TFM Sunrise Update 8-10-20


Corn futures begin the week basically unchanged from Friday’s lower settlement prices as the expectation for a large corn crop grows.  USDA is likely to confirm this in the upcoming August Supply/Demand report which, historically does not do any favors for the market, price-wise.  Yield projections for Wednesday’s WASDE report are expecting be just north of 180 BPA at an average guess of 180.4.  September corn pushed to a new contract low on Friday as did the Dec contract to 3.20.  Overnight, that low in Dec held, but the technical trend is clearly lower.  Just how low this market is poised to go is yet to be determined, and with First-Notice-Day for September futures scheduled for Aug 31, it would appear we’ll see more price pressure between now and then as growers make basis decisions.  Weekly Export Inspections and Crop Ratings are out today.


Soybean futures are called steady to lower for today after slipping lower overnight to a fresh 5-1/2 week low.  Despite favorable demand news last week, soybean futures broke through near term support and fell to their lowest level since the end of June. Nov beans go to 8.65-/14 last night, below the contract’s 100-day moving average support at 8.69-1/2.  Independent analysts expect the soybean yield to move to 51.3 on Wednesday.  The technical picture is weak and the trend is lower.  Looking at weather, our sources over the weekend report: Regardless of which computer forecast model that one uses for the next ten days the bottom line remains the same; that no broad-based region of aggressive drying is going to occur.  Pockets of moisture stress may occur, but there will be no extreme temperatures and enough variation in crop weather will occur to support favorable plant development through the middle part of this month.  Of course, those areas in Iowa, the northwestern Plains and neighboring areas will continue to deal with moisture shortages that will keep the pressure on for late season crop development


Wheat futures were down 2 to 3 cents overnight, likely influenced by the negative feel in row crops.  The dollar is forming some semblance of a bottom after crashing the past 5 weeks.  A weak technical picture in wheat weighed down by strength in the Russian and Australian wheat crops makes the market susceptible to additional long liquidation.   U.S. wheat prices are struggling versus global wheat prices.  Despite December Chicago wheat holding the $5.00 support levels on Friday and hitting that juncture again last night, the trend is lower, looking for potential season fall low.


Live cattle futures are called mixed to lower.   Despite cash trade range $2-3 higher, live cattle contracts posted bearish reversals on daily charts Thursday, and saw additional follow through on Friday.  Typically, early August shows seasonal weakness into early September, and with a market over-bought, the cattle market may be getting tired and seeing some long liquidation.  The key to watch will be follow through off of late last week’s price action.


Lean hog futures are called mixed to higher.  Hog futures pushed through resistance levels on Friday, and prices broke out of the multi-month consolidation range.  The strength in the market was fueled by a late week surge in retail values that helped usher in some short covering into the market.   Current market fundamentals will limit rallies, but follow through today could lead to additional short covering.


Matthew Strelow

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