TFM Sunrise Update 10-08-2020


Corn futures were up 2-1/2 cents overnight after breaking through a new high for the move yesterday ahead of tomorrow’s monthly Supply/Demand report.  Trade estimates for this morning’s USDA Weekly Export Sales are 700,000 to 1.50 mil tons. Tender activity showed S. Korea feed groups buying 262,000 tons of S. American corn.  The front month December contract is at 3.91 and is fast approaching the $4.00 mark, fueled by spillover support from wheat, a 4.7% increase in ethanol production from last week; And, Argentina sitting at nearly half their normal precipitation over the past 90 days.  In the U.S., clear weather forecasts greet corn and bean harvest into the weekend and for much of next week, allowing harvest progress to stay ahead of schedule in many locations, provided the crop has dried down enough.


Soybean futures stayed within yesterday’s higher ranges overnight.  Nov was up 6 cents to 10.57 in keeping with the trend.  Trade estimates for this morning’s USDA Weekly Export Sales are 1.50 to 2.50 mil tons for beans, 150,000 to 500,000 tons for meal; And, zero to 30,000 tons for soyoil.  Overnight tenders included S. Korean feed groups bought 60,000 tons of optional-origin soymeal.  Meanwhile, Managed Money’s net long position in beans has swelled to an estimated 283,000 contracts, 102,000 lots of Soymeal: And,97,000 Soyoil.


Wheat futures remained in a steep uptrend overnight with gains of 7 cents in Dec Chicago wheat to a new high of 6.14-1/2.  Dec KC wheat gained 6-3/4 cents to 5.51-1/4, and Dec MPLS was dragged 4-1/4 cents higher to 5.53-1/2.  Weather premium builds underneath the market and European milling wheat continues to forge new highs for the move on planting concerns for Russia.  An afternoon newswire report stated, “China’s 2020/21 feed and residual used for all coarse grains and feed-quality wheat are estimated to increase 3.2% compared to the previous marketing year due to a projected recovery of swine production and strong expansion in the poultry and ruminant sectors.”  The trend is clearly higher, but overbought technicals warrant some caution for bullish traders.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 600,000 tons.  Tender activity included Japan’s purchase of 118,428 tons of U.S./Canadian/Australian wheat in a routine buy.  Pakistan bought 330,000 tons of optional-origin wheat; And, Jordan passed on 120,000 tons of optional-origin wheat.  Tomorrow’s USDA report is expected to show a U.S. wheat carryout of 887 mil bu vs the USDA’s previous estimate of 925 mil.


Cattle calls are steady to higher after futures rallied off early session lows yesterday to post a modest reversal in live and feeders that could bring follow-through buying this morning.  The outside day up is a positive signal.  Weekly  Export sales were strong last week, so we’ll look today to see if that trend continues.  Cash is still largely undeveloped, though some bids at $107/cwt have appeared.  On Wednesday, carcasses were mixed and choice up .64 to 216.88. Selects were off 1.26.


Lean hog futures are called steady to higher, underpinned by a strong cash market that continues to trend higher.  The index reached 77.41 on Wednesday.  Cutouts add support.  Looking ahead, the market has to decide whether, or not the strong discount of the December contract to cash sways the market up, or down.  Momentum studies are rising from mid-range which would push the market higher if resistance levels break.  The next level of resistance is around 65.22 for the Dec contract which settled at 64.57 on Wednesday.


Matthew Strelow

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