% to 75% good to excellent.  Weather looks to stay favorable, and global supplies heavy which will limit rallies.  In tender activity, Ethiopia cancelled a tender for 400,000 tons of optional-origin wheat.


Live cattle futures are called steady.  With slaughter back to 90% plus pre-COVID-19 levels offering market support, plants forge ahead to work through the backlog of cattle.  After losing over $90 last week, retail values were still softer on Monday, but with moderate product movement.  Traders are hopeful that the reopening of many restaurants across the country will spark some stability.  Cash was undeveloped on Monday and will likely lead the trend in cattle prices for the week.


Lean hog futures are called mixed after buying developed in Monday’s session following a sharply lower opening that saw last week’s lows hold support in the nearbys.  Packer margins have tightened as retail values return to last year’s level.  An improved cash market on Monday was supportive and needs to be maintained to support prices.  June is supported with a $5.00 discount to the Lean Hog Index.  Retail values finished the day softer.  Deferred contracts are building a higher trend on an improved technical picture and the prospects of longer-term demand.


Matthew Strelow

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