TFM Sunrise Update 7-9-20


Corn futures are higher this morning ahead of this morning’s USDA Weekly Export Sales.  Numbers are expected to be between 450,000-1.1 MMT combined for old and new crop.  Dicey weather patterns occurred overnight that may be adding some support to prices as the trade awaits details to unfold.  Strong winds and the potential for damaging hail rolled across portions of the upper and central corn belt, this after prices softened mid-week on less mixed views about the weather forecasts.  Dec corn jumped up a nickel overnight to 3.59-1/4 after managing to close back above the contract’s 100-day Moving Average which is situated at 3.51.  Additional, choppy trade can be expected ahead of tomorrow’s July USDA Supply/Demand report, however, we believe there is a high likelihood that this market is not done making new highs for the move.  Corn demand for ethanol keeps creeping up on a weekly basis, and, of course, weather will be key.   The player sheet had Managed Money net buyers of 10,000 corn contracts yesterday trimming their net holding to an estimated 173,000 sold contracts.


Soybean futures were up 7-1/4 cents overnight while consolidating mid-range of this week’s higher trading ranges before the USDA report on Friday.  Nov beans are oscillating around the psychological $9.00 price level with a higher bias.  Weather forecasts remain hot which is a concern in the soybean market.  Last night’s GFS model run was notably drier in much of the Corn Belt July 18-23; “A greater amount of drying is still expected in the second week of the outlook in the region compared to the first week; The position of the ridge of high pressure in the U.S. will likely favor some complexes of thunderstorms to move across the region, and portions of the southwestern Corn Belt may end up driest.”  Weekly export sales numbers could provide further direction with old crop and new crop sales expected to be a combined 700,000-1.8 MMT for last week.  Managed Money, meanwhile is estimated net long 76,000 soybeans; net short 47,000 lots of soymeal, and; long 5,000 soyoil.


Wheat futures were firm overnight with most contracts seeing 2 to 3 cent gains amid a weakening dollar.  Contracts saw gains of 1 to 3 cents across the board overnight with rising European wheat prices bringing spill-over support into the U.S. market.  Chicago September, at 5.18 is solidly back about the $5.00 level, triggering some short covering.  Managed Money is net short an estimated 24,000 contracts of SRW Wheat.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 550,000 tons.  In tender activity, Jordan seeks 120,000 tons of optional-origin wheat; Philippines seek 110,000 tons of optional-origin feed wheat; And, Thailand passed on 193,300 tons of optional-origin feed wheat.


Live cattle futures called steady to lower as continued weakness in the beef market, down to the lowest level since February creates head winds for higher cash trade.  August live cattle remain at a premium to the cash market and without a strong rally in beef, cash will struggle. Live sales are from $94/cwt to $100 with most of the high end of the range in the north while the low end with light volume is in the southern plains.  The online fed auction on Wednesday posted light sales at $95 to $95.25/cwt with many cattle priced higher resulting in a ‘no sale’.


Lean hog futures are called mixed.  The heavy fundamental supply of market hogs make price rallies difficult, as hog prices trying to build a short term low, but will be challenged.  Retail and cash weakness will keep pressure on front months.


Matthew Strelow

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