TFM Sunrise Update 7-28-20

CORN

Corn futures fell back to near-term support price levels overnight after USDA on Monday afternoon reported good-to-excellent ratings for U.S. row crops, above analysts’ estimates.  Timely rains in key growing areas helped protect the crops as corn passed through its pollination phase.  The USDA rated 72% of both corn and soybeans as good-to-excellent, better than the average of estimates, which had the crops holding steady at 69% in the past week.  Dec corn shed 4 cents to 3.30-1/2 following an unsuccessful test of the 10-day moving average resistance level brought on by a lack of threatening weather in the near term forecasts.  The corn crop is in good shape in the vast majority of the country, and though China demand has been strong lately, there just isn’t much to suggest that the heavy supply will be alleviated anytime soon.  The weakened dollar is making a technical bounce this morning after forging new lows on Monday.

SOYBEANS

Soybean futures saw double-digit losses overnight after trading an ‘inside day’ on Monday, waning upward momentum.  The market appeared to be at a crossroads after Chinese demand helped to keep buyers interested in this up-trend.  The market seemed comfortable with the weather premium built in over the past few weeks, but better-than-expected weekly crop ratings have depleted price strength.  Estimates for both the soybean and corn ratings ranged from 67% to 71%.  Nov beans slumped back below the contract’s 10-day moving average and $9.00 mark on losses of 11-1/2 cents to 8.95.   August soybean contracts enter First Notice Day on Friday which will cause a mild shuffling of long positions throughout the week.

WHEAT

Winter wheat markets were narrowly mixed overnight as a weak dollar provides support in the face of record global inventories.  At this point, Black Sea wheat still looks like the cheapest in the world, but the dollar is currently at its lowest levels since June of 2018.  China has shown a dire need for feed grains, and U.S. wheat could be a target of further purchases.  Technical resistance levels have held strong, and wheat markets are lacking the spark to push sharply higher.  On Monday afternoon, the USDA reported the winter wheat harvest as 81% complete, short of analysts’ estimation of 83% harvested but up from 74% a week earlier.  Spring wheat was up 3 to 4 cents overnight.  The government’s first report on the harvest progress of that crop for the year showed 1% harvested compared with a forecast of 3% complete.

CATTLE

Cattle markets are called lower this morning.  With production running ahead of last year due to heavy carcass weights, as well as questionable beef demand, the market looks a bit toppy.  Monday’s closes cemented an ugly start to the week with prices posting bearish outside sessions with closes below technical support.

HOGS

Hog markets are called mixed this morning.  Pork prices have not been able to hold on to strong buying interest despite sharp mid-day increases.  The cash index is trending higher, but pork production could very well overwhelm current demand.  China has been a big buyer of U.S. pork lately, but it is difficult to count on this continuing with the volatile nature of US-China trade relations.

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Lisa Heder

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