TFI Sunrise Update 12-24-2020


THURSDAY, DECEMBER 24: The CME closes at 12:15 CT, and Total Farm Marketing offices close at 1:00 CT. There will be no 4:30 update.
FRIDAY, DECEMBER 25: The CME and Total Farm Marketing offices are closed.


Corn futures were mostly steady overnight while trading in the upper half of yesterday’s trading ranges and new contract high of 4.49-3/4 (March).  Next resistance is near the 4.64 or the July, 2019 high on the nearby contract, then the 2014 high near 5.00.  After that, the market can target the gap on the weekly chart from 2013 near 5.50.  Yesterday’s Weekly Export Sales were only 651 mt, but total commitment is near 42.2 mmt versus 17.8 last year. The USDA goal is 67.3 vs 45.1 last year.  There are no significant forecast changes in South America.  Conditions in Argentina will still be stressful for crops through at least Monday.  There will be some erratic showers and thunderstorms, especially in the west; however, any meaningful moisture in central and eastern areas will be localized.  Rain may then increase some Tuesday due to a frontal boundary which would be beneficial.  Net drying will occur in far southern and some of northeastern Brazil through next Tuesday with favorable rain elsewhere in the region.  The frontal boundary in Argentina will then likely move into far southern Brazil in the middle part of next week and help enhance the rain chances there.  Managed Money is net long an estimated 345,000 corn contracts.


Soybean futures continued to march higher overnight on gains of as much as 15-1/2 cents to a new high of 12.74-1/4 (Jan).  For the week, Jan beans are up nearly 55 cents and more than $1.00 per bushel since the end of November, underpinned by a bullish stocks-to-use balance sheet that is expected to narrow further in the upcoming January crop report.  Positive technical signals are ushering in new longs and limiting new selling.  Higher China Dalian soymeal futures prices and new highs in palm oil futures is also supportive.  A higher close today would mark the sixth consecutive day of new contract high settlements for nearby bean contracts.  Managed Money is net long an estimated 253,000 soybeans; 105,000 lots of soymeal, and; 113,000 soyoil.


Winter wheat futures were unchanged overnight in light volume after rallying on Wednesday.  Managed Money is net long an estimated 27,000 SRW wheat futures.  The complex has gained stamina into the holiday as the dollar weakens and the higher trend in row crops offer spillover support.  If corn and soybean prices continue to move higher, wheat prices should follow.  In addition the labor strike at the key export port in Argentina is expected to continue through Christmas throwing a wrench into the world wheat supply/demand balance sheet.  2021 food demand will also be impacted by the Covid pandemic and what the vaccine does to social policy.


Cattle calls are for steady to higher led by cash strength and technical buying.  Cash trade developed on Wednesday at $110/cwt, up $1-2 over last week, thus supporting Dec prices and cattle prices throughout.  Feb cattle tested support at the 100Day moving average before tech buying surfaced into the afternoon.  The market is now poised to break out to the topside, but needs follow through today.  Wholesale carcasses finished lower as Choice dropped 3.13 to 207.54 and Select was down 1.66 to 197.93.  A moderate load count of 119 was noted.  Wholesale values seem to be trying to find some stability.  Feeders are taking cues from higher live cattle, while strength in corn market limits upside potential. 


Lean hog calls are mixed to lower.  Prices pushed higher through support before the quarterly Hogs and Pigs report.  Overall, the report was in line with expectations, but the Sept-Nov pig crop was 2.4% above expectations, and Sept-Nov farrowings were 2.7% above expectations.  This larger-than-expected supply picture should weigh on prices.  The CME Lean Hog Index was down sharply by .51 to 62.504.  Feb hogs are trading over the index by 5.81, which will limit upside.  Look for the cash market to stay weak into the end of the year. 


Matthew Strelow

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