TFM Sunrise Update 10-26-20


Corn futures traded narrowly mixed overnight from 2 cents higher to 2 lower with contracts respecting uptrend channel support and Friday’s trading ranges.  Demand from China remains stronger-than-expected and U.S. harvest progress is running into resistance from winter weather across several regions.  For now, we’ll see if strong global demand and ideas China may significantly increase grain and oilseed imports beyond already elevated levels keeps speculators buying Chicago-traded grains and oilseeds; Open interest is also on the rise along with futures prices and fund optimism.  We’ll get Weekly Export Inspections this morning followed by the weekly update on harvest progress this afternoon.  Managed Money is net long an estimated 253,000 corn contracts.


Soybean futures were mixed overnight with Nov trading an 11 cent range including a new high coming in at 10.89-3/4.  Soybeans remain extremely overbought which may lead to some correction without what has become somewhat routine export announcements to China.  Meal futures are consolidating, and soyoil is breaking out to the upside of their consolidating on the charts this morning.  Malaysian palm oil prices were up 51 ringgit at 2,993 (basis January) at midsession tracking rival vegoils.  Brazil’s rainfall is similar for the coming ten days as to that of Friday; rain will fall in most of the nation at one time or another, but rainfall will be least frequent and least significant in the interior south.  Managed Money is net long an estimated 249,000 soybeans; 94,000 lots of soymeal, and; 87,000 soyoil.


Wheat futures traded lower overnight amid strength in the dollar.  Dec Chicago wheat fell a dime to 6.22-3/4, KC lost 14-3/4 cents to an overnight session low of 5.54; And, Mpls wheat fell a nickel to 5.72-1/2.  The Europe/Black Sea Region Forecast is as follows:  Brief periods of precipitation will move across the European continent over the coming week resulting in a favorable mix of moisture and sunshine for winter crops; fieldwork will advance around the precipitation; this weekend and next week should trend drier; temperatures will be near to above average;  Ukraine precipitation will be limited after this week with the best chance for moisture during mid- to late-week.  In Chicago, Managed Money is net long an estimated 51,000 contracts of SRW wheat.  Tender Activity shows Syria seeking 200,000 tons of Black Sea wheat; Pakistan seeks 320,000 tons of optional-origin wheat; Egypt bought 165,000 tons of Russian wheat; And, S. Korea bought 50,000 tons of optional-origin feed wheat.


Cattle futures calls are for sharply lower trade following a bearish Cattle-on-Feed report.  Feeders also look to follow suite, and with Nov closing under 130 could see additional long liquidation on Technical weakness.  ‘On feed’ at 104% shows there are still plenty of cattle that need to be killed.  ‘Placements’ at 106% is negative, and ‘Marketings’ at 106% percent shows with big numbers coming up, kill needs to increase and with COVID 19 changes, they might not be able to increase much more.  US cattle need to see a dramatic drop in cattle weights going to slaughter, and  it needs to have bigger exports to decrease beef inventories. Look for bear spreading to increase.  Cash ended the week mainly at $105/cwt in the north and $106 in the south with some transaction at $103 to $104 in Iowa.


Lean hog calls are steady to lower on spillover weakness from the cattle complex. Retail values suffered on Friday afternoon, closing 5.59 lower to 93.25 which may add to selling pressure on today.  Nearby Dec hogs may see some support from a recovery on Friday posting a hook reversal on the daily chart, and overall pork supplies are tight as shown in cold storage report last week.  The CME Index was .09 lower to 78.60 on Friday while maintaining a large premium to the Dec.



Matthew Strelow

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