TFM Sunrise Update 7-13-20


Corn futures are lower this morning with July down as much as 7-1/4 cents to 3.33-1/4 and Dec dipping to 3.34-3/4 on losses of 10 cents at one point.   Friday’s USDA Supply/Demand report held few surprises, and China stepped in to work on fulfilling its Phase 1 trade deal obligation buy purchasing its largest single-day purchase in 25-1/2 years, behind only a 1.45-million-ton purchase in December 1994.  The USDA said China bought 765,000 tons of corn for shipment in the current marketing year which ends Aug 31 and 600,000 tons for shipment in the following year.  However, markets saw long liquidation and profit taking as weather models softened their aggressive forecast for heat across the corn belt early this week.  In tender activity, Iran seeks 200,000 tons of option origin corn.  The 6 to 10 day Midwest forecast has difference in the models with the GFS being wetter than the European model; Temps look to run above average, but the GFS has light to moderate rainfall for most sections of the Midwest while the European model favors northern sections of the Midwest with precipitation;  The 11 to 16 day Midwest forecast sees close to average rainfall and slightly above average temps.  Futures gapped lower overnight and are now below their respective 100-day moving averages that had been serving as support all of last week.  Managed Money is estimated to be net short 151,000 corn contracts.


Soybean futures eased overnight with Nov off nearly a dime to 8.81.  Meal and oil were also weaker.  The July Supply/Demand report provided very little surprises on Friday, but changes in weather models brought selling pressure into the market.  Going into this week, forecasts hold chances for rain storms in most corn and soybean producing states.  Managed Money is estimated net long 90,000 soybeans; net short 23,000 lots of soymeal, and; long 12,000 soyoil.  In tender activity, China seeks 200,000 tons of soymeal.


Wheat futures are called steady to higher.  Prices were unchanged overnight.  Despite slight increases in US and global stockpiles on Friday’s supply and demand reports, global wheat prices continue to reflect the concerns regarding the quality and quantity of European wheat harvest and should provide cues for U.S. wheat futures this week, as well as the dollar that appears to be wanting to weaken.  In addition to major purchase of corn, China also booked deals for 130,000 tons of U.S. hard red winter wheat and 190,000 tons of U.S. hard red spring wheat.  Heading into today, Managed Money is estimated net short 3,000 contracts of SRW wheat.


Live cattle futures are called steady to firmer with choice beef finding a price support floor around $204/cwt and cash cattle markets hovering $97 to $98/cwt, or in some places as high as $100.  August futures held a range of $2.50, which was the narrowest range since early February.  The improved technical picture and a steady to firmer cash market last week, offers up the potential for more money flow into the cattle market.  Open interest in climbing in this seasonal window which is also supportive of price.


Lean hog futures are called flat to firmer after finishing last week with a bullish weekly reversal amid a surge in demand for pork.  Improved retail values helped keep cash from slipping too hard this past week, supporting the front month contracts.  Hog markets are still dealing with burdensome supplies of slaughter hogs which will limit rallies.


Matthew Strelow

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates