TFM Sunrise Update 7-7-20


Corn futures were down 3 to 4 cents overnight.  USDA rated the country’s corn crop 71% Good-to-Excellent after the markets closed on Monday in its weekly crop progress report, down 2 percentage points from a week ago.  The trade was expecting a smaller decline in the neighborhood of 1 percentage point.  U.S. Corn silking was 10% versus 4% a week ago, 7% last year, and 16% average.  Overnight prices initially stabilized near their closing ranges before drifting lower toward their respective 100-day moving averages as threatening forecasts wane.  Total corn demand is still a mystery moving forward with ethanol demand still below pre-Covid19 levels.  We’ll get weekly data tomorrow, Exports on Thursday and the July Supply/Demand report on Friday.  Erratic shower and thunderstorm activity across much of the Corn Belt through next Monday will lead to some pockets that receive enough rainfall for favorable crop development and some pockets that get missed with increasing crop stress.  MI and OH are most in need of rain due to having the driest topsoil.  Rain will be more substantial in the southwestern corn belt from eastern NE to southwestern IA, eastern KS and western MO.  Meanwhile, Managed Money is net short an estimated 173,000 corn contracts.


The soybean complex traded weaker overnight with beans down 4 to 5 cents and meal off 60 cents.  The USDA rated 71% of the U.S. soybean crop in Good-to-Excellent condition, unchanged from the previous week.  Analysts on average had expected a 1-point decline in ratings.  November beans are now treading water just above the $9.00 mark after closing above the that level for the first time since March 6 on Monday.  On the upside, the contract’s 200-day moving average near 9.13 is a bullish target.  Managed Money is estimated net long 83,000 soybeans; net short 44,000 lots of soymeal, and; long 5,000 soyoil.


Wheat futures were unchanged overnight and look to be taking cues from movement in row crops on a day-to-day basis.  The dollar is back up this morning lending some resistance to export potential.  The USDA rated 51% of the winter wheat crop in Good-to- excellent condition, down 1 percentage point from the previous week.  Analysts on average had expected no change.  For spring wheat, USDA rated 70% of the crop as Good-to-Excellent, up from 69% a week ago.  Heading into today, Managed Fund Money is estimated to be net short 40,000 contracts of SRW wheat.  Overnight wires show Egypt in the market for an undisclosed volume of option-origin wheat.


Live cattle futures are called steady to lower after seeing August live cattle settle more than $1.00/cwt off their highs yesterday.  This may turn sellers more active to start the day today.  We’ve seen a nice rally in cattle to start the week, but cash cattle and beef prices have turned choppy and though the gap up on the charts yesterday is a bullish indicator, the futures market is at overbought levels.


Lean hog futures are called mixed.  Look for the Aug hog contract to finally close the gap at 50.42 left from late June and then drift back down.  The market is trying to find a bottom and remains technically oversold amid a heavy fundamental supply of market hogs.  Choppy price action will be likely as the market looks for direction from here.


Matthew Strelow

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