TFM Sunrise Update 7-15-20


Corn futures were unchanged overnight with a weaker bias.  Despite China purchasing nearly 70 million bushels of corn, corn futures failed to find any traction on Tuesday, closing weaker while taking out Monday’s lows and then seeing more weakness overnight.  Weather models are staying warm, but keeping rain in the forecast including a radar mass this morning covering a significant portion of the nation’s mid-section.  We’ll get routine demand data in the form of weekly ethanol statistics today followed by exports tomorrow. Meanwhile, Managed Money has built back their net short holding to an estimated 190,000 contracts.


Soybean futures were up a nickel overnight with Nov beans getting back to the contract’s 20-day moving average at 8.92-3/4. Chinese trade tensions and weather keep selling pressure active, but the market’s ability to maintain gains on Tuesday was important. The 6 to 10 day forecast has models in agreement with moderate rainfall for most regions of the Midwest.  The 11 to 16 day forecast for the Midwest remains mixed with the GFS model showing average to a bit below average rains and average temps while, the European still sides with ridging.  Managed Money is estimated to be net long 83,000 soybeans; net short 30,000 lots of soymeal, and; long 14,000 soyoil.


Wheat futures traded 3 cents higher overnight in keeping with the weaker trend of the greenback which reached a multi-week low overnight.   Overall, look for wheat futures to stay in a consolidation mode at the top of the latest rally.  Chicago wheat futures can potentially see a fourth straight day of trading an ‘inside-day’ while struggling with resistance near $5.35 on the September contract, though strength in global wheat prices and the softer dollar builds support underneath the market.  Seasonally, the next few weeks are weak for Chicago wheat futures, favoring the funds who are estimated to be net short 8,000 contracts of SRW wheat.  Tender activity showed Egypt opting for 114,000 tons of Russian wheat; Jordan bought 60,000 tons of optional-origin wheat; And, Ethiopia passed on 400,000 tons of optional-origin wheat.


Live cattle futures are called steady to lower as the market holds a premium to the cash market.  Cash trade developing steady with last week at $95 in the south is disappointing to the markets and we’re seeing the lowest beef price since October 2018.  With cattle futures slumping and breaking near-term support on Tuesday, look for additional long liquidation with the break.


Lean hog futures are called mixed.  Hog prices are likely to stay choppy to weaker as the July contract expires today.  August’s premium over July with heavy slaughter supplies makes the market vulnerable to selling pressure, particularly with a disappointing cash market adding to weakness and futures pushing down against downtrend channel resistance.


Matthew Strelow

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