TFM Sunrise Update 11-20-20


Corn futures were up 5-1/2 cents overnight to 4.28 (Dec).  Both Russia and Ukraine domestic feeders are asking their governments for corn export quotas to preserve domestic supplies. This could help increase final U.S. exports and lower the 2020/21 carryout.  For the week, the nearby contract has gained 20 cents and 30 cents for the month, so far.  Look for the contract high at 4.28-1/2 to be taken out and possibly the next near-term resistance target of 4.29 today on upward price momentum.  Rising stochastics show an overbought technical condition for corn.  Managed money liquidated some long positions on Thursday on South American weather.  Forecasts for rains next week over parts of the dry areas of south Brazil and north Argentina may trigger more liquidation near new highs, but they remain heavily net long despite selling an estimated 12,000 corn contracts on Thursday.


Soybean futures made new highs overnight to 11.92-3/4 in the Jan contract on gains of 15-1/4 cents.  For the week, Jan has rallied more than 40 cents and $1.30 per bushel for the month.  Better than expected Weekly Export Sales at 1.387 mmt with sales to China at 1.060 mmt, brought their commitment to a record large 28.6 mmt.  China could take as much as 38 mmt from the U.S.  Higher Chinese demand and any South America weather problems will push Jan well above 12.00, particularly with where the latest USDA Stocks-to-Use ratio stands.  The 7 day forecast calls for rains in the dry areas of south Brazil and north Argentina.  Meanwhile, higher World vegoil prices continues to support soyoil which made new highs overnight and offers support to soybeans.  World vegoil numbers could suggest soyoil futures could trade over 40.


Wheat futures were narrowly mixed overnight underpinned by the trend in row crops and the weaker dollar.  Weather forecast calls for rains across the U.S. south plains.  The GFS model has good rains and coverage, while EU model has less rains, but a little more than mid-week.  Rains may not help wheat stands, but will add moisture for the spring.  Over the last few days some of the dry areas of Russia also saw good rains.  In addition to activity in row crops and the dollar, continued rainfall amounts across the Black Sea region will be a key to wheat price movement.


Cattle futures are called steady/weaker as large production numbers and COVID concerns weigh on sentiment. A JBS plant in Greely, CO reported 20 cases of COVID in the plant.  As of yesterday, no planclosures were announced.  Prices have technically broke down and are poised to challenge trendline resistance.  The long term uptrend is intact, but the market is cautious.  Cash trade is likely wrapped up for the week going into the COF report on Friday.  Light cash trade at $110, so far this week is steady with last week and early-week trade.  Strong retails had the market hoping for higher.  Feedlots are still asking $112.   Choice Carcass values closed 1.86 higher to 237.70 and Select gained .27 to 213.89.  The spread is at 23.81, may be reflecting a more current feedlot situation.  Look for some position squaring before the cattle on feed report. Expectations for report are: On Feed: 101.8%, Placed 90.9%, and Marketed at 100.1% 


Lean hog calls are steady to weaker large pork supplies and disappointing export demand.  Weekly export sales were disappointing on this week’s report.  Total sales for 2020 were 28,900 mt for the week, down 32% from last week.  Export shipments remained firm at 38,800 MT, up slightly from last week.  China was quiet at 2,100 MT including decreases of 1,400MT.   They took shipment on 13,100MT.  The CME Lean Hog Index was lower, down .35 to 69.73, though holding a premium over December futures and supporting the front month, but trending lower.  Retail values closed 1.54 higher to 79.22.  The trend is still lower in retail values but starting to be at value below $80.


Matthew Strelow

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