TFM Sunrise Update 8-5-20


Corn futures stabilized overnight after a rough outing on Tuesday including new contract lows as the market anticipates strong yields and crop ratings that all but ensure large supplies this fall.  The price drop is factoring in expectations for the USDA to raise the yield projection in next week’s USDA report.  The technical picture is weak, and the market is seeing funds add to their short position.  Managed Money is net short an estimated 183,000 corn contracts.  Dec corn gained 2-1/2 cents  to 3.22-1/2 with Weekly Ethanol Demand numbers on tap for today followed by Weekly Export Sales tomorrow morning.  The dollar is down sharply after a brief early-week rebound.  Tender activity shows S. Korean feed groups bought 69,000 tons of optional-origin corn, and seek 69,000 more tons of optional-origin corn.


Soybean futures were firm overnight.  Nov beans gained 2-1/2 cents, meal $1/ ton and soy oil was down slightly.  Expectations for a potential record yield, a 1% hike in crop ratings to 73% good-to-excellent and favorable weather conditions are taking any weather premium out of the soybean market.  Demand overall is good, but the market failed to see a USDA export sales announcement on Tuesday, with left the path of least resistance lower.  Bean futures did hold the bottom of the trading range, but short term charts are weak technically.  Managed Money is net long an estimated 58,000 soybeans; net short 23,000 lots of soymeal, and; long 53,000 soyoil.


Wheat futures were firm overnight along with row crops and a lower dollar.  Strength in the Russian wheat crop and demand concerns for U.S. wheat are pressuring wheat prices, though.  Traders broke chart resistance on Tuesday, and are opening the door for additional long liquidation and short selling in a seasonally weak window for wheat prices.  Sept Chicago wheat futures, trading at 5.10 is looking to find chart support near the psychological $5.00 price level should selling continue.  In tender activity, Egypt seeks optional-origin wheat,  Jordan seeks 120,000 tons of optional-origin wheat; and, Ethiopia seeks 400,000 tons of optional-origin wheat.


Live cattle futures are called mixed.  Prices softened on Tuesday, but overall technical strength and growing open interest is an indication of money flow moving into the cattle markets with traders checking support at the 200-day moving average under the Oct contract.  Cash trade was beginning to develop on Tuesday, with some $100 trade, $2-3 higher than last week as futures maintain a premium.  Seasonally, October cattle trade lower from the first-notice-day on August cattle, which begins on August 10.


Lean hog futures are called steady to lower.  Aug and Oct hog futures, at 49.70 and 49.02, respectively, are challenged, and though technically oversold, may be looking at a push to the recent contract low.  Those lows reside at 47.52 and 46.47.  Burdensome supplies of slaughter hogs keep cash markets in check, pressuring prices as the market tries to absorb the extra production.  Deferred contracts are choppy, but the technical trend is sideways to lower.


Matthew Strelow

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