TFM Sunrise Update 10-27-20


Corn futures reached new highs again overnight with Dec up 4 cents to 4.21-3/4 and the next three 2021 contracts all within a penny of that price leaving no carry in the marketplace. Rains in Brazil and Argentina should help corn and soybean plantings there, however, talk of higher demand for U.S. corn exports and a lack of U.S. farmer selling continues to offer support.  Some feel the U.S. farmer is only 35 to 45 percent sold.  Weekly harvest progress data showed 72% complete.  Trade estimates were for 73% versus 60 last week and 56 average.  Managed funds are net long an estimated 251,000 corn contracts in this overbought technical stage of the corn market.  Overnight tender activity showed: A S. Korean feed group passing on 69,000 tons of optional-origin corn, bought 268,000 tons of optional-origin corn, Iran seeks 200,000 tons of optional-origin corn; And, Taiwan bought 65,000 tons of U.S. corn.


Soybean futures were unchanged overnight at the top of their respective trading ranges, supported by continued talk of tight old crop Brazil and Argentine soybean supplies.  Brazil could hold back their soybean, soymeal and soyoil supplies for domestic use until their 2021 harvest.  Managed funds are net long an estimated 257,000 soybeans, 100,000 soymeal and 91,000 soyoil.  U.S. harvest progress is 83% complete versus 75 last week and a five-year average of 73%.  China will have their outlook conference this week.  Most feel they will announce new spending for infrastructure which could increase their imports of base metals and raw materials.


Wheat futures saw a technical bounce overnight and look poised to trade a ‘turn around Tuesday’ session.  Dec Chicago wheat rose 7 cents to retest the contract’s 10-day moving average at 5.66-3/4.  Dec KC wheat was up 5-1/2 cents to 5.64; And, Dec Mpls traded 3-3/4 higher to 5.68-3/4.  The winter wheat seeding pace is pegged at 85% complete versus 77 last week and a five-year average of 80%. Emerged was 62% versus 51% last week, 60% a year ago, 60% average.  Winter Wheat was rated 41% good to excellent (trade estimate was 52%) versus NA% a week ago and 56% a year ago; 40% fair (NA% last week, 31% a year ago); 19% poor to very poor (NA% last week, 13% a year ago).  Managed Money is net long an estimated 51,000 SRW contracts in a trend that remains up despite the recent weakness.  Overseas weather will be watched closely for further price direction.  The Black Sea and European winter wheat crops are expected to trend drier into next week following some precipitation this week.  In the U.S., significant precip is still expected in west Texas and from the Texas Panhandle through Oklahoma and south-central Kansas tonight into Thursday.  This will increase soil moisture and benefit the newly planted winter crops.


Cattle futures calls are steady to higher. The market shrugged off a negative COF report in yesterday’s trade, likely because the bearish data was already priced into the recent depressed price activity.  There was no developed cash trade on Monday, so we’ll watch for bids today with an expectation for lower than last week.  Equity markets are stabilizing this morning after yesterday’s down day, this could lend some support to an improved technical picture for cattle.


Lean hog calls are mixed after the complex experienced some recovery from a test of the lows on Monday.  The move posted a strong upside signal, technically.  The CME Lean Hog index slipped .06 to 78.54, but still holds a large premium to the Dec contract.  Overall pork supplies are tight as shown in the cold storage report last week.  This should offer underlying support in the hog market.  Demand will stay the key.  The hog slaughter estimate was 492,000 on Monday, steady with last year.  Retail values gave up mid-day strength, closing 1.39 lower to 91,86, this may create some selling pressure, thus the reason for mixed opening calls.


Matthew Strelow

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