TFM Sunrise Update 11-18-20


Corn futures were mostly steady overnight near the top of Tuesday’s higher trading ranges.  Talk of higher demand for U.S. corn exports combined with an escalation in the soy complex keeps the market supported.  More weakness in the dollar is also noted.  Meanwhile, corn prices above $4.00/bu is being met with an increase in farmer selling.  weekly Ethanol Stats will be out today, Exports tomorrow.  USDA did announce a 195 mt sale of U.S. corn to Mexico.  South Korea also bought 66,000 tons at their tender, but still no new U.S. corn sales to China despite rumors of them asking for U.S. corn prices.  Dec corn is trading just above 4.20 per bushel with a near-term objective of 4.24-1/2 and last week’s high of 4.28.


Soybean futures were up 4 cents overnight while reclaiming the upper portion of Tuesday’s contract high trading ranges.  Managed Money is net long an estimated 239,000 soybeans; 79,000 lots of soymeal, and; 107,000 soyoil amid a tightening of the U.S. soybean balance sheet that could push nearby soybean futures above 12.00.  Overnight, Jan beans settled in around 11.75.  Should final export demand increase another 150 mil bu, carryout would likely drop below 100 mil.  Currently, the Stocks-to-Use ratio is near 4% which on its own, implies a soybean price at $13 to $14.  The trend is higher, but there are still no new U.S. soybean sales to China despite rumors of them buying U.S. soybeans.    


Wheat futures traded mixed overnight with modest 3 cent gains in Chicago futures.  KC and MPLS prices were flat.  Daily charts are showing a bottleneck of consolidation as traders digest the price impact from higher row crop prices, a weaker dollar, and; fundamentals for the grain.  On the surface, world wheat supplies limit rally potential….Dry weather in the Black Sea, U.S. Plains and South America limits downside price potential.  Wheat will need to capture the draft from the rally in corn to pull prices higher.  Overnight, the Taiwan Flour Millers’ Association issued an international tender to purchase 82,220 tonnes of grade 1 milling wheat to be sourced from the U.S. The tender deadline is Nov. 25.


Cattle futures calls are steady to higher following Tuesday’s rally.  Carcass values remain in an led by a 6.77 surge in Choice to 233.72 and Select holding mid-day strength and closing up 1.61 to 213.96 on moderate demand at 142 loads.  The Choice/Select spread is at 19.76, possibly reflecting a more current feedlot situation.  Cash trade undeveloped on Tuesday, but did see first starter bids at $110.  triggering light trade in the south at $110, but not enough to establish a trend.  Today’s Fed cattle exchange may help bring more clarity.  Technically, cattle held support and Feb traded back above the 100-day moving average.  The latest Cattle on Feed report is this Friday.  Expectations for On Feed: 101.7%, Placed 90.3%, and Marketed at 100.1% 


Lean hog calls are steady to weaker.  The market traded higher on Tuesday supported by value buying and the discount to Lean Hog Index for front months.  Weak carcass values will pressure the market, though, and heavy pork production and a large slaughter run limits upside potential in futures . Estimated slaughter was at 493,000 on Tuesday, steady with last week.  Retail values closed down 2.55 to 78.60, failing to hold mid-day firmness.  The CME Lean Hog Index was lower, down .76 to 70.08, though st holding a premium over December futures at 65.52, and supporting the front month, but trending lower.


Matthew Strelow

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