TFM Sunrise Update 7-24-20


Corn futures were flat overnight while remaining choppy, looking for short term direction.  The trend is lower, but the market has been supported by China buying soybeans and booking 1.967 mil tons of U.S. corn, the biggest weekly total on record.  For the week, Dec, at 3.36 is up 4 cents with near-term support around 3.30.  Yesterday’s weekly export sales were longer-term friendly for corn with 91 mil bu booked for new crop delivery.  Daily stochastics had dipped into oversold territory, suggesting the selling may be letting up soon.  The lower trend in the U.S. dollar is also supportive.  Managed Money is estimated net short 122,000 corn contracts heading into today’s trade.  Weather-wise, the 11 to 16 day forecast is back to average rainfall and average to a bit below average temps across the Midwest through Aug 7.


Soybean futures traded mostly unchanged overnight with Nov beans settling in at the $9.00 price level.  Weather is still a limiting factor in the soybean market.  However, a steady dose of daily export sales announcements has the 2020-21 export pace off to a strong start.  China was a buyer of 1.696 mil tons, the highest total since March of last year despite talk of increasing trade tensions and the closure of China’s consulate in Houston.  New crop soybean sales were 84.5 mil bu last week.  Front month soybean futures are also at or above the psychological $9.00 level, which could attract additional technical support.  Soymeal is also gaining technical traction after Dec closed back above the 60-day moving average.  Managed Money is net long an estimated 94,000 soybean contracts and have been enjoying the long bean/short corn spread. They’re estimated net short 25,000 lots of soymeal and net long 22,000 soyoil.


Wheat futures were up overnight and are in a volatile consolidation pattern in the upper half of the of the trading range for Chicago contracts.  Managed Money is net short an estimated 9,000 contracts of SRW Wheat.  The weak U.S. dollar that has export possibilities is supportive. The dollar made another new low overnight, just barely, and is attempting to post a bit of a correction this morning.  In addition, the international Grain Council revised downward their forecast for wheat production this week, most notably in the EU and Russia.  Wheat futures will look to continue to consolidate and await news leading to a move in either direction. Sept Chicago wheat advanced 6 cents to 5.35-1/2, KC was up 5 to 4.46-1/4; and, Sept MPLS was up 4 to 5.14.


Live cattle futures are called mixed.  Cash was still developing on Thursday with more trade pushing towards $98/cwt.  Look for more posturing and positioning ahead of this afternoon’s monthly Cattle on Feed and Cattle inventory reports.  Expectations are for: total Cattle of Feed at 100%, Placements at 103.8% and Marketings at 101% of last year.  Cattle inventory is projecting the 2020 calf crop to be 99% of last year.


Lean hog are futures called steady to firmer.  Supportive cold storage numbers, solid export demand and strong midday retail values supported hog prices on Thursday.  Retail values have been trending higher, supporting cash prices.  Technically, the hog market is building a base, but rallies are limited with supplies of slaughter hogs still in the pipeline.


Matthew Strelow

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