TFM Sunrise Update 12-11-20


Corn futures traded mostly steady overnight, mid range of this week’s 13-3/4 cent trading range (Dec).  The corn market has little incentive to move out of its comfort zone today following yesterday’s USDA report.  The agency left ending stocks unchanged from the November report, and though Argentina’s2020/21 production was trimmed, Brazil’s was left unchanged.  The latest U.S. ending stocks forecast from private firm Stone X was for 1.772 bil bu versus USDA’s 1.702 bil.  The somewhat disappointing data leaves the market in limbo and susceptible for a near-term retreat if prices can’t move higher on weather and demand.  However, longer-term, March futures, at 4.19-1/2 could make a run to 4.50.  USDA did raise China’s corn imports to near 16.5 mmt and there is talk that the final number could be closer to 22 to 25 mmt.  This week USDA China’s Ag attaché increased China imports to 22 mmt.  USDA lowered the World corn crop 1 mmt, raised feed use 2 mmt and exports 1 mmt and dropped World corn ending stocks 3 mmt to 289 mmt versus 303 last year.  U.S corn exports could exceed 2.80 bil bu which could lead to a final carryout to closer to 1.50 bil.  Heading into today, Managed Money is net long an estimated 272,000 corn contracts.


Soybean futures were quietly unchanged overnight at 11.52-3/4 in the Jan contract.  The contract has basically been trading 5 to 10 cents on either side of the 11.50 level all week, 50 cents off of strong ceiling resistance seen up at $12.  The market is sitting near oversold levels, and with U.S. ending stocks estimates as low as 113 mil bu from Stone X versus USDA lowering the number closer to 175 mil, prices may find decent support until the January crop report comes out.  The next area of resistance is up near 11.66-1/2.  South America’s latest weather reads as follows: In Argentina, some shower and thunderstorm activity will occur in the southern part of the nation tonight.  Net drying will then likely occur in the south Saturday through at least Wednesday which will lead to some increase in crop stress.  Rain in northern Argentina will be greater, especially in northeastern Argentina.  Last evening’s GFS model run was notably aggressive with a rain event in much of the nation Dec. 20 – 22 (except for far eastern areas).  Some erratic showers and thunderstorms will be possible; however, this event was overdone and changes are likely in future model runs.  In Brazil, conditions will still be favorable in much of the nation for crop development; though, there will be some pockets that need more rain.  Bahia and southeastern Piaui will receive little to no rain through next Thursday; however, there will likely be some increased rainfall in this area in week 2 of the outlook.  Northwestern Mato Grosso do Sul will also be drier than preferred through week 1 but will likely get at least some increase of rain later in week 2 as well.  Heading into today, Managed Money is net long an estimated 191,000 soybeans; 61,000 lots of soymeal, and; 114,000 soyoil.


Winter wheat futures were firm overnight and have climbed back into their previous November trading ranges while forming a near-term bottom.  Chicago and KC wheat wheat gained 2 cents to one-week highs on the heels of yesterday’s double-digit gains, and the dollar is higher this morning while building a base of support at a multi-year low.  The lower greenback enforces ideas of better U.S. export potential on the world market, and USDA’s latest balance sheet held some positive factors allowing the major trend to begin testing the upside again.  Heading into today, Managed Money has flipped from short to now net long an estimated 16,000 SRW wheat contracts.


Cattle futures are called steady to firmer on follow-through from Thursday’s positive closes and seasonal optimism.  Overhead resistance in the form of near-term moving averages and trendlines may cap early strength, though.  In addition, more light development in cash on Thursday was at $107-108, $2-3 softer than last week, reflecting where Dec is trading ahead of next Monday’s expiration.  The contract begins the day at 107.92.  Seasonally, cattle trend higher into Dec contract expiration, this seems to be occurring despite poor fundamentals.  Choice carcass finished 3.67 lower to 214.59 and Select was down 3.18 to 198.47.  The drop in retails triggered moderate product movement with a 185 load count.  That strong product demand supports the market despite the price drop.  Choice carcasses now trading over $20 off recent peak.  Feeders are firmer supported by stability in the live market.  Cash feeder market has been active, providing support 


Lean hog calls are steady to lower after dropping yesterday on cash weakness due to heavy supplies of slaughter hogs.  Technical weakness also weighs on sentiment for today.  Feb hogs, at 65.10 gapped lower late last week and have been rangebound ever since around the 100-day moving average.  The contract’s 200-day MA is at 62.89.  Heavy pork production and large slaughter runs limit upside potential.  The CME Lean Hog Index was higher by .06 to 65.66 and is lagging Feb, but at a premium to the Dec which stands at 64.80. Retail values closed firmer on Thursday, up .83 to 78.43 but, Carcasses failed to hold afternoon strengthup 2.87 at midday.  Weekly exports sales on Thursday came in at 26,500 MT for 2020, and 6,400 MT for 2021.  Shipments were strong at 42,000MT, up 23% week over week.


Matthew Strelow

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