TFM Sunrise Update 10-19-20

CORN

After retreating on Friday, corn futures were up 3 to 4 cents overnight, taking back some of Friday’s higher trading ranges.  Dec got to 4.06-3/4, shy of the high of 4.09.  Corn spreads have narrowed on increased export demand and slow farmer selling.  We’ll get Weekly Export Inspections data this morning.  Some Feel China may take 24 mmt of US corn when all is said and done.  There is talk that Ukraine may have sold 8 mmt to China.  Meanwhile, talk of rains in Brazil and Argentina may offer some resistance.

Newswires: Brazil will suspend tariffs on corn and soy imports from countries outside the Mercosur trade bloc until early next year to help reduce food prices that are pushing up inflation, the economy ministry said on Saturday.  Corn imports will be exempt and cease paying the tariffs until March 31, 2021, the ministry said in a statement.  Record high prices for both grains have impacted food prices that are fueling inflation and squeezing incomes of Brazilians that have already been hit by the coronavirus pandemic.  Inflation in August hit its highest in four years for that month, driven by rising fuel and food costs.

Managed Money is net long an estimated 207,000 corn contracts heading into today’s trade.

 

SOYBEANS

Soybean futures were up as much as 6-1/2 cents overnight to 10.56-1/4 (Nov) before trimming gains.  Bean contracts are tracking their 10-day moving average support levels in a bid to maintain their up-trend.  The high for the November contract stands at 10.77 hit on Oct 9.  Soybean meal and soy oil imports will also be exempt along with soy imports until Jan. 15, 2021 as part of Brazil’s suspension on tariffs on corn and soy imports from countries outside the Mercosur trade bloc until early next year to help reduce food prices that are pushing up inflation.  The Brazilian growing regions has light to moderate rainfall covering 75% of the area in the north with things quiet in the south. The 6 to 10 day has moderate rainfall for 80% of the growing regions.  Managed Money is net long an estimated 232,000 soybeans; 86,000 lots of soymeal, and; 78,000 soyoil.

WHEAT

Winter wheat futures made new highs overnight and Mpls spring wheat followed suite hitting a multi-month high.  Dec Chicago wheat got to 6.35 on gains of 9-1/4 cents.  Dec KC wheat hit 5.67 on gains of 8-1/4 cents; And, Dec Mpls reached 5.68-1/2 on gains of 8-3/4 cents.  Higher row crop and a retreat in the greenback, along with bullish technical momentum and surging Paris and Black Sea futures keep prices on the upswing.  Concern about Russia’s weather and crop conditions had  slowed Russia farmer selling, thus reducing the flow to ports for export.  Long-awaited rains arrived in part of Russia’s winter wheat-sowing regions over the weekend after the dry spell, the head of the IKAR agriculture consultancy said; more rains are still needed in these regions; farmers in part of Russia have been sowing winter wheat in dry soil this autumn which signals risks for the 2021 grain crop.  Tender activity has Ethiopia seeking 280,000 tons of optional-origin wheat; And, Syria needs up to 200,000 tons of wheat per month to meet a shortfall.  Managed Money is net long an estimated 60,000 contracts of SRW wheat.

CATTLE

Cattle calls are for steady to lower this morning due to a breakdown on the charts last week and weaker cash.  Carcass values lost $4.00 from early week highs, closing at 210.66 on Friday.  This may lead to some value buying as load counts did reverse higher on Friday after trending lower Monday through Thursday.  We’ll keep an eye on demand concerns versus the heavy carcass weights and high production.

HOGS

Lean hog calls are mixed to firmer after Dec hogs breached the 70.00 barrier in Friday’s trade, getting to 70.70 before succumbing to some profit taking and settling at 69.80.  The discount to cash keeps the market supported in front months.  The CME Lean Hog Index maintained its strength, up 0.25 to 78.49.  Carcasses were soft on Friday, but weekly overall strength supports the market as hog carcasses have crossed the $100.00 barrier mid-week, but finishing the week at 99.19, down 2.23 on Friday.  Weekly export inspections were disappointing last week at 26,800 mt, down noticeably from last week.  Shipments stayed firm at 36,000 MT.

 

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Matthew Strelow

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