TFM Sunrise Update 11-2-20


Corn futures were down 4 cents overnight along with the rest of the grain and oilseed complex.  Dec corn got to 3.93-1/4, re-testing last Thursday’s 2-week low of 3.93.  A ‘risk off’ mood in commodities continues to swell ahead of tomorrow’s election with a distinct possibility that results may not be validated for days, or weeks.  Market weakness also stems from good weather in Brazil as a negative factor for the week, though exports remain very strong.  The Brazilian growing regions have hit and miss, moderate rainfall amounts for 75% of the area over the next 6 to 10 days. Temps will be below average for the week ahead turning to average to a bit above by the end of the week/weekend.  We’ll get Weekly Export Inspections later this morning, Weekly Harvest Progress at 3pm.  In tender activity, S. Korea bought 131,000 tons of optional-origin corn.  Heading into today’s trade, Managed Money is net long an estimated 220,000 corn contracts.


Soybean futures fell to a fresh 2-week low overnight led by the nearby November contract as traders continue to stay away from the possibility of being delivered on and move long positions out and into Jan.  Nov was down 14-1/2 cents to 10.42, and Jan lost 10-1/4 to 10.45.  The complex is vulnerable to more profit-taking and long liquidation this week on technical weakness following last week’s rally to new highs given the large net long position from fund traders.  The funds are net long an estimated 209,000 soybeans; 81,000 lots of soymeal, and; 89,000 soyoil.  API Energy Stocks data will be out tomorrow afternoon: U.S. soyoil stocks at the end of September were seen dipping to 1.826 billion lbs, down from 1.958 billion lbs at the end of August and a fifth straight decline; but it would be above stocks of 1.775 billion lbs at the end of September last year; soyoil stocks estimates ranged from 1.764 billion to 1.875 billion lbs.


Wheat futures were down 3 to 4 cents overnight. Our commodity clearing firm estimates Managed Money net long 35,000 contracts of SRW wheat.  Wire story report:  “Just when Australia needs it, wheat farmers start bumper harvest; Australia to produce third biggest wheat crop in 30 years; concerns over Black Sea conditions lead to wheat price rise.”  Rain is still needed in parts of Russia and the U.S. Plains, but the latest forecast models shows the Southern U.S. Plains might have a front that brings some precipitation to the eastern sections of KS, OK early next week. Temperatures are seen running above average.


Cattle futures calls are steady to higher after holding and adding gains on Friday.  The impressive price action on Friday highlight the prospects of improving demand.  We have been seeing more overall choice product movement as a sign of that with nearly 100 choice box loads the past 3 days recorded.  Cash trade stayed light with most trade at $106/cwt, not enough to make a solid trend for the week. Choice Carcasses stayed firm into the close on Friday, up .78 to 208.10 as retailers are locking in cheaper holiday supplies.  The improved technical picture in both live and feeder contracts create a  possible forming of a V-bottom in feeders.  For the week, Dec cattle traded 4.725 higher and Jan feeders were 8.575 higher. Funds were long only 14,000 LC contracts on Tuesday last week, shaving 50,000 long since 9/1/2020.


Lean hog calls are called steady to lower after Dec hogs failed to hold early session gains, leading to a difficult technical picture.  The CME Lean Hog Index slid, losing another .78 to 75.49, but still hold large premium to Dec contract, and will provide support to Dec., but the trend has turned lower.  Retail values had gains at midday, up .95 to 83.80, but failed to hold those gains, losing 3.77 to 83.80.  this will pressure today’s open.  Technical outlook is weak, leading to additional long liquidation; Deferred contracts are testing key support levels and are starting to look like a value. 


Matthew Strelow

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