TFM Sunrise Update 1-4-21

CORN

Corn futures traded sharply higher overnight to new contract highs.  The market started by posting a modest gap higher, then rose to double-digit gains while keeping a 3:1 ratio with soybeans.  March corn hit a new high of 4.97-3/4, pausing just shy of $5.00.  In addition to talk of record U.S. corn exports for the first half of the year supporting futures, spreads and basis, the dollar is sharply lower this morning, losing more than 45 basis points versus other currencies like China’s slumping yuan.  Rising stock index futures, gold and crude oil prices are also noted.  Weekly Export Inspections will be out today.  Meanwhile, South America’s forecast for Brazil should remain mostly favorable for its reproducing and filling row crops, but some of the dryness from earlier this year already hurt production and some of that loss cannot be made up by improved weather in January.  Argentina will remain one of concern for central and eastern crop areas in the nation where rainfall will be quite limited over the next two weeks and temperatures will continue warm.  A front may be coming through with moderate rainfall with 85% coverage early next week.

SOYBEANS

Soybean futures rallied nearly 35 cents overnight to 13.49-1/2 in the nearby March contract.  Nov 2021 beans reached 11.47.  Soybean meal gapped higher to new highs and March soyoil is making its largest single-day gain so far for the life of that contract.   Argentina’s grain inspectors’ union, Urgara, said on Thursday that its members would continue to strike over the weekend after failing to strike a wage deal despite two meetings with the Chamber of Private and Commercial Ports (CPPC).  The strike comes after Argentina’s soy crushing companies signed a contract with oilseed workers’ unions on Tuesday night, ending a stoppage that delayed the loading of ships and stalled soy crushing since workers walked off the job on Dec. 9.   A fresh meeting with the CPPC is scheduled for today with hopes to reach an agreement that meets the needs of the workers who stood by throughout the pandemic to safeguard foreign exchange income and the country’s economic growth.

Later today, USDA releases its Monthly Fats and Oils report at 2PM CST.  The U.S. soybean crush in November likely totaled 5.765 million short tons, or 192.1 million bushels. The crush would be down from a record 196.5 million bushels in October but well above the 174.6 million bushels crushed in November last year. It would also be the largest November crush on record and the third-largest crush for any month, behind only October and March 2020.  U.S. soyoil stocks at the end of November were seen swelling to 2.023 billion lbs; up from 1.964 billion lbs at the end of October and 1.880 billion lbs at the end of November last year; soyoil stocks estimates ranged from 1.926 billion to 2.086 billion lbs.

WHEAT

Winter wheat futures rose 8 cents overnight, spring wheat was up 6.  Wheat is getting a boost from new highs in row crops, new lows in the dollar and economic optimism to start the new year as viral vaccines become more widely available.  New highs are developing across the complex to start the new year after prices ended on a higher note last week following rumors of U.S. wheat export prices becoming more competitive for new demand.  March wheat’s new high in Chicago, as of early this morning now stands at 6.50-1/4.  In KC, March wheat peaked at 6.13-3/4; And, MPLS March wheat hit 6.05-3/4.  Higher freight costs from the U.S. to places like North Africa is noted, but a drop in Russia and E.U. exports and talk of higher 2021 corn and soybean prices outweighs those concerns from a market-moving standpoint.

CATTLE

Cattle futures are expected to benefit from higher stock index futures and a lower dollar to start the week.  In addition, last week’s cash markets offer support.  Feeders may fall into some volatility as higher feed costs weigh on sentiment.  Technically, cattle are holding support and trending higher and beef export shipments hit a marketing year high last week.  Wholesale carcasses finished lower on Thursday with choice carcasses down 1.28 to 209.25 and Select 2.99 lower to 196.87 amid a low load count at 113, reflective on the New year’s tradeChoice carcass did finish the week $2+ higher from Monday’s close. 

HOGS

Lean hog calls are for higher trade supported by export demand and a lower dollar.  2021 export sales were 46,300 metric tons with China topping the buyer list at 22,700.  Shipments for the week ending December 28 were 39,400 MT.   The CME Lean Hog Index was lower by .07 to 59.86.  Feb hogs, at  70.27, is trading over the index by 10.41, which will limit upside.  We’ll need to see cash market strength to maintain this strong price move from Thursday.  Retail values closed sharply higher on Thursday, up 5.93 to 78.58.  Moderate product movement was seen at 337 loads.  Pork carcasses are $9.00 higher from the previous (Dec 26) Thursday’s close.  Pork Cutout futures were higher last Thursday.

Author

Matthew Strelow

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