TFM Sunrise Update 8-7-20


Corn futures were steady overnight, staying in consolidation mode with choppy two sided trade expected ahead of the weekend and next Wednesday’s monthly USDA Supply/Demand report.  Support is holding at 3.20 under December corn as the trade weighs the longer-term demand picture competing with the potential for a large crop filling silos and plugging the elevators.  The dollar is higher this morning while building a base of support at recent lows.  All eyes will be on what comes of the weekend forecast for Iowa where crops are deteriorating.  Last evening’s GFS model run was drier across much Iowa Wednesday and removed most of the rain from an event the mid-day GFS model run had suggested; The mid-day European model run was most aggressive with rainfall for Iowa in the first week of the outlook.  Temps are seen running close to average for the first 7 to 10 days for the Midwest.  Meanwhile the trade is pausing to digest the latest escalation by President Trump in his confrontation with Beijing as the U.S. seeks to curb China’s power in global technology.


Soybean futures traded two-sided overnight with a weaker bias following selling pressure this week.  Nov beans, at 8.76, are trying to hold support at the bottom of the trading range, but the short-term technical trend is clearly lower.  Meal was mostly steady, soyoil lower.  Malaysian palm oil prices were down 4 ringgit at 2,761 (basis October) awaiting monthly trade data on Monday.  Expectations for increased yield potential on the U.S. soybean crop will likely result in an increase in carryout projections despite strong demand.  Weekly export sales showed a staggering 2.6 million metric ton figure for new crop on the books last week.


Wheat futures were firm overnight after a down week.  Chicago wheat lost 30 cents this week, and half of the rally that started at the end of June.  The price drop leaves contracts below all their respective moving averages and technically oversold.  KC and MPLS wheat are defining contract lows on downward price discovery.   The bountiful Russian wheat crop and demand concerns for U.S. wheat are seen as a bearish catalyst for the move as U.S. wheat struggles versus global wheat prices, despite the weaker U.S. dollar.


Live cattle futures are called steady to lower.  Despite cash trade ranging $2 to $3/cwt higher, live cattle contracts posted bearish reversals on daily charts.  Typically, early August shows seasonal weakness into early September, and with a market over-bought, the cattle market may be getting tired and thus attracting long liquidation.  Today is the last trading day for August cattle options.  The key today will be whether we see follow through off of yesterday’s price action where Oct cattle saw prices reverse course at the contract’s 200-day moving average resistance line up at 109.27.


Lean hog futures are looking at a choppy open today.  Burdensome supplies of slaughter hogs keep cash markets in check, pressuring prices on the front month contract.  Deferred contracts are choppy, but have worked higher, challenging the $50 to $51 level resistance.  Those prices were supported by firmer retail prices, keeping some long-term optimism in the hog market.


Matthew Strelow

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