TFM Sunrise Update 11-9-2020


Corn futures eased overnight, registering 4 cent losses and dipping beneath 10 and 20-day moving averages that lent technical support for the market late last week.  Dec corn remains above the $4 mark at 4.02-1/2 and is showing signs of consolidating between 4,22-1.4 and 3.93.  Rising global cases of COVID19 is weighing on sentiment, but strong demand, particularly from China keeps speculative optimism in play.  Managed Money is net long an estimated 301,000 corn contracts.  Weekly Export Inspections will be out this morning and then the November USDA Supply/Demand report tomorrow at 11 AM Central.  A drop in Ukrainian supplies could help U.S. corn export demand which is the cheapest feed grain in the world.  USDA could drop World corn crop 12-16 mmt tomorrow.  The average guess for the U.S. 2020 corn crop is 14.569 bil bu versus USDA last estimate of 14.722. The U.S. 2020/21 corn carryout is estimated near 2.033 bil versus 2.167.  Some feel the U.S. 2021 corn crop will be near 15.300 bil bu and carryout near 1.915.  The USDA released the U.S. focused portion of the USDA Agricultural Projections to 2030 report on Friday, with the complete report due to be released in February 2021.


Soybean futures were mostly steady overnight, meal and oil firm.  Jan beans are oscillating around the $11.00 level awaiting fresh friendly news to propel the contract to a new high.  Managed funds are net long and estimated 238,000 soybeans, 90,000 soymeal and 99, 000 soyoil.  USDA U.S. 2020/21 soybean carryout is near 290 mil bu.  The average trade guess for tomorrow is 235.  Some feel minimum pipeline stocks is near 140 mil bu, and the U.S. 2021 bean crop will be near 4.590 bil bu and carryout near 215. The South America weather report showed Argentina and Brazil receiving insignificant precipitation during the Friday through Sunday morning period and temperatures were warm enough to accelerate drying across both countries; limited rain and warm weather during the weekend has further depleted soil moisture and raised stress for recently emerged crops; the next ten days of rain will be of critical importance for grain and oilseeds; confidence is high that all of these areas will get rain sufficient to maintain crop development except in far southern Brazil and eastern Argentina.


Wheat futures were down a nickel overnight, though underpinned by a weak trend in the dollar.  Chicago Dec wheat is at a one-week low of 5.97 after rallying over over the $6.00 level on dry U.S. south plains, Russia and Argentina weather. The 2-3 week forecast for those areas continues to be dry. U.S. export prices continue to be high versus Russia.  Still, a drop in Black Sea production and lower EU supplies could continue to help World Wheat prices.  USDA will revise US/World wheat Supply and Demand tomorrow with trade estimates for U.S. 2020/21 carryout at 881 mil bu versus USDA 883 October guess.  The trade also expects World 2020/21  carryout to be near 319.7 mmt versus USDA October guess of 321.45 mmt. USDA could drop the Russian crop estimate of 83 mmt.  Some feel US 2021 wheat total supply will be near 2,935 mil bu and carryout near 892.  Overnight tender activity had Jordan seeking 120,000 tons of optional-origin wheat; Saudi Arabia bought 860,000 tons of optional-origin wheat, and; Ethiopia bought 600,000 tons of optional-origin wheat.


Cattle futures calls are steady to higher.  Last week’s cash sales began with a token amount at $103 before moving to $107 by week’s end with volume well over 100,000 head.  With feedlots holding out for higher levels, we could see $109 to $110 this week?  Choice Carcasses gained $1.77 on Friday to 214.32 and were up more than $4.00 on the week with decent product movement.  However, carcass weights stay high keeping production heavy. The price movement in grains may be a key going forward this week.


Lean hog calls are mixed after a bout of bear spread and long liquidation pressured front month hogs on Friday.  The technical trend is lower as is the the CME Lean Hog Index which lost another .53 to 71.52.  Retail values closed 2.32 lower on Friday to 85.06; Carcasses were stable on the week, and recovered off of mid-week lows.  CME Pork carcass cutout index (IJ.X) was down .22 to 83.77, trending lower since 10/22, reflective of the weak retail market over the past 5 days.  CME begins trade on the Pork Carcass cutout contract today.


Matthew Strelow

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