TFM Sunrise Update 11-11-2020


Corn futures were up 5 cents overnight supported by USDA dropping the size of the U.S. 2020 corn crop below the average trade guess.  USDA also raised U.S. corn exports, lowered Ukrainian supplies and dropped U.S. 2020/21 corn carryout below the average trade guess.  Dec corn reached 4.28 overnight, eclipsing Tuesday’s  new high of 4.27-1/4.  Follow-through momentum and dry weather in the Black Sea and Argentina have the contract pointed toward 4.50.  Managed Money is net long an estimated 364,000 corn contracts after going long another 57,000 yesterday.


Soybean futures continued to stay strong overnight, making new highs on lingering support from Tuesday’s USDA data.  Jan beans rose as much as 16-1/4 cents to a new high of 11.62-1/4 before trimming gains.  The lower-than-expected U.S. carryout combined with possibly higher-than-expected U.S. soybean exports that could mean an even lower carryout may force prices higher to slow demand.  Brazilian crop agency Conab raised its forecast for soybean production for the 2020-2021 growing season as farmers are expected to plant a larger area with crop amid strong demand from China and good prices.  After Tuesday’s buying, Managed Money is now net long an estimated 278,000 soybeans; 100,000 lots of soymeal, and; 105,000 soyoil.


Wheat futures were firm overnight, posting modest 1 to 2 cent gains on spillover lift from row crops, a generally weak dollar and underlying support from dry weather patterns in the Black Sea, U.S. south plains and Midwest and east Argentina and South Brazil.  USDA did not change a lot of U.S. and World wheat numbers in their November update.  USDA estimated U.S. 2020/21 wheat carryout at 877 mil bu versus 881 expected and 883 in Oct.  The trade will watch to see if Russia imposes wheat export quotas.  Heading into today, Managed Money is net long an estimated 50,000 contracts of SRW wheat in Chicago.  In tender activity, Turkey seeks 550,000 tons of optional-origin wheat;  Algeria seeks 50,000 tons of optional-origin wheat.


Cattle futures calls are steady to higher after contracts held on to gains from Monday despite strength in the grain markets.  Cash trade remains quiet with no established bids and feedlots asking $112/cwt.  We’ll get the Fed Cattle exchange at 10 AM today to provide a glimpse of the pulse of this week’s cash trade.  Choice Carcasses gained $4.86 on Tuesday to 22.25.  Select gained 6.18 to 208.55.  Retail strength is adding to cash optimism.  Feeder cattle are showing stability despite the strong grain markets 


Lean hog calls are mixed to lower.  The market was bear spread on Tuesday featuring selling pressure in the front months.  Fundamentally, weak cash and retail demand due to large production weighs on the market in the nearby.  Technically, the trend in the front months is lower.  The CME Lean Hog Index was firm, down only .01 to 71.13; Retail values closed 2.71lower to 82.98, softer from midday. This will pressure prices today.  CME Pork carcass cutout index (IJ.X) down .14 to 84.13.  Heavy slaughter was estimated at 493,000 highlighting excess production, and thus pressuring prices. 



Matthew Strelow

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