TFM Sunrise Update 1-14-2021

CORN

Corn futures were choppy overnight after failing to hold new highs into yesterday’s close.  USDA’s latest data suggests domestic corn stocks-to-use for 2020-21 at a 7-year low 10.6%.  The gap left from follow-through strength yesterday was partially closed on the daily chart and is likely to be an active bearish target the rest of the week.  For nearby March corn, last night’s low was 5.19 with prices needing to reach 5.17-1/4 to fill the gap.  For now, the market is showing signs of exhausting the rally and will need a steady dose of supportive rhetoric to fuel further gains.  Perhaps a broad-market influencer, in the news – President-elect Joe Biden will unveil a stimulus package proposal today designed to jump-start the economy during the coronavirus pandemic with an economic lifeline that could exceed $1.5 trillion and help minority communities.  Stock index futures are firmer this morning in keeping with the trend and are poised to make new highs.  Trade estimates for this morning’s USDA Weekly Export Sales are 700,000 to 1.20 mil tons for old crop supplies.

South America’s weather forecast reads as follows:  Conditions in Brazil will continue to be very good in most areas.  Some pockets of the far south may become a little too dry occasionally; though, rain will occur often enough.  There will be notable dryness from eastern Minas Gerais into central and northeastern Bahia; though, this is outside of the most important grain, oilseed, and cotton production areas.   In Argentina, an area of meaningful rain will occur in La Pampa Today.  Central and northern production areas of the nation will then receive significant rain Friday and Saturday and this may extend down into northeastern Buenos Aires.  This rain is still important due to the lengthy period of dryness that will follow it.  Rain will likely return to Argentina in the last week of the month. Last evening’s GFS model run showed significant rain in Argentina as early as Jan. 23 – 25.  Both the midday and evening GFS model runs showed rain in Argentina Jan. 26 – 28 with last evening’s run wetter.

SOYBEANS

Soybean futures were mixed overnight as the trade ponders yesterday’s weaker close following a post-January Crop Report push to new contract highs, signaling a potentially bearish set up for the market.  March beans are trading near 14.10, 3 to 7-1/2 cents higher this morning.  Nov beans are up 11 to 13-1/2 cents near 11.90.  Meal is up 3.50 to 5.80 per ton; and, soy oil is down 45 to 77 cents underpinned by demand and tight stocks.  USDA’s latest data suggests domestic soybean stocks-to-use for 2020-21 at a 7-year low of 3.1%.  Overnight news wires headlined China’s soybean imports jumped 13% to an annual record in 2020, customs data showed on Thursday, after crushers ramped up purchases amid improved margins and healthy demand from the country’s rapidly recovering pig sector.  China, the world’s top soybean buyer, bought 100.33 million tons of the oilseed in 2020, up from 88.51 million tons in 2019, according to the General Administration of Customs.  Trade estimates for this morning’s USDA Weekly Export Sales are 300,000 to 700,000 tons for old crop, 100,000 to 500,000 tons for new crop.  Meal sales are expected near 100,000 to 300,000 tons; And, oil, 5,000 to 30,000 tons.

WHEAT

Wheat futures were firm overnight.  March CBOT and KC winter wheat contracts were up 2-1/2 cents to 6.63 and 4-1/4 cents to 6.31, respectively, again mirroring movement in row crops.  The dollar is weaker and showing signs of ending a modest technical bounce off of recent lows.  March Mpls wheat is up 5-1/2 cents to 6.34-1/4 this morning.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 500,000 tons for old crop, zero to 50,000 tons for new crop.

CATTLE

Cattle market calls are mixed as live prices move in opposite directions from weaker in the front months, to new contract highs farther out as high feed costs come into play.  The premium of Feb live cattle to cash is seen weighing on the front month, particularly with this week’s cash market  influence by packers working the prices lower.  In the north a few live cattle traded at $110 then moved down to $109 and dressed trades at $174, turning to $173, $1-2 lower.  In the south a cattle were trading live at $111 then turned to $110, $1-2 lower.  Expect this week’s slaughter volume to remain comfortably above prior year.

HOGS

Lean hog futures are called mixed as the nearby Feb contract, at 66.85 settles into the mid-section of its 4-month trading range between 63.42 and strong contract high resistance at 72.00.  Prices are now finding support at the 50 and 100 day moving averages drawn near yesterday’s settlement price.  The recent weakness has threatened to turn the trend lower.  Like cattle, distant contracts are trending higher amid fund buying and demand optimism.  August posted a contract high for the sixth consecutive session on Wednesday.

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Matthew Strelow

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