TFM Sunrise Update 10-15-20

CORN

Corn futures traded a 4 cent trading range overnight with Dec hitting $4.00 for the first time since Jan 24, 2020.  The contract’s low side of the trading range was 3.96 and the Dec/Mar spread has narrowed to less than 6 cents.  Managed funds were net buyers of 7,000 corn contracts pushing their long position to an estimated 171,000 contracts, and China corn futures continue to rise.  Weekly Export Sales data is delayed until tomorrow.  USDA still projects Chinese imports at only 7 million metric tons.  However, there are some who feel China may take 20 to 25 mmt globally, including 18 to 19 mmt from the U.S.

SOYBEANS

Soybean futures saw some higher follow-through overnight after rallying to a higher close yesterday, but then shed 8 cents by this morning.  World Weather, Inc reported: “Finally, there are signs of a buildup of atmospheric moisture in Brazil’s Amazon River Basin beginning in the last days of October. This change has been long awaited and provides encouragement that delayed rainfall in Brazil may be in its final ten days to two weeks. But it also suggests at least another week of frustrating weather in center west soybean production area.”  Strong demand and dryness in Brazil had been supportive during this price rally.  10.50 seems to be an equilibrium price level for Nov beans which traded between 1048 and 10.61 last night.  A rally in the dollar this morning, combined with a one day delay in Weekly Export Sales may also weigh on the grain complex today.  The monthly NOPA report is scheduled for release at 11 a.m. CDT today.  U.S. soybean crushings likely dropped in September to the lowest monthly level in a year, while soyoil stocks fell to a 13-month low, according to analysts polled.  NOPA members, which handle about 95% of all soybeans crushed in the United States, likely crushed 160.795 million bushels of soybeans last month, according to the average of estimates from nine analysts.   Other overnight new headlines included: ‘Argentine authorities step in to halt workers strike.’

WHEAT

Wheat futures traded 3 to 5 cents higher overnight despite a 35 basis point rise in the greenback.  Dec Chicago wheat is content with trading at $6.00 per bushel for the time being while consolidating the recent rally to new highs.  The contract peaked at 6.16-3/4 on Oct 8 which stands as resistance for now.  The 10-day moving average is situated near 5.93.  Dec KC wheat is at 5.40-1/4 ahead of it’s 10-day MA at 5.31-1/2.  That contract’s peak and resistance area from Oct 8 is etched at 5.52-3/4.  Competitive Russian wheat is rumored to have quality concerns and is priced too high.  News wires reported that European wheat prices closed slightly higher on Wednesday after hitting contract highs earlier in the session, in a sign that traders were relieved that Algeria’s latest wheat purchase would not be sourced from the Black Sea region.

CATTLE

Cattle calls are mixed after trading lower on Wednesday.  Overall, prices are in a range dating back to July, but the market is now showing signs of collapsing if new buying interest fails to appear.  Managed Money has held roughly 60,000 long contracts the past two months which leaves room for long liquidation price pressure, particularly if cash levels off and fears that an increase in seasonal demand will not occur take over.  Beef prices this week are also slipping with choice losing $5/cwt in just over a week.

HOGS

Lean hog futures are expected to see some upside follow-through in the nearby contracts this morning after closing sharply higher yesterday.  December, at 68.42 is the new lead month contract following the expiration of the October contract.  With cash trading in the upper $70’s and in an uptrend, Dec will play ‘catch up’ at this juncture in time.  Pork cutouts also showed strength on the day.  The next swing target for Dec is up at 69.32.

 

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Matthew Strelow

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