TFM Sunrise Update 01-27-2021


Corn futures were up 7 cents overnight trailing the gains in the bean complex.  Momentum has turned higher suggesting a move into new highs as demand stays supportive.  China was rumored to have purchased a huge amount, roughly 200 million gallons of U.S. ethanol yesterday for the first half of 2021, matching its previous record for annual imports of the corn-based fuel.  The next USDA Supply/Demand report is scheduled for Feb 9 followed by USDA’s annual Outlook conference Feb 18 & 19. This will be their first look at U.S. 2021/22 Supply and Demand.  Meanwhile, many U.S. producers have sold the bulk of their 2020 inventory.  March corn, trading near 5.37 is now less than a nickel away from making a new high above 5.41-1/2.  Managed Money is net long an estimated 388,000 corn contracts.


Soybean futures traded as much as 20 cents higher overnight before trimming gains to a dime.  March beans reached 13.93-3/4 in a break back above the contract’s 10-day moving average after a brief week-long drop below the 20-day.  Nov beans were up as much as 15-3/4 cents to 11.64-1/4.  Managed Money is net long an estimated 152,000 soybeans; 71,000 lots of soymeal, and; 102,000 soyoil.

There continues to be talk that Brazil’s harvest could be delayed and as many as 5 mmt of bean sales switched to the U.S. as China monitors U.S. prices for February.  The latest from South America’s weather front has conditions still be good for most key production areas in Brazil with a few exceptions. The northeast will need more rain.  In Argentina, conditions are still expected to be mostly good for crops with a favorable mix of rain and sunshine in most areas.


Wheat futures were firm overnight led by surging corn and bean prices.  Contracts were 2 to 4 cents higher at all 3 exchanges after posting double-digit gains on Tuesday.  The move puts prices back above their respective 10-day moving averages while taking back more than half of the price pullback that began on January 15.  News headlines support the complex: Russia approved an additional wheat tax to begin on March 1st and, winter wheat conditions were down in the Southern Plains.  Demand-wise, all eyes will be on China as they build stocks for food security.


Cattle futures are called steady to higher following another round of solid closes on Tuesday.  Surging boxed beef prices and weather are helping lift asking prices in the cash market as high as $115 to $117.  1000 head were sold in TX at $112.50 versus Feb futures at 117.00.  We’ll get the weekly Fed Cattle Exchange trade later this morning.  Choice carcasses pushed to a close at the $230 level.  Higher-than-expected Placements in Friday’s Cattle on Feed report are seen hanging over the market, and Feeders are running into mid-week pressure as feed prices become choppy, but still strong.


Lean hog futures are called steady to firmer amid good technical buying and positive money-flow spilling into the livestock sector.  April hogs posted another new high on Tuesday at 77.60 before settling mid-range for the day.  Bullish traders look to try to extend a string of 5 consecutive higher days of trading, barring a technically overbought market that could lead to some backfilling on the charts, particularly if China begins to slow pork imports.  Summer month hog contracts have built a head of steam and are now trading in the upper $80’s led by the July contract. 


Matthew Strelow

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