TFM Sunrise Update 11-30-2020


Corn futures made new highs overnight and the dollar a new low.  Dec 2020 corn gained a nickel to reach 4.30-1/2 before easing; March 2021 corn got to 4.39-1/2 as traders roll long Dec positions to the next contract amid first-notice-day today.  Dec 2021 made it to 4.15.  Buyer enthusiasm has returned to the marketplace after last week’s liquidation of December open interest during the holiday.  Lower U.S. equity trade may offered some resistance, but Managed funds are net long an excess of an estimated 280,000 contracts.  We’ll get Weekly Export Inspections today to gauge whether a an actual slowdown in demand is occurring.  There are some forecasts beginning to lower Brazil’s 2021 corn crop due to late planting and dry soils.  La Nina could also reduce 2021 rains for south Brazil and east Argentina.  This could lower U.S. carryout and push prices even higher.  South Brazil could see rains early this week.  Overnight newswires showed Brazilian farmers will produce a smaller first-corn crop, which is planted over the summer in the nation, as dry weather persists in southern states, agribusiness consultancy Safras & Mercado said; Safras now forecasts Brazil will collect 19.052 million tonnes, almost 18% below the 23.161 million tonnes harvested in the 2019/20 summer season; in a previous estimate released in October, the volume forecast for this season’s summer corn production was 22.851 million tonnes.


Soybean futures bumped up against last week’s new highs overnight before retreating as much as 16 cents to 10-day moving average support levels.  Jan beans are at 11.84 after retreating from the $12.00 market for a fifth consecutive session a as South American weather forecasts hang in the balance.  Technically, daily stochastics that gauge technical momentum have swung into overbought territory which would favor more weakness if overnight reversal action is sustained.  Managed Money is net long and estimated 231,000 soybeans;  79,000 lots of soymeal, and; 115,000 soyoil.

Overnight newswires reported:  A vessel carrying 30,500 tonnes of soybeans produced in the United States is due to arrive on Friday in Brazil, according to the Paranaguá port authority, as the nation makes a rare purchase from North America amid tight supplies; this year, Brazil sold huge soybean volumes to top importer China, leaving little for domestic consumption.


Winter wheat futures were mostly lower overnight with the March Chicago contract down 4-3/4 cents to 6.01-1/4.  March KC wheat shed 8 cents to 5.57-14, and; March Mpls wheat 4-1/2 cents to 5.65-1/2.  The entire complex continues to grind sideways in a classic consolidation pattern awaiting fresh market-moving news other than reacting to neighboring corn and soy movement and a lower dollar.  The view of higher wheat futures turns out to be a mirage disappearing out in the distance for bullish traders as rallies become selling opportunities for the bears.  Look for more choppy trade to begin the week.


Cattle futures are called steady to higher after seeing the majority of Friday’s cash trade at $111/cwt and some reach $112/cwt, up $1 to $2 from the previous week.  The recent price movement, on the surface is positive, but some early weakness could happen if resistance levels are not taken out.  A falling dollar heightens the prospects for an increase in demand heading into year-end.  The Covid epidemic clouds the actual demand forecast for the market moving into 2021, though.  Feb cattle begin the week at 113.25 with the next near-term upside objective at 114.55.  First support is seen around 112.35.  Meanwhile, feedlots are purchasing cattle now that will market after the expiration of the April board and the steep discount to the June contract (111.90) creates a large loss.


Lean hog calls are mixed.  Much will depend on whether Friday’s ‘outside day’ lower closes will attract follow-through sentiment.  Traders turned into active sellers to close out the holiday-shortened week on views of adequate supplies and non-friendly export sales.  More weakness could signal a longer-term downtrend after last week’s sideways action.  The next upside area of resistance for the Feb hog contract is at 68.32 after closing at 67.25 on Friday.  The near-term support area is seen at 66.60.


Matthew Strelow

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