TFM Sunrise Update 11-4-2020


Corn futures were unchanged overnight with Dec sitting at 4.00 and mid-range of yesterday’s 8 cent trading range.  Election results remain unclear and the markets appear to be in limbo until more is known.  Managed Money bought back 3,000 corn yesterday and are long an estimated 219,000 contracts, and there continues to be less-than-normal rainfall forecast for Brazil and Argentina over the next 2 weeks. Weekly Ethanol Stats will be out today, Exports tomorrow.   Next week Tuesday, we’ll get the November Supply/Demand report.  One group estimates the 2020 U.S. corn crop at 14.502 bil bu versus USDA Oct guess of 14.722, suggesting a yield of 175.7 bpa vs 178.4.  Normally, USDA would not drop a Nov yield this much, but with this year’s rapid harvest pace and the kind of year it has been, the final corn crop may be smaller than the latest USDA guess.  U.S. Stocks-to-Use would remain in the 15% area, kind of a neutral to bearish quotient for price.  This year’s harvest is now more than 82% complete versus a 69% average and 49% last year.


Soybean futures were higher overnight. Beans were up a nickel, meal $4/ton and oil firm.  Hopes for new U.S. soybean sales to China and concern about a drier Southern Brazil and Eastern Argentina weather pattern have helped the complex climb out of a downward correction phase that began after posting new highs last week.  With the November USDA Supply/Demand report less than one week away, one private group estimated the U.S. 2020 soybean crop at 4,183 mil bu versus USDA October guess of 4,268. This would suggest a yield near 50.8 versus USDA 51.9.  Some would expect the final soybean crop may not drop as much as this private guess.  Still, an 85 mil bu drop in the crop could reduce USDA’s 290 mil bu carryout the same.  Some would even add 150 mil bu to U.S. soybean export which could drop carryout even more.


Wheat futures were two-sided overnight and are largely in the red this morning led by 3-1/2 cent losses in Chicago, fractional weakness in KC and a down a penny in MPLS.  The dollar was sharply higher and is now mostly steady.  Looking ahead, there is concern about increased volatility post U.S. election, but for now, markets are pausing. Talk of drier 2 week Russian weather offers support and there is also concern about a drier South America and U.S. south plains weather outlook.  Managed funds were net buyers of 1,000 wheat and are estimated net long 42,000 wheat. One private group that dropped U.S. and World corn and soybean supplies dropped World 2021 wheat crop 4 mmt.  This, due to a 2 mmt drop in Russia and 2 mmt drop in Ukraine.  Their Russia crop estimate is near 75 mmt versus 83 last year.  The wheat market will also be digesting China’s ban on Australian wheat imports.  News sources report: “China is expected to ban imports of Australian wheat, putting a A$560 million (HK$3 billion) trade in doubt, with the grain ­becoming the latest to join a list of new blocks on products from the country, according to industry sources.”


Cattle futures calls are mixed, looking at two-sided trade in search of direction.  Prices have consolidated at the top of their most recent rally, and with cash undeveloped and election results hanging in the balance, we expect higher movement, but need confirmation.  Feedlots are seen asking $110/cwt.  Rising COVID cases bring some uncertainty to the market.


Lean hog calls are called mixed.  Weaker cash and retail values are expected to lean on the nearby Dec contract.  The CME Lean Hog Index lost another 1.01 to 73.48 amid a lower trend.  Retail values gave up midday gains, closing 1.15 lower to 82.99.  Beginning November 9, there will be a new CME Cutout contract that we will begin reporting on.  The carcass cutout settled down 1.3 to 85.84 and has been trending lower since Oct 22. 


Matthew Strelow

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates