TFM Sunrise Update 7-16-20


After losing a lot of ground so far this week, corn futures were up 3 cents overnight.  Wet weather forecasts has kept a lid on grain prices, however, in the past two days, China has purchased more than 75 million bushels of corn from the U.S. with Tuesday’s reported purchase being the largest one-day U.S. export sale to China on record. Ethanol demand continues to improve as well. Trade estimates for this morning’s USDA Weekly Export Sales are 600,000 to 1.30 mil tons for old crop, 900,000 to 1.60 mil tons for new crop.  In tender activity, S. Korea feed groups seek 55,000 tons of optional-origin corn; passed on 69,000 tons; And, bought 130,000 tons of optional-origin corn.  On the weather front, last evening’s GFS model run was notably drier in the eastern half of the Corn Belt July 25 – 27; the decrease was due to the evening’s run being too aggressive with a large ridge of high pressure shown to spread over much of the region.  Another notable change was the decrease of rainfall in the southern half of the Corn Belt July 28 – 30 and across the southeastern states as well.  The 11 to 16 day forecast has models back in agreement with a well defined ridge sitting over the Midwest bringing hot and dry weather.


Soybean futures were up 3 to 4 cents overnight along with firmness in meal and oil.  The market experienced a second consecutive day of Chinese soybean purchases for new crop delivery.  Afternoon rumors of China picking up an additional 5 cargoes of new crop soybeans for the 2020-21 marketing year on Wednesday is helping turn the tide on the recent price retreat.  Yesterday’s NOPA Crush report showed the largest June crush on record at 167.263 million bushels of soybeans.  Weather forecasts, though, will likely keep the market range-bound.  For the Nov contract, currently trading at 8.86, that 41 cent range features 9.12-1/2 from July 6 on the high end and Monday’s low of 8.71-1/2.  Trade estimates for this morning’s USDA Weekly Export Sales are 300,000 to 450,000 tons for old crop, 400,000 to 900,000 tons for new crop.


Chicago wheat futures were down 3 cents overnight in a mild technical correction following a big rally yesterday on short-covering and infusion of speculative money tied to talk of China buying two cargoes of US SRW.  Another factor is a new low for the month in the U.S. Dollar Index making U.S. wheat more attractive on the global market.  Recent rains have also slowed harvest pressure with 68% of the winter wheat crop harvested vs the 5-year average of 66%.  KC and MPLS wheat traded mostly steady overnight.  Despite strong global supplies, global wheat prices stay firm, helping to support the overall market.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 650,000 tons.


Live cattle futures are called steady to higher. Cash trade developing steady to firmer than last week at $95-96 in the south and money flow, is viewed as friendly factor in pushing cattle prices higher.  Prices rallied off technical support on Wednesday, now challenging the top side resistance.  Strength in feeder cattle prices on lower corn  values helps bring buyer support into the live cattle market.


Lean hog futures are called steady to lower.  Hog prices are likely to stay choppy as the August contract takes over as the lead month.  The current premium over the expired July contract with heavy slaughter supplies makes the market vulnerable to weakness.  On the other hand, price support stems from strong retail values with carcasses closing $2.71 higher helping to prop up the market assisted by retail and export demand being a key mover of product in the face of large supplies.


Matthew Strelow

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