TFM Sunrise Update 8-12-2020


Corn futures are expected to see mixed trade this morning following a quiet night ahead of the August edition of the USDA Crop Production report due out at 11 AM Central.  Row crops have not had a solidly bullish reaction on USDA’s August report day since 2013, and the past three years have been downright bearish, especially for corn.  Expectations are for corn yield to be raised to 180.5 bushels per acre and new crop carryout to 2.800 billion bushels.  Some analysts are suggesting this year’s crop could eventually yield between 182 and 184 bpa.  However, the field and elevator damage from this week’s storms in Iowa will not be reflected in today’s data and may be a source of support as the trade digests the numbers versus the bearish tilt prices are currently in.  Early estimates show that tens of millions of bushels worth of commercial grain storage, as well as millions of bushels of on-farm storage bins owned by producers were either impacted, destroyed or severely damaged by the storm.  How the USDA handles demand can go either way for carryout projections.  Heading into today’s trade, Managed Money is net short an estimated 167,000 corn contracts.


Soybean futures are called steady to lower ahead of today’s USDA report.  Prices were narrowly mixed overnight with a weaker bias.  Favorable demand news highlighted by a fourth consecutive day of soybean export sales allowed Nov soybean futures to hold support at the 100-day moving average and move higher.  China is continuing to buy U.S. goods, particularly commodities, under its Phase 1 trade deal with the United States, despite rising tensions over Hong Kong and other issues.  The USDA is expected to raise soybean yield to 51.2 bushels per acre, and new crop carryout up to 524 million bushels.  Weather stays overall favorable for soybeans and development of this year’s crop.  Heading into today’s trade, Managed Money is net long an estimated 40,000 soybeans; net short 23,000 lots of soymeal, and; long 44,000 soyoil.


Winter wheat futures were down 3 to 4 cents overnight, spring wheat steady.  A weak technical picture in the complex keeps the market poised for additional liquidation, but prices are awaiting confirmation of higher U.S. all-wheat carryout projections of up to 946. mil bu which would be a slight increase over the previous month.  Managed Money is net short and estimated 9,000 contracts of SRW Wheat.  U.S. wheat prices are struggling versus global wheat prices and the drop in the dollar is now stabilizing.  How the USDA handles the global wheat supply picture will likely influence direction in the wheat market, too. in tender activity, Egypt bought 120,000 tons of wheat from Russia; Syria seeks 200,000 tons of EU/Black Sea wheat.


Live cattle futures are called steady to higher. Cash strength, improved midday retail values and better-than-expected beef prices provided support in the cattle market on Tuesday.  Cash was beginning to surface at $103 in some regions, $3 over last week.  Despite deliveries against the August contract, prices held firm on Tuesday’s trade.  Technically, the Oct contract pushed through resistance at last week’s high and has shrugged off a bearish, week-long trend which opens the door to more follow-through to the upside.


Lean hog futures are called mixed to higher.  The hog market was oversold and could see additional short covering on the hooves of profit-taking in Tuesday’s trade.  The near-term trend is improving as the 100-Day moving average resistance now serves as a pivot point for Oct and Dec futures.  A firming in the cash index and strength in midday retail values provide support for the market.


Matthew Strelow

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