TFM Sunrise Update 11-16-2020


Corn futures traded narrowly mixed overnight around 4.10 and the 10 and 20-day moving averages in the nearby December contract.  An increase in farmer selling is creating some resistance for the market that has been underpinned by a drop in USDA’s 2020 and 2020/21 carryout forecast.  Weekly Export Inspections are on tap for later this morning.  Overnight tender activity showed Turkey seeking 350,000 tons of option-origin corn.  Brazil rainfall during the weekend was most concentrated on the area from Mato Grosso do Sul, Paraguay and western Parana into Minas Gerais and Goias ; Southern Brazil weather will trend drier after the first part of this week; Rainfall today  will vary from 0.20 to 0.75 inches with local totals over 1.00 inch; Far southern Brazil will trend drier starting Tuesday and expand northward Wednesday through Saturday.  Argentina received rain during the Friday through Sunday morning period with about 85% coverage, but the greatest amounts of rain occurred in Cordoba, southeastern Santiago del Estero, northwestern Santa Fe and parts of western Chaco and eastern Formosa where 1.00 to 2.00 inches resulted; follow up rain will be extremely important; Rain is expected Nov. 24-28 across much of Argentina with 0.50 to 1.50 inches resulting which may translate into further improved rainfall.


Soybean futures were mixed overnight between 11.52-3/4 and 11.46-1/2 in the nearby January contract.  Last week’s new high of 11.62-1/4 is an upside target for this week.  Record weekly U.S. soybean exports earlier this month and good weekly U.S. export sales last week offer lingering support.  In addition, the USDA’s downward revision to the U.S. 2020 soybean crop and 2020/21 carryout is likely to lead to a test of the recent highs and keep Managed Money on the long side of the market with $12.00 per bushel in their sights.  They’re long an estimated 288,000 soybeans, 94,000 lots of meal, and,; 113,000 soyoil.  Today’s market chatter will include yesterday’s news about fifteen Asia-Pacific economies forming the world’s largest free trade, a China-backed deal that excludes the United States.  The signing of the Regional Comprehensive Economic Partnership (RCEP) at a regional summit in Hanoi could help Beijing cut its dependence on overseas markets and technology, a shift accelerated by a deepening rift with Washington, according to the Reuters weekend article.


Wheat futures fell 6 cents overnight into the midsection of Friday’s trading ranges.  Prices managed to close on a positive note Friday, but lost that traction to start this week.  Technically,  futures at all three exchanges are struggling below their respective 10 and 20-day moving averages while testing 50-day MA support.  FACE (Informa) estimated U.S. 2021 wheat acres at 46.0 million versus 44.3 this year.  This would produce a crop near 1.934 bil bu versus 1.826 in 2020.  2021 US winter wheat acres were estimated near 31.5 versus 30.4 last year.  HRW 21.9 vs 21.3; and, SRW 6.1 vs 5.5 last year.  Record high world wheat ending stocks will make it difficult for the market at this juncture in time.  U.S. wheat is priced nearly $2 below French and $5 below Russia supplies with Russia’s domestic prices still at all-time highs.  Last week’s Russia’s export quota was higher than expected and weighs on prices.  Tender Activity has Syria seeking 150,000 tons of optional-origin wheat.


Cattle futures calls are steady to lower on the heels of disappointment in last week’s cash market that saw most trade at $110/cwt.  This was up $2 to $3 from the previous week, but below what many thought would be $112.  Choice carcasses did finish the week $9.00 higher on moderate demand.  Meanwhile, feeder cattle finished lower amid firmness in the grain markets and weak live cattle trade.  Outside markets and COVID concerns limit buying strength and brought weakness into the livestock markets.  The technical trend is higher, but may be poised to check support levels.  Weekly export sales did slip back off last week to 14,300 Mt, down 30% from last week, but it was encouraging that China was the largest buyer at 3,500MT. 


Lean hog calls are mixed as the market may be still trying to etch out a bottom.  Price weakness quickly reappeared on Friday as large pork production weighed on the market.  The last 4 week’s pork production has averaged 586.9 million pounds, the highest 4-week average ever recorded for any time of year.  The CME Lean Hog Index was steady, down .05 to 71.32, holding near the $71 level and maintaining a premium over December futures.  Retail values closed 2.94 lower to 80.14.  Hog carcasses were down $5.00 on the week.  Weekly pork export sales for last week were at 58,600 MT of 2020 and 2021 combined; this was up from last week’s totals. China stayed active in the market by adding 30,500 MT for both years combined.  All in all, look for choppy trade to begin the week.


Matthew Strelow

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