TFM Sunrise Update 7-2-20


Corn futures traded two-sided overnight favoring the high side of this week’s stronger trading ranges ahead of this morning’s USDA Weekly Export Sales.  Trade estimates range from 450,000 to 700,000 tons for old crop, and up to 200,000 tons for new crop.  As the corn market manages the 92 million planted acreage number from Tuesday’s USDA report, the focus has shifted to weather forecasts calling for above normal temperatures, which could bring additional short covering and weather premium, particularly with futures contracts suddenly trading above all their respective short and long-term moving averages.  Shower and thunderstorm activity will be drying up as we go through the day today in the Midwest; things then look to be fairly quiet for the next 5 days.  The 6 to 10 day forecast for the Midwest had some changes as the GFS model has turned drier with any rains for the period falling in the far northern Midwest and missing the cropland.  Managed Money is estimated net short 208,000 corn contracts.  Markets will close more than one hour earlier than normal today and then will be closed tomorrow in observance of Independence day.  Night-session trading will resume Sunday evening.


Soybean futures were unchanged overnight.  Weather now is the focus of the market into July with warmer than normal forecast.  A tighter-than-expected acreage forecast help has ushered in some premium for the market along with warmer-than-normal forecasts.  Like corn, soybeans are trading above key moving averages.   Managed Money is estimated to be net long 64,000 soybeans; net short 39,000 lots of soymeal, and; short 2,000 soyoil.   Nov beans are sitting at $9.00 per bushel for the first time since March 9 and traders look fill the gap today at 9.03-1/2 left on the chart from that day when Covid-19 sent a plethora of markets tumbling.  Trade estimates for Weekly Export Sales are 300,000 to 800,000 tons for both the old crop and new crop marketing years.  The USDA May soybean crush was pegged at 180 mil bu (estimate was 181 mil bu) versus 183 mil a month ago and 165 mil last year.  Soyoil stocks were 2.446 bil lbs (estimate was 2.372 bil) versus 2.602 bil last month and 1.699 bil a year ago; And, soymeal stocks were 442,000t versus 341,000t last month and 276,000t a year ago.


Wheat futures called mixed for today after trading mostly steady overnight at all three exchanges.  Strength in row crops has triggered short covering into the wheat market along with a pull-back in the dollar.  Global wheat prices have firmed on dryness concerns, and that is also supportive wheat futures as prices continue to consolidate off of recent lows.  Trade estimates for Weekly Export Sales are 250,000 to 600,000 tons.  In tender activity, Jordan seeks 120,000 tons of optional-origin wheat; Thailand bought more than 100,000 tons of optional-origin feed wheat.  Managed Money is said to be net short 41,000 contracts of SRW wheat.


Live cattle futures are called steady to higher, supported by technical buying and money flow.  Cash trade is developing this week at $95-98 except in Texas where a few cattle sold Monday at $92-93. The 4th of July falls on Saturday this year making it unclear how slaughter volumes will be impacted, but they will be smaller.  Retail values are trying to find stability near $208 on Choice trade.


Lean hog futures are called mixed.  Despite firmer cash trade and positive gains in retail values, the heavy fundamental supply of market hogs weighed on hog futures Wednesday.  Choppy price action can be expected ahead of the 3-day holiday weekend.


Matthew Strelow

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