TFM Sunrise Update 11-23-20


Corn futures were up as much as 9-1/2 cents overnight before trimming gains.  Dec 2020 corn hit a new contract high of 4.29-3/4, and Dec 2021, the bell-weather contract for producers’ pricing mechanism for next year’s crop hit a new high at 4.12-3/4.  New highs in the soy complex and a feeling that a 3:1 soybean/corn price ratio suggests corn stay lock-step with the rally in beans which hit $12 overnight is supportive.  The U.S. corn ending stocks/usage ratio stands at a market-friendly 7-year low of 11%.  Traders will keep an eye on dwindling crop estimates in South America and corn exports from Ukraine.  In addition, we’ll have holiday-shortened trading week due to the Thanksgiving holiday where the markets will be closed Thursday and end early on Friday.  Weekly Export Inspections will be out mid-morning today.


Soybean futures made new highs overnight to 12.00 in the Jan contract on gains of 19 cents after a rather volatile session on Friday that saw overnight gains erased by the settlement.  Late Brazil soybean crop plantings that could delay harvest and reduce crop size combined with the hog expansion in China that would increase their feed demand and help lower carryout below 100 is once again carrying the trend upward.  The U.S. stocks-to-usage, at 4.2% has fallen sharply since being closer to 25% just 2 years ago.  New highs were posted in nearby soymeal overnight, too.


Wheat futures were higher overnight on spill-over support from new highs in row crops and a steep decline in the dollar to a new 11-week low.  Wheat contracts are still mired in a generally sideways, consolidation as high global wheat stocks act like a wet rag over the markets’ attempt to break out to the upside with corn and beans.  Last week’s NOAA 90-day U.S. weather forecast suggested the dry footprint expanding in the U.S. Plains following weekend moisture that is carrying into today in Kansas.  U.S. HRW crop ratings improved early last week, but were still below average.  We’ll get an update this afternoon.  The Russian winter wheat crop is still viewed as off to a poor start which bears watching.


Cattle futures are called steady to higher.  Friday’s Cattle on Feed was in line with expectations:  On Feed came in at 101%, Placements at 89%, and; Marketings at 100%.  Based on last week’s selling pressure due to large production numbers and COVID concerns, these numbers should be more than baked into the current market price levels, so we expect some recovery today. Very light cash trade on Friday at $110/cwt was steady with the previous week. Choice Carcass values stay in their uptrend closing .65 higher to 238.35 and Select gained 1.09 to 214.98.  The Choice/Select spread stands at 23.37.


Lean hog calls are mixed after rebounding and posting technical reversals in the market late in the week last week.  The market is oversold and may be due for a technical bounce, but fundamentals are not very supportive.  Heavy pork production and a large slaughter run of an estimated 2.43 million head last week limits upside potential.  In addition, the CME Lean Hog Index was .55 lower to 68.77.  Though holding a premium over December futures, and supporting the front month, it’s trending lower. Retail values closed  down  1.05 to 78.17, also trending lower. 


Matthew Strelow

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