TFM Sunrise Update 1-19-2021


Corn futures traded two-sided overnight, first starting the week 4 to 5 cents lower, then moving 1 to 2 cents higher completing a 9 cent trading range between 5.28 and 5.37 in May corn, about mid-range of last week’s 22 cent range (5.44 – 5.22).   We’ll get Weekly Export Inspections later this morning as demand for corn stays in the spotlight for the market.  The rest of the regularly scheduled weekly data from USDA will be backed up one day this week due to the markets being closed yesterday.  Post-Covid demand for U.S. food and fuel is expected to further cut into a tight U.S. supply and support prices.  In tender activity, Taiwan seeks 65,000 tons of optional-origin corn.  The dollar is down 29 points from testing it’s high from nearly a month ago last night.  Crude is firm and Stock Index futures are up 200 points.


Soybean futures traded a 37 cent range overnight on both sides of Friday’s settlement prices.  March beans are down 8 cents at this time to 14.08-1/4.  May beans are down 8-3/4 to 14.06.  Positive momentum has slowed with overbought stochastics signaling some caution to bullish technical traders.  Futures are finding support at their 10-day moving averages with rains in Argentina also triggering some selling.  The latest on weather there reads: Argentina’s bottom line is mostly good. Last week’s rainfall was well distributed, although not enough to fully restore soil moisture to normal. It was sufficient to restore favorable crop development conditions.  Crops have likely responded well to the combination of newly found moisture and seasonable temperatures.  Crop stress has been sufficiently eased, although there will be some returning stress later this week and into the weekend as the ground steadily dries and temperatures turn hotter.  Late January and February weather will still be critical in determining yields and a close watch on that period is warranted.  Meal and oil are lower with March soyoil at its lowest point so far this new year.


Winter wheat futures were up 12 to 15 cents overnight in a bid to take out Friday’s new contract highs.  Mpls wheat gained nearly a dime.  Record high domestic wheat and bread prices in Russia, coupled with a wheat export tax from Feb 15 to a proposed June 30 timeframe continues to give legs to the current price rally.  In addition, overnight new wires showed a cold snap hitting Black Sea wheat regions with temps as low as -25C to minus 30C in some cases, and China sold 3.94MMT of wheat at auction which was 99.7% offered to market.  Technically, winter wheat contracts have reached an RSI of over 70 which is an overbought condition, but look headed for $7.00.  March Chicago futures got to within 1-3/4 cents of Thursday contract high of 6. 93 last night.  In KC, March peaked at 6.56-1/4 versus Friday’s high of 6.60.  The dollar is down this morning and may be ending its recent bounce.  In tender Activity:  Japan seeks 72,000 tons of optional-origin wheat, Algeria seeks 50,000 tons of optional-origin wheat, Turkey postpones a 400,000 ton wheat tender; And, Philippines seek 100,000 tons of optional-origin feed wheat.


Cattle market calls are for steady to higher following strong trade on Friday across the cattle complex.  Daily stochastics have slipped into oversold territory, suggesting technical selling my be coming to an end.  This week’s Cattle on Feed report scheduled for Friday may keep prices choppy, though.  Cash this week is expected to be steady to higher on retail strength.  Carcass values finished mixed on Friday but saw a strong week overall.  Choice carcasses were down .45 to 212.92 and Select gained 2.01 t203.08.   


Lean hog futures are called steady to lower after a Reuter’s Article talked about China’s pork output recovering sharply in 2020, down 3.3% year-on-year.  This may spook the market and spark concerns about Chinese demand.  China will sell 30,000 tons of frozen pork from state reserves on Jan. 21, the China Merchandise Reserve Management Center said.  The front month contract continues to struggle with large supplies and heavy production, but saw some short covering going into the 3-day weekend on Friday.  Deferred contracts are showing strength, challenging or establishing new highs while building a strong up-trend.  They were softer on Friday with some long liquidation as bull spreading entered the market, reversing some of the bear spreading seen during the week.  The lean hog index has been trending higher and carcass values finished mixed on Friday following a saw a strong week overall.


Matthew Strelow

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