TFM Sunrise Update 12-14-20


Corn futures traded mostly higher overnight led by double-digit strength in beans and a sharp drop in the dollar.  March corn hit a two-week high of 4.28-1/2 on gains of 5 cents before easing.  Nearby Dec was made it to 4.29.   Weekly Export Inspections are expected to maintain a friendly pace for the market later this morning.  There were a few supportive export announcements last week and we’ll need to see that shipments are actually loaded out in the Inspection tables.   Any disruption to weather conducive to a big crop in South America is liable to add fuel to the up-trend in row crops and support the huge net long position held by the fund managers.  For now, Argentina’s recent heat wave and drier conditions help keep premium in place.  Brazil weather is favorable since rain will fall at one time or another in all of the nation over the next two weeks.  Argentina crops would be favorable if rain falls later this week as advertised, but it would not be surprising to see some of the precipitation lighter than advertised.  Sufficient rain will fall in northern Argentina to maintain a very good environment for crop development after some welcome rain fell during this past weekend.  The absence of excessive heat will help crops cope with the drier days, but temperatures will still be warm enough to keep evaporation rates high.  Being net long more than an estimated 280,000 corn contracts, Managed Money is still laying high odds on market support.


Soybean futures advanced more than a dime overnight to give the market a bullish tilt to begin the week.  Jan beans were up 11-3/4 cents to make it back above the contract’s 10 and 20-day moving averages, but still fell short of last week’s high of 11.78, which stands as a bullish target this week, followed by the contract high and elusive $12.00 level from late November.  As the trade set sights on adjustments to USDA’s January balance sheets, sentiment is hinging on how much the agency will tighten ending stocks as demand takes a toll on global supplies.  They left exports unchanged in last week’s December update.  Heading into today, Managed Money is still heavily long the soybean complex with an estimated 195,000 soybeans; 66,000 lots of soymeal, and; 95,000 soyoil.


Winter wheat futures gave back a portion of Friday’s rally overnight, slumping 7 cents despite a drop in the dollar.  However, prices have carved out a near-term bottom and Chicago wheat is back inside the November trading ranges.  Look for technically biased trade this week around contracts’ upward trending 100-day moving averages.  March KC wheat eclipsed Friday’s new high overnight reaching 5.88 before easing.   Mpls wheat was up 3 to 4 cents.  Underlying support stems from concerns that Russia will see a tightening of exportable surplus wheat by placing a significant tax on exports.  In addition, USDA also lowered ending stocks versus expectations in Thursday’s report.


Cattle futures are called steady to higher supported by seasonal optimism.  Open interest is rising having reached the highest level last week since Oct 8.  Friday’s higher trade now has prices challenging overhead moving average resistance.  Feb closed above the 100-day moving average.  Cash trade was quiet on Friday holding $107 to 108/cwt for most of the week$2-3 softer than last week.  Choice carcasses finished lower by  by .71 to 213.88 and Select was down 2.76 to 195.71 and down more than $15 this week.  Weak retails will keep rallies in check.  An active feeder market has been supported by stability in the live market.  Looking ahead, the next Cattle on Feed report is scheduled for this Friday.


Lean hog calls are steady to lower after dropping last week on technical pressure, cash weakness and heavy supplies.  Friday slaughter stayed heavy at 490,000 head and estimated weekly slaughter at 2.45 million not counting Saturday’s kill.  Retail values closed firmer on Friday up 1.28 to 79.71, as retail carcasses consolidate around the $80 area.  Product movement was strong at 407 loads.  Feb hogs fell hard on Friday and closed at 63.22, well below the 100-Day Moving Average at 65.46 while targeting the the November low and 200-day moving average at 62.87.  Dec futures, at 64.67 expire today at a discount to the CME Lean Index which settled .06 lower to 65.61 on Friday.


Matthew Strelow

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