TFI Sunrise Update 12-28-2020


Corn futures made new highs overnight on gains of 3 to as much as 4-1/2 cents pushing nearby March corn to 4.55-1/2.  This week’s trading schedule will be the same as last week as the New Year approaches on Friday.  Outside markets offer support with crude firm, stock index futures higher, and the dollar softer.  Managed funds continue to be net buyers and were net long an estimated 345,000 contracts during Friday’s contract high trade.  Lower South American production and U.S. carryout, as well as soaring soybean trade keeps a strong bid under corn prices heading into the end of the year.  Argentina weather over the 3-day period ending Sunday morning was warm and generally dry in the central and southeast parts of the nation.  Net drying occurred in most of the nation and topsoil moisture is rated short to very short in the majority of the nation’s key grain and oilseed production areas while subsoil moisture was rated short to very short in the west and adequate to slightly short in eastern parts of the nation.  Brazil’s weather this week is unlikely to change greatly with rain falling most frequently and most significantly from Mato Grosso to Parana, Sao Paulo and Minas Gerais.  The bottom line is good for center west and center south crop areas even though some areas will not get abundant rain. There will be enough moisture to support crop development.


Soybean futures maintained their zeal overnight in a bid to reach 13.00.  Jan beans rallied another 15 cents while hitting 12.79-1/2 before erasing much of the higher move by this morning.  On Sunday, Reuters News reported Argentina’s influential chamber of soyoil manufacturers and exporters on Sunday spiced up an offer to striking workers, seeking to end a more than two-week standoff that has bogged down exports from one of the world’s main breadbaskets.  The CIARA-CEC chamber said it would top up salaries by 35% in 2020, a central demand of the striking workers, many of whom stayed on the job through the height of the coronavirus pandemic. The group also offered a 70,000 peso (about $840) bonus to compensate for the risks entailed.  The striking workers did not immediately respond to the latest offer.  Argentina’s government has urged the parties to meet on Tuesday to resolve their differences.  Managed Money is net long an estimated 258,000 soybeans; 101,000 lots of soymeal, and; 116,000 soyoil.


Winter wheat futures traded two-sided overnight taking cues from row crops and a weaker dollar.  Spring wheat futures were steady.  Global newswires reflect current market pulse for wheat:  Egypt has strategic wheat reserves sufficient for 5.5 months, the supply ministry said; The North African country has strategic rice reserves sufficient for 11.1 months and strategic vegetable oils reserves sufficient for 4.3 months.  Wheat prices have risen in recent months on uncertainty caused by the coronavirus pandemic and protective measures such as Russian export quotas, Egypt’s supply minister said, adding that he expects them to stabilize.  The last three months have seen high prices caused by uncertainty and not the usual factors of climate change or problems with harvests.  Weekly Export Inspections will be out this morning.  Overnight, Taiwan posted a tender seeking 82,325 tons of U.S. wheat.  Managed Money is net long and estimated 25,000 contracts of SRW wheat.


Cattle calls are for steady to higher amid strong cash cattle trade, technical strength and outside market support in the form of higher stock index futures.  Cash trade developed on Wednesday, with most trade at $110, $2 over last week, supporting Dec prices and cattle prices throughout.  Feb cattle back-tested support at the 100Day moving average, held and saw some technical buying surface and is now poised to break out to the topside.  Fat cattle prices are going into year-end $10/cwt under last year with the choice cutout price almost par with last year.


Lean hog calls are for steady to firmer based on last week’s positive closes for the week.  Hogs took a nice jump higher through support areas prior to the Quarterly Hogs and Pigs report, but the fundamental picture needs to improve to bring buying into the market.  Overall, the H/P data 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 limit upside price potential. 


Matthew Strelow

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