TFM Sunrise Update 10-20-20

CORN

Corn futures were up 2-1/4 cents overnight in a bid to challenge Friday’s new one year highs.  Dec corn got to 4.07-1/2 with Friday’s high of 4.09 an upside target for the bulls, supported by surprisingly high Weekly export inspections at 911,000 metric tons.  In addition, there is talk that the low moisture in the harvested crop may require a downward revision in the nation’s yield estimates due to the quick drying period for the harvested crop.  The U.S. corn harvest was pegged at 60% complete versus 43% average (trade was looking for 57% complete).  Corn crop conditions were steady at 61% good to excellent.  Managed Money is net long an estimated 216,000 corn contracts heading into today’s trade.  Tender Activity showed Algeria believed to have bought 30,000 tons of optional-origin corn.

SOYBEANS

Soybean futures were up as much as 9-1/2 cents overnight to 10.63-3/4 (Nov).   Strong demand keeps a fire lit underneath the grain and oilseed complex, but forecasts for rain in South America may limit upside potential.  Season to date bean exports are near 423 mil bu versus 238 last year.  The USDA goal is 2,200 versus 1,676 last year.  There was talk that a Brazil branch of a global exporter bought a few US soybean cargoes from its US branch yesterday.   Exports could be as high as 2,350 if Brazil’s 2021 harvest is delayed.  There is also concern about global soymeal supply versus demand which could add to demand for US meal.  Newswires report farmers in Brazil have sowed 7.9% of the estimated soy acreage through Oct 15, more than doubling the area planted last week. This is the slowest planting pace in one decade due to drought at the start of the season, Ag Rural said.  The US soybean harvest was 75% complete ahead of 58% average (trade was looking for 79%).

Managed Money is net long an estimated 237,000 soybeans; 91,000 lots of soymeal, and; 75,000 soyoil.  Bean contracts continue to remain a step ahead of 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.

WHEAT

Winter wheat futures were up a nickel overnight with new highs in the KC contracts.  Chicago wheat is in an ‘inside day’ pattern after closing well of new contract highs in yesterday’s session.  The dollar is down to a one-week low this morning, giving wheat an outside-market push.  With wheat contracts in overbought territory, more two-sided action can be expected as traders exhibit caution on this rally.  For now, the complex is in the midst of a upward tilt that favors the bulls.  Mpls wheat was up 4 cents to a new 8-month high of 5.73-1/4 (Dec).  The U.S. winter wheat crop 77% done versus 72% average with the trade looking for 81% done.  Managed Money is net long an estimated 62,000 contracts of SRW Wheat.

Tender Activity has Japan seeking 80,000tons of optional-origin wheat; Algeria seeks 50,000 tons of optional-origin wheat; And, S. Korea bought 60,000 tons of optional-origin feed wheat.

CATTLE

Cattle calls are for steady to lower this morning after imploding with steep losses to begin the week.  The complex is now in search of a low led by weakness in equity markets, poor cash performance, and demand concerns from COVID.  Fund are long 56,000 contracts leaving room to liquidate.  Carcass cut out value trended lower last week, losing 4.00 from early week highs and stayed soft on Monday, down .29 to 209.74; Select under $200 at 191.84.  Heavy weights leave production levels burdensome for demand concerns.  We will get a Cattle on Feed Report on Friday. 

HOGS

Lean hog calls are mixed with Dec rallying above 72.00 to 72.80 on Monday, and the rest of the complex giving up intra-day strength and closing in the red.  The cash market remains supportive for Dec, even after slipping .26 to 78.23 to post the CME Lean Hog Index’s first negative day since Sept 1.  Carcasses softened 1.09 to 98.10 on Monday, and the deferred contracts are breaking down on follow-through from last week’s topping action.  Demand will be the key to further price direction this week.

 

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Matthew Strelow

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