TFM Sunrise Update 01-29-2021


Corn futures traded higher overnight led by the nearby, old crop contracts posting gains of 8 to 9 cents.  New crop Dec was up 3 cents to 4.42.  Markets remain volatile into the weekend and month-end as final production estimates for South America and world supply/demand data unfolds.  For the month, March corn, at 5.43 is up about 60 cents and 43 cents for this week, including a new high yesterday at 5.50-1/2.  Dec corn, at 4.42 is mid-range of this month’s trading range between 4.34-1/2 and 4.53-1/4 while trading both sides of the 10 and 20-day moving averages.  Argentinian crops are getting help from rains in the north, but the south remains dry.  Row crops have been hit by bouts of profit-taking pressure since the January crop report came out and is expected to remain choppy with a higher bias into foreseeable adjustments by USDA in the Feb 7 February report.  Additional daily U.S. corn sales to China is supportive.


Soybean futures were up 15 cents overnight in March to 13.69-1/4, right at converging 10 and 20-day moving averages.  The contract has traded a 91-1/4 cent range for the month between 11.11-3/4 and a new high of 12.03.  Nov was up 11-1/2 overnight to 11.42-3/4 while staying below it’s 10 and 20-day MA’s.  Chinese Ag futures (May) settled up 6 yuan in soybeans, down 26 in Corn, down 22 in soymeal, up 16 in soyoil, and up 20 in Palm Oil.  Malaysian palm oil prices were up 101 ringgit at 3,489 (basis April) on talk Indonesia hikes export tariffs.  Brazilian truckers are still talking about a strike Monday for higher wages and the market is trading higher on ideas that China could take 38 mmt of soybean imports from the U.S. while Brazil soybean harvest is slowed due to rains.  Overnight, S. Korea bought 60,000 tons of optional-origin soymeal.  Conditions will continue to be good in most key production areas with a few exceptions.  Northeast Brazil will still need more rain.  Some erratic shower and thunderstorm activity will increase in this area Tuesday through next Thursday; though, more will be needed.  An area from Rio Grande do Sul into Parana and southern Mato Grosso do Sul and also southern Paraguay will be notably wet through next Thursday with some flooding.  In Argentina, conditions will be mostly good for crops with a favorable mix of rain and sunshine.  There will still be some flooding though due to too much rain in week 1 of the outlook in Corrientes, Misiones, and some immediate nearby areas.  Some flooding is also still possible in northeastern Buenos Aires.  Look for more double-digit price swings on a daily basis given the elevated levels beans are at.


Wheat futures were up 5 to 6 cents overnight on spillover strength in row crops.  A higher dollar is limiting advancement, though.  March CBOT wheat, at 6.53 is mid-range of this month’s 35 cent trading range between 6.75-1/2 and 6.40-1/2 while sitting just below the 20-day MA.  March KC wheat is at  6.31-12, mid-range of the contract’s 10 and 20-day moving averages and this month’s 42-1/2 cent range between 6.43 and 6.03-1/2.   March Mpls is at 6.25-1/2 this morning and straddling its 10 and 20-day MAs.  For the month, the contract started at 5.99-1/2 and peaked at 6.53-1/2 on January 19. Overnight tender activity included: Jordan seeking 120,000 tons of optional-origin wheat; Taiwan bought 85,340 tons of U.S. wheat.


Cattle futures are called mixed.  Cash trade is still quiet for the week with some very light trade around $112.  Trade should be more aggressive today to finish the week.  We’ll get a USDA cattle inventory report this afternoon and will be watching beef cow inventory (-1.7%) and 202 calf crop (-.8%) for key numbers in determining the future cattle supplies.  Retails values strong with Choice carcasses at $230 and Select at $220.  Demand has been good.  Weekly Exports sales were friendly yesterday at 28,800 MT.  Cattle futures look to stay in consolidation amid a friendly up-trend.  Meanwhile, strong grain prices may keep feeder market in check. 


Lean hog futures are called steady to higher looking for further direction into the weekend.  Demand is strong with carcasses closing higher at the $83 level, weekly exports sales were strong at 52,900 MT.  However, heavy slaughter and the premium of Feb to the cash index will limit gains.  Deferred contracts may see some correction after strong gains, showing some short-term technical weakness, but still trending higher overall.


Matthew Strelow

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