TFM Sunrise Update 7-22-20


Corn futures traded narrowly mixed overnight with Dec setting a range between 3.30-1/4 and 3.33.  The 3.30 price level is becoming an area of nearby support for the contract as non-threatening weather forecasts press on prices.  Weekly Ethanol Stats today and exports tomorrow may give prices some ‘demand’ support mid-week following a round of unchanged crop ratings on Monday afternoon.  Again, December corn prices did hold 3.30 support on Tuesday.  This and another multi-week low in the dollar overnight could set up an additional technical bounce.  The Midwest 6 to 10 day has the GFS model showing rainfall in most of the Midwest with good coverage; the European model has lighter rainfall amounts favoring the southern sections of the Midwest; temps are seen near average for the rest of the week turning a bit above average later but, no severe heat.  Managed Money is estimated net short 140,000 corn contracts.


Soybean futures were down 3 cents overnight amid topping action seen in soyoil contracts overnight.  Meal contracts were firm.  Soybean prices are also experiencing long liquidation after crop ratings rose somewhat unexpectedly on Monday afternoon.  The trade estimates Managed Money net long 85,000 soybeans; net short 30,000 lots of soymeal, and; long 25,000 soyoil.  Underlying support stems from the demand side of the market with China and an unknown destination purchasing beans for the 7th consecutive day.  We view the break lower in the U.S. dollar as aiding a potential demand-driven market.


Wheat futures were unchanged overnight.  The weaker dollar Index is likely to support wheat futures while drawing global competition for cheaper supplies.  Global wheat prices remain firm, but overall global supplies will limit price rallies.  With U.S. wheat harvest already 74% complete, and ideas that Monday’s selloff was overdone, traders should step back from aggressively selling wheat at this juncture in time.  The trade estimates Managed Money net short 10,000 SRW wheat contracts.  In tender activity, Egypt bought 115,000 tons of Ukrainian wheat; Jordan bought 60,000 tons of optional-origin wheat; Pakistan bought 300,000 tons of Black Sea region wheat; Taiwan bought 98,320 tons of U.S. wheat; Philippines seek 110,000 tons of optional-origin feed wheat; And, S. Korea bought 134,000 tons of optional-origin corn and 60,000 tons of feed wheat.


Live cattle calls are mixed. Cash was beginning to develop on Tuesday, with some trade at $96,  steady to firmer from last week.  Improved packer margins and the big premium of futures over cash leave room for potential cash strength, but large slaughter supplies are seen as a barrier to significant rally attempts, so look for prices to stay choppy this week going into Friday’s Cattle On Feed report.


Lean hog futures are called mixed.  Strong midday retail values helped support front-month hog futures on Tuesday and should buoy the market in the face of large supplies of slaughter animals keeping rallies in check.  Strong demand will remain key to price direction as futures continue to hold a premium to the cash market.


Matthew Strelow

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