TFM Sunrise Update 6-18-20


Corn futures were higher overnight after finishing off early session lows on Wednesday as Weekly ethanol statistics continue to improve helping build support in corn prices.  Contracts gained 3-1/2 cents with Weekly Export Sales data on tap for 7:30 AM CST.  Trade estimates range between 450,000 and 850,000 tons for old crop, 50,000 and 300,000 tons for new crop.  Look for choppy trade to continue in corn, held in check by a weak wheat market and large supply picture that will thwart any rally potential.  The market focus will also hone in on upcoming weather forecasts and projected rainfall totals for the weekend.  The 6-10 Day Forecast U.S. forecast had rounds of showers and thunderstorms from Monday through Wednesday bringing moderate rainfall to near 100 percent of the Midwest.


Soybean futures were up 2 to 3 cents overnight.  July soybean futures rallied this week to close above the 100-Day moving average for the first time since January, opening the door for additional short covering or renewed buying.  Rumors of Chinese business again for U.S. soybeans hints at more buying support for the market.  The U.S.-China trade deal shows no signs of weakening despite clashes between the two nations over the coronavirus pandemic, China’s crackdown on Hong Kong’s autonomy, and China’s falling behind on purchases of U.S. goods, U.S. Trade Representative Robert Lighthizer said; every indication is that in spite of this Covid-19, they are going to do what they say.  Weekly export sales this morning are targeting 500,000 to 1.20 million tons for old crop beans, 600,000 to 1.30 mil for new crop.


Wheat futures made a token bounce of 1 to 2 cents overnight after giving up 10 to 15 cents the past two days.   Weak technical closes leave the door open for additional long liquidation.  Russia withholding any export quota through December has put pressure on wheat prices, as July is trading at its lowest point since September.  The US dollar has bounced back from last week’s lows which doesn’t help with US export competitiveness, and the winter wheat harvest pace is improving.  Trade estimates for this morning’s USDA Weekly Export sales are 250,000 to 500,000 tons.  For tender Activity, Egypt seeks optional-origin wheat; Tunisia seeks 176,000 tons of optional-origin wheat; Japan bought 76,143 tons in a routine purchase sourced from U.S. and Australia; Jordan passed on 120,000 tons of optional-origin wheat; And, Thailand bought 60,000 tons of optional-origin feed wheat.


Live cattle calls look two-sided for this morning’s opening ranges.  Cash trade is starting to develop and the trend looks softer than last week, but the overall tone improved from earlier in the week for majority of trade at $102.  Live cattle prices will likely stay choppy into Friday’s Cattle on Feed Report.  Cattle placements and marketings in May dropped from a year earlier after slaughterhouses closed temporarily or slowed operations due to outbreaks of the new coronavirus among plant workers, analysts said.  Marketings of cattle from feedlots to processing plants are heavily correlated with livestock slaughter.


Lean hog futures called steady to lower.  Overall cash weakness and large slaughter supplies limit rallies. Weak technical closes on Tuesday and overall cash weakness creates the potential for additional long liquidation.  Hog production continues to recover inside of China and was better than expected in May, and pig prices are up 15.6% for the month and up 109% versus last year.  Pig inventories and breeding sows continue to expand according to the head of the agriculture ministry’s animal husbandry bureau.  The number of breeding sows expanded 3.9% month over month which was the eighth-consecutive increase.


Lisa Heder

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