TFM Sunrise Update 8-14-2020


Corn futures retreated 2 to 3 cents overnight from an impressive rally off of contract lows following Wednesday’s USDA report.  Dec corn is at 3. 36-1/2 and is up more than 15 cents for the week despite a heavy supply picture.  Traders did pause at the 100-day moving average in Thursday’s trade and just short of the 340 level.  Demand for corn is supportive and may be some of the reason for the price surge.  China purchased 110,000 metric tons of corn on Thursday, split between old and new crop. The 6 to 10 day weather forecast for the Midwest has both models showing mainly dry conditions but, fronts that move through; The GFS has a bit more moisture that the European model over the period.  Temperatures are seen average to a bit below average over the next 10 days.


Soybean futures were also softer overnight on profit-taking and active farmers selling of row crops.  The market had already jumped as much as 35-1/2 cents from yesterday’s low fueled by active export news.  China has put together another string of daily purchases and cumulative soybean sales have reached 105% of  USDA’s forecast for the 2019-20 marketing year versus a 5 year average of 101.6%.  Larger-than-expected numbers in the USDA report on Wednesday are viewed as headwind for the market moving forward, but Nov beans pushed to the $9.00 level and the 200-day moving average this week.  This will be some key resistance over top of the market.  Today is the last trading day for August futures.  Weather forecasts are expected to be cool, but dry for the next few weeks.


Winter wheat futures eased overnight, slipping 2 cents in most contracts as prices plot a mostly sideways course.  Global wheat supplies are heavy, and that limits been affecting the ability for prices to stage rallies.  Mpls wheat was unchanged overnight.  Egypt completed another wheat tender for 415,000 mt, filled by Russian wheat.  U.S. prices are still too high versus the global market even with the lower dollar.  Look for more price consolidation with a weaker bias.  Strength in row crops, though may offer support to wheat.


Live cattle futures are called steady to higher. October cattle traded higher for the fourth consecutive day and closed over the 110 price level on Thursday, the highest level since March 4.  Despite deliveries against the August contract, prices held firm on Thursday’s trade.  Cash strength with up to $105/cwt in some regions and improved midday retail values that provided support in the cattle market on Tuesday has had a lingering affect on this week’s price direction.  Look for more upside probing before pre-weekend profit-taking leads to choppy trade.


Lean hog futures are called mixed.  Strong gains in the retail market supported the lean hog market on Thursday despite higher pork production.  Prices held support levels on Wednesday and saw some follow-through on Thursday, improving the technical picture.  Today is the last trading day for the August hog contract.  The supply side of the hog market remains heavy, but the uptrend this week in cash and pork product prices means October futures hold a much smaller-than-normal discount to the cash market.


Matthew Strelow

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