TFM Sunrise Update 7-20-20


Corn futures were down 2 cents overnight, following seasonal tendencies for prices to work lower into the end of July, and with the crop in overall good conditions, the supply side of the equation is weighing on price.  Dec corn is at 3.37 and has a gap targeted to be filled by technical traders from last week at 3.43-3/4 to 3.42.  Managed Money is estimated to be net short 110,000 corn contracts.  Weekend weather across much of the key Midwestern grain and oilseed production areas in the U.S. was as warm and humid as expected.  Quick drying occurred in many areas and nighttime low temperatures were too warm in parts of the region to give crops much rest overnight.  A cool front moving through the Midwest Sunday and into today will bring a little relief from the heat, but showers and thunderstorms will be a little erratic not only early this week, but throughout the week.  Another ridge of high pressure is expected Friday through Sunday, July 26 that will bring back more heat and stress for livestock and crops.  Weekly Export Inspections are on tap for later this morning followed by weekly updating of crop conditions.


Soybean futures were up 4 cents overnight on follow-through from a strong technical finish last week.  A strong demand tone last week supported the market featuring announced export sales to China and unknown destinations – likely China – every day of the week.  The U.S. dollar has traded lower for the month of July and is back near its recent lows which will help soybean exports continue to rise.  Heading into today, Managed Money is estimated net long 85,000 soybeans; net short 30,000 lots of soymeal, and; long 23,000 soyoil.  Globally, Brazil’s 2020/2021 soy production is expected to reach 131.7 million tonnes, a 5.4% increase over the prior crop year, consultancy Safras & Mercado said, in its first prediction for the new crop year; Soy planted area is seen reaching 37.8 million hectares for the new growing season, an increase of 1.8% compared to 2019/2020.


Wheat futures traded mixed with a weaker tone overnight despite a weaker dollar.  Rumors of China buying SRW last week helped propel the market higher, however, those rumors failed to materialize and, despite stronger-than-expected weekly export sales, prices fell back to support levels and held, setting up an interesting potential week.  Seasonally, wheat prices work lower into August.  Higher global wheat prices could lead the way for U.S. wheat this week.  Newswires show Taiwan tendering for 98,230 tons of U.S. sourced wheat.   Managed Money net short an estimated 5,000 contracts of SRW wheat.


Live cattle futures are called steady to higher while trying to maintain a healthy premium over cash.  In the south most cattle sold for $95-96/cwt or one dollar higher than last week.  In the north live sales came in from $97-100 with the lower end of the ranges in Nebraska.  Expectations are for cash to remain steady to firmer this week.  The strong technical picture may attract additional money flow into the cattle markets this week, but large slaughter supplies will limit rallies.


Lean hog futures calls are mixed as the week begins with traders digesting last Thursday’s price hike fueled by improved cash trade, firm retail values and strong export demand provided.  Improved technicals may set the market up for additional short covering, particularly if supported by fundamentals.


Matthew Strelow

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