TFM Sunrise Update 02-01-2021


Corn futures traded higher overnight.  March corn rose 8-3/4 cents to a new high of 5.55-3/4 and Dec reached 4.50 on gains of 4-3/4 cents.  Old crop corn contracts are now leading the grain and oilseed complex higher as final carryout projections shrink in the face of steady demand.  Sales of corn inventory had slowed briefly, but a flurry of strong sales last week has given prices a boost.  Corn export commitments are projected to be near 1.916 bil bu versus 848 last year, but final exports could increase by 300 mil bu and domestic use by 200 mil, suggesting a carryout closer to 1.052 bil bu versus USDA’s last estimate near 1.552.  Some price models suggest March corn futures near 6.00 to 6.25.  Managed Money is net long and estimated 404,000 corn contracts.  Weekly Export Inspection will be out this morning.  Looking ahead, USDA will release the monthly supply/demand report next Tuesday.  and then hold their annual Outlook conference Feb 18-19. This will be their first look at US 2021/22 supply and demand.


Soybean futures were mixed overnight.  March beans are up 3 cents to 13.73 this morning and peaked at 13.83 overnight.  Nov beans are up a nickel to 11.48 with an overnight high etched at 11.54.  Both contracts have been posting rather wide daily trading ranges and are currently oscillating around their respective 10 and 20-day moving averages that are pointing to more of a consolidation pattern.  Managed Money is net long an estimated 163,000 soybeans; 72,000 lots of soymeal; And 112,000 Soyoil.  Underlying support stems from the potential for China needing to switch 50 to 100 mil bu soybean imports from Brazil to U.S. due to Brazil’s late harvest.  The last USDA estimate for U.S. carryout was near 140 mil bu.  Overnight, tenders were reported showing South Korea in the market for 60,000 tons of optional origin soymeal.  Egypt seeks 30,000 tons of soyoil and 10,000 tons of sunoil.

In South America, rains of .75 to 1.5 inches and more fell across most of the Argentine growing regions over the weekend with some 2”+ totals falling in northern Buenos Aries and southern sections of Cordoba, Santa Fe and Entre Rios.  The 6-10 day forecast sees fairly quiet weather to hang on across most of the Argentine growing regions with some showers impacting the far western growing regions.  Temps will run below average across the Argentine growing regions in the next 10 days.  A highly favorable mix of rain and sunshine will occur in Brazil agricultural areas during the coming two weeks.  Sufficient drying time will occur between rain events to support soybean harvesting and Safrinha crop planting.  Temperatures will be seasonable during both forecast weeks.


Wheat futures were two-sided overnight and are tilting slightly lower this morning amid an uptick in the dollar.  Uncertainty over actual wheat exports from Russia, EU and Argentina is also noted.  March CBOT wheat is down 3 cents to 6.35 this morning.  Managed Money is net long and estimated 19,000 contracts of SRW wheat.  March KC is down 2 to 6.31-1/2;  And, March Mpls is down 2 to 6.31-1/2.  Mixed signals from higher corn prices and slower global wheat trade has the wheat market in limbo to begin the week and new month.   Higher corn prices have helped improve Chinese demand for wheat, though.  The key to price direction for 2021 may depend on U.S. weather, demand and final crop size.  Long term charts continue to bode well for bullish wheat traders.  In the near term, prices are also tilting positive which would reinforce continued strength if recent highs are taken out.


Cattle futures are called steady to lower following a technical breakdown on Friday.  The daily stochastics triggered a bearish indicator which could accelerate a move lower if the next downside target at 119.720 is taken out in the April live contract.  The contract settled at 121.85 last week.  Cash trade was $113/cwt last week and retail values landed on a firm uptrend, helping support packer margins and cash optimism.  All regions reported small sales volumes for the week.  This narrowed the basis with a two dollar negative basis to close the week.  Friday’s Cattle inventory was supportive based on cattle numbers.  Cow inventory was down .6% from last year, calf crop down 1.3%.  USDA made friendly revisions to prior reports, lowering overall numbers.


Lean hog futures are called steady to higher.  The strong demand tone stays supportive in the market and the trend in carcass value will likely dictate the direction of the market to start the week. Carcasses were at $85 and exports strong at 52,900 MT last week.  Feb hogs closed at 69.80 on Friday.  Heavy slaughter numbers and the premium of Feb over the cash index limits upside potential for the lead month contract.  Technically, the market is trending higher, but may be due for some profit taking as prices reach overbought territory.


Matthew Strelow

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