TFM Sunrise Update 10-09-2020


Corn futures were up 4 cents overnight after seeing some profit taking in Thursday’s trade following new highs earlier in the session.  Weekly export sales of 1.225 million metric tons were impressive with Japan and Mexico being the two largest purchasers.  Trade estimates for today’s October USDA Supply / Demand report are for production to come in at 14.808 billion bu, compared to 14.9 billion last month.   The average trade guess for US 2020/21 corn carryout is 2.113 bil.  The average trade guess for World 2020/21 corn carryout is 300.1 mil metric tons.  Monday, the markets will be closed in observance of Columbus Day.


Soybean futures regained composure overnight after reversing and settling lower on Thursday.  The market made new contract highs for a third straight day before active selling erased gains.  Nov was up 8-1/2 cents overnight to 10.58-1/2.  A wire story reports Chicago corn and soybean futures have responded positively the last three times that the USDA published a major report, something that the very plentiful bulls would enjoy should this happen again on Friday; soybean futures hit 2-1/2-year highs on Thursday and corn a nearly one-year high before ending lower, though investors have built enormous long positions ahead of Friday’s supply and demand report from the USDA, where U.S. corn and soybean production will be in focus; the market is fairly set on lower U.S. corn and soybean yields today.  Looking ahead, the market will continue to hone in on South American weather and demand from China.  China was back from Holiday last night and their futures traded higher trying to catch up with CBOT gains while on Holiday.  Chinese Ag futures (January) settled up 109 yuan in soybeans, up 74 in Corn, up 175 in Soymeal, up 234 in Soyoil, and up 258 in Palm Oil.


Wheat futures were up 7 to 8 cents in Chicago and KC, up 4 in Mpls overnight.  The complex remains in an uptrend and the dollar is in a short and long-term down trend.  US south plains will remain dry for the next 2 weeks. Argentina will be mostly dry over the next 2 weeks. There could be some light rains for US south plains and Russia after Oct 20.  Today’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.  In tender activity, Jordan seeks 120,000 tons of optional-origin wheat, Pakistan seeks 300,000 tons, Turkey bought 125,000 tons; And, Thailand bought 55,000 tons from Australia.


Cattle calls are mixed.  The market shook off yesterday’s strength and remain choppy.  Soft closes under the 10-day moving average and weaker boxed beef values to start the week, could lead to a technical break.  OThursday carcasses were softer choice carcasses down 0.88 to 216.00, select carcass were 2.48 lower to 203.10.  Cash prices are converging with the October futures.   The cash market is mostly seeing cattle owners pass live bids of $108/cwt.  Two small pens sold at $108.50 on the fed cattle exchange and futures are anticipating $109 trade this week, but sellers seem firm at $110 asking prices.


Lean hog futures are called steady to higher, underpinned by a strong cash market that continues to trend higher.  The index reached 77.50 on Thursday, up .09, thus supporting the front months.  Dec and Feb futures have broken out of consolidation and look strong and overbought.  Weekly export sales were a marketing year high at 60,200MT, china bought 29,00 MT, confirming the potential demand after the Germany bans due to ASF.  Look for strong demand to create bull spreading into the front months over the deferred.


Matthew Strelow

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