TFM Sunrise Update 10-16-20


Corn futures rose to new highs again overnight.  Dec corn got to 4.07 on gains of 3-1/4 cents ahead of this morning’s delayed Weekly Export Sales.  Trade estimates look for 600,000 to 1.20 mil tons to be reported.  Managed Money, meanwhile has grown their net long position to an estimated 184,000 contracts while open interest continues to increase on the rally.  Some US corn end users are beginning to price 2021 needs despite fact 50% of US corn crop is still left to be harvested.


Soybean futures were up 4-1/2 cents to 10.66-3/4 (Nov) and are about even for the week.  Increased tensions between the US and China is highlighted by China’s President stating that the China Military should put its mind on preparing for war.  Meanwhile, USDA did announce a 261 metric ton US soybean sale to China.  Trade guesses for US weekly soybean export sales are 1.50 to 2.20 million tons versus 2.591 last week. Guesses for US soymeal sales are near 100-250 mt versus 272 last week.  Argentina remains dry spurring talk of late plantings due to dryness.  Argentina’s farmers remain a slow seller of beans.  This could reduce their crush which could help US soymeal export demand which has been a supportive factor for CME soymeal futures.  In Brazil, there are increased chances for rains across the central region which are needed to improve crop outlook there.  NOPA soybean crush for September was 161.5 mil bu vs 152.6 mil bu last year. This translates to a census crush of 171 mil bu, bringing Oct-Sept crush to 2,173 mil bu versus USDA’s estimate of 2,170 mil bu. There is talk that China bought 5 cargoes of US soybeans and 6-8 cargoes of Brazilian soybeans for the Feb through June timeframe.  Increased Chinese demand for US soybeans could drop US 2020/21 soybean carryout below 200 mil bu versus USDA 290.


Winter wheat futures made new highs overnight before retreating to Thursday’s higher settlement closes.  Dec Chicago wheat got to 6.22, moving over 6.00 this week for the first time since June, 2015.  Matif and CME Black Sea futures continued to make new highs this week, too, despite talk of Russia rains.  Farmers in Russia continue to be a slow seller until good rains are received.  Their domestic wheat and flour prices are at all-time highs. Talk of a lower Argentina wheat crop due to dryness offers support.  Weekly US wheat export sales are estimated 200,000 to 600,000 tons versus 530,000 last week.


Cattle calls are for steady to lower this morning due to a breakdown on the charts this week.  Dec closed below the previous day’s low on consecutive days thus weakening the technical picture.  Cash, too has weakened with this week’s trade at $108/cwt, down $1 from last week.  Carcasses cut out values are trending lower with closing values showing Choice down .66 to 210.48 and Select down 2.77 to 196.50.  The rally in grains and weak spring live cattle prices are weighing on feeder markets..


Lean hog calls are mixed with the CME lean hog index strength bolstering the nearby futures market.  The index has risen to 78.24 versus Dec futures at 69.87.  Mid-week carcass values were higher, too gaining 4.85 to close at 101.42 led by strength in the ham and belly cuts.  Weekly Export Sales are due out today, one day later than normal due to the holiday last Monday.  Last week was a marketing year high at 60,200 MT of pork sales.




Matthew Strelow

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