TFM Sunrise Update 8-4-20


Corn futures were down 3 cents overnight following the latest round of Weekly Crop Ratings.  USDA on Monday rated 72% of the U.S. corn crop as good-to-excellent, unchanged from a week ago and in line with trade expectations.  This, and the crop weather keeps the technical picture weak and supports Managed Money’s net short position in the market.  Dec corn is teetering on support this morning at 3.25-1/2, Friday’s low.  A potential yield adjustment higher in the August 12 WASDE report, reflecting good crop conditions is likely to press the market lower in search of a seasonal low and a test of the contract low of 3.22.


Soybean futures lost 4 cents overnight amid an uptick in crop ratings.  Meal was also lower, but soyoil rose to fresh 5-1/2 month high overnight.  USDA pegged the crop at 73% good-to-excellent, up 1% from last week.  Weather is overall favorable for the development of a large U.S. soybean crop, but the market will be keeping a close eye on longer range forecast for the end of August with potential warmer conditions.  The potential of this year’s crop size is winning the battle with the rally potential from the strength of demand.


Wheat futures traded 3 to 4 cents lower in Chicago overnight, 1-1/2 weaker in KC and 1 to 2 cents lower in Mpls.  The wheat markets are seeing chart support fail with a bias toward seasonal weakness.  The USDA said the U.S. winter wheat harvest was 85% complete as of Sunday, lagging the five-year average of 88% and below the average analyst estimate of 89%. The harvest was 81% complete a week earlier.  For spring wheat, the government said the harvest was 5% complete, behind the five-year average of 10% and the average analyst estimate of 8%.  The USDA rated 73% of the spring wheat crop in good-to-excellent condition, up from 70% a week earlier. Analysts on average had expected no change.  U.S. dollar index has firmed the past couple trading sessions, but is lower this morning.  Elsewhere, Russian wheat harvest results have improved, putting pressure on global wheat prices, and with supplies plentiful it will make rallies difficult.


Live cattle futures are called steady to higher. Technical strength and growing open interest show money flow moving into the cattle markets, but overbought technicals warrant some caution.  October live cattle closed higher for the fifth day in a row on Monday and at another nearly 5-month high.  Cash trade was undeveloped on Monday, but the strength in futures has cash projected to be steady to higher.  Cattle in Kansas and Texas will all be priced at $100/cwt and higher.  August is currently at $103 and Northern sales are reaching levels close to futures, particularly in Iowa who has the tightest supplies in the country.


Lean hog futures are called mixed to lower.  August futures, at 49.87, broke through support and are likely headed lower to challenge the recent contract low at 47.52.  Burdensome supplies of slaughter hogs including a jump in pork production last week of more than 10% versus a year ago keep sellers active and cash markets under pressure. Technical trends are weak and oversold, as front month hog futures look for a bottom.


Matthew Strelow

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