TFM Sunrise Update 10-6-2020


Corn futures were mostly unchanged overnight while staying inside the previous day’s trading range for the second straight session.  The U.S. corn crop was 25% harvested, the USDA said, just ahead of the five-year average of 24% but behind the average analyst estimate of 26%.  Many of the U.S. Crop Watch growers reported relatively slow harvest progress in their areas over the past week as scattered showers, equipment breakdowns, and high moisture levels were prohibitive.  Condition ratings for corn improved, with 62% of the crop rated in good to excellent condition, up 1 percentage point from a week earlier, the USDA said.  Meanwhile, Managed funds are net long a large amount (165,000) in corn and have added to positions after USDA Sep 1 stocks were lower than expected.  Good demand and slow farmer selling add to underlying strength.  USDA crop report is Friday. Food and Ag Commodities Economics (Informa) estimated US 2020 corn crop near 14,812 mil bu versus USDA 14,900. Their US 2020/21 corn carryout is near 1,996 versus USDA 2,503.


Soybean futures were up 8 cents overnight, breaking out of Monday’s range to the upside.  The U.S. soybean harvest was 38% complete as of Sunday, the USDA said in a weekly crop progress report on Monday, ahead of the five-year average of 28% and the average estimate in a Reuters analyst poll of 36%.  Soybean ratings were steady at 64% good-to-excellent.  There is an increased chance for Brazil rain after Oct 10, but until that happens, trade continues to be supported by residual buying.  Food and Ag Commodities Economics (Informa) estimated US 2020 soybean crop near 4,294 mil bu versus 4,313 mil bu. Their US 2020/21 soybean carryout is near 270 versus USDA 460.  Managed Money is net long an estimated 257,000 soybeans; 87,000 lots of soymeal, and; 94,000 soyoil.


Wheat futures were down 1 to 2 cents overnight even with more weakness in the dollar occurring.  Planting of the 2021 winter wheat crop was 52% complete by Sunday, ahead of the five-year average of 47% and the average analyst estimate of 50%.  US and world wheat futures are in the midst of an upswing on the prospect of another 2 weeks of below normal rainfall for the winter wheat areas for European Russia.  US southern Plains and Argentina are also dry.  However, the market is technically overbought which will create some measure of weakness at times.  Mpls wheat was unchanged overnight.


Cattle calls are mixed as the trade digests outside market strength and the recent uptrend in cash cattle.  Varied signals from boxed beef values on Monday and weaker choice carcasses versus select will lead to some two-sided trade to begin the day, particularly as cash aligns with the Oct live cattle contract near 108.00.


Lean hog futures are called steady to higher, underpinned by a strong cash market that continues to trend higher.  The index reached 76.81 on Monday, but may be due for some topping action as strength in the move lessens.  An 8.49 jump in carcasses complimented a strong move in hams and belly cuts, giving fundamental support to and overbought hog market.  Look for bouts of profit-taking pressure to occur if buying enthusiasm wanes.


Matthew Strelow

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