TFM Sunrise Update 10-5-20


Corn futures start the week where they left off Friday after trading narrowly mixed overnight.  Harvest progress is expected to be running ahead of schedule in a Weekly Progress report later today.  Looking ahead, traders will set sights on next Friday’s USDA Crop Production report.  USDA Weekly Export Inspections are out this morning.  The corn market is overbought, and with open interest on the high side and Managed Money net long an estimated long 166,000 corn, traders will monitor signs of the potential for long-covering.


Soybean futures two-sided inside Friday’s trading ranges overnight on comments from the Ag Secretary.  China may fall short of annual agricultural product purchasing commitments made in its Phase 1 trade deal with the United States due to “non-agricultural trade issues,” USDA Secretary Sonny Perdue said; I’m not sure they’re going to make it, but they’re trying,” Perdue said.  Nov beans peaked at 10.29-1/4 where the next area of resistance lies while holding support above the 10 and 20-day moving averages.  Strong export demand and dryness in South America competes with aggressive harvest progress here in the U.S.  Managed Money is net long an estimated 256,000 soybeans; 93,000 lots of soymeal, and; 87,000 soyoil.  In tender activity, Egypt seeks 30,000tons of optional-origin soyoil, 10,000t sunoil.


Winter wheat futures were up as much as 15 cents overnight while forging new highs for the move.   High volatility best describes the up-trending pattern that has developed as weather in Russia, and to some extent Ukraine injects premium into the market.  Russia’s Southern Region is still advertised to be mostly dry for the next ten days, but some showers will be possible October 15-22; most of the region was dry during the weekend and very little precipitation was expected in the next week to ten days.  Spring wheat contracts in Minneapolis remain mired in a consolidation phase, gaining 5 cents on spillover support and a weaker dollar.  Dec Chicago wheat, got to 5.89-3/4 and within a dime of the 2020 high of 5.99-1/2 hit on Jan 22.  In tender activity, Pakistan is to import 180,000 tons of Russian wheat, Tunisia seeks 67,000 tons of optional-origin wheat.


Cattle calls are mixed to begin the week after softening on Friday led by the feeder cattle market.  Charts are on overall up-trend but may be poised for technical weakness, again led by a technically weak feeder complex that could spark long liquidation.  Managed Money was last estimated to be net long 62,000 contracts.  Firm boxed beef, choice carcasses and cash trade, rumored to have hit $108/cwt round out the ‘mixed’ calls for cattle futures this morning. 


Lean hog futures are called steady to higher underpinned by a strong cash market that continues to trend higher.  The index reached 76.74 on Friday which was the highest for October since Aug 2019 and Oct futures are technically overbought, which may lead to some long liquidation at some point.  Carcasses softened into the weekend overall, slowing the momentum in front month hogs.  Friday’s closing carcass value was down 3.50 to $92.15to end the week.


Matthew Strelow

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