TFM Sunrise Update 1-8-2021


Corn futures were firm overnight, underpinned by record U.S. Jan through May U.S. corn exports supporting basis and futures.  Corn futures traded more than 5 cents lower at one point yesterday, but managed to reduce the losses to only 1 cent on the day.  Open interest in corn is up more than 100,000 contracts so far this month, an indication that fund traders have been aggressive buyers.  Managed Money has approached a record net long position in corn on this rally.  March corn traded 3-1/2 higher within a range of 4.99-1/2 and 4.92-1/2 last night.  Dec corn was up 2 to 4.43.  The average trade estimate for US 2020/21 corn carryout in next week’s Jan Crop Report is near 1.599 bil bu vs USDA 1.702.   Dec 1 U.S. corn stocks could be near 11.951 bil bu vs 11.327 last year.  The average trade estimate for Brazil and Argentina corn crops are near 155 mmt versus USDA 159.  U.S. census data shows Nov corn exports were 150 mil bu and 5 mil bu above inspections, bringing Sept to Nov exports to 445 mil bu vs 270 mil bu last year.  U.S. ethanol exports remained strong at 113.6 mil gallons, bringing Jan through Nov exports to 1.222 bil gallons versus 1.323 bil gallons last year.  U.S. DDG exports for November were 927.6m, bringing Sept through Nov exports to 3.037 mmt vs 2.717 mmt’s last year.  U.S. corn export sales were 748 mt and in line with expectations, bringing commitments to a record large 1.730 bil bu versus 729 mil bu last year.  China’s commitment is a record 11.7 mmt.  With sales of 7.58 mmt’s to unknown, China commit totals 13.0-13.5 mmt’s versus USDA’s projection for China total all origin corn imports at 16.5 mmt’s.


Soybean futures were up overnight led by old crop contracts.  The union representing Argentine port-side grain inspectors said on Thursday it had ended a month-long wage strike after reaching a contract deal with export companies that will allow international soy, corn and wheat shipments to return to normal.  March beans reached 13.70 on gains of 14-1/3/4 cents, stabilizing near Tuesday’s new contract high etched at 13.78-1/4.  Nov beans peaked at 11.61-1/2 on gains of 8-1/2 cents.  Some long liquidation yesterday after recent sharp gains could be linked to position-squaring before next week’s USDA report.  Weekly U.S. 2020-21 soybean export sales at 37 mil tons were well below estimates.  Futures have also become overbought with Managed funds record long 264,000 soybean contracts.  However, the average trade estimate for U.S. 2020/21 soybean carryout is near 139 mil bu vs USDA 175.  Dec 1 U.S. soybean stocks could be near 2.920 bil bu vs 3.252 last year.  The average trade estimate for Brazil and Argentina’s collective soybean is crop near 179 mmt versus USDA 183.


Wheat futures were mixed overnight with Chicago and Mpls contracts up a nickel, and KC wheat unchanged as the dollar begins to show signs of putting in a near-term bottom.  We don’t look for USDA to make significant changes next Tuesday, but pre-report positioning and news of higher Argentina crop estimates are keeping prices from testing early week contract high resistance going into the weekend.  USDA is projecting a 20 mil bu increase in 2020-21 U.S. wheat exports with their current estimate of 985 mil bu.   The average trade estimate for U.S. Dec 1 wheat stocks is near 1.695 bil bu vs 1.841 last year. The average trade estimate for U.S. 2021 winter wheat acres is 31.5 mil vs 30.4 last year.


Cattle futures are called mixed after a second day of rather subdued action with prices searching for direction from the cash market.  The slaughter was estimated at 117,000 head, steady with last week, but 7,000 under last year.  Feeders are supported by strength in live market and weaker grains, but cash trade is still overall quiet at $112, mostly steady with last week.  Most asking prices are at $114 and higher.  We’re likely to see an uptick in cattle trading hands today as packers prepare for a full slaughter week and will need more inventory.  Despite an extended period during plant shutdowns and slowdowns, 2020 set another record for beef exports at 14% of all beef sales.


Lean hog calls are steady to higher, though we look for the front month contract to continue to struggle with October price resistance.   Deferred contracts are showing strength, erasing Wednesday’s losses and challenging or establishing new highs.   Heavy production and available hogs for slaughter weigh on the market.  Expected slaughter was 117,000, even with last year.   Higher grain prices may be long-term supportive on futures, limiting expansion due to higher feed costs.  Pork carcasses finished the day 2.17 higher to 79.82 complimenting a nice rebound in carcass values going into the end of the week.  Good product movement was seen at 338 loads.  the Lean hog index closed .95 higher to 62.42 while trading 6.70 under February futures.


Matthew Strelow

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