TFM Sunrise Update 12-3-2020


Corn futures traded two-sided overnight, mid-range of their 21-1/2 cent trading range for the week between 4.30-1/2 and 4.09 (Dec).  The grain markets are seeking stability after running into a ceiling of resistance to begin the week and new month, and the dollar continues to press lower and offer outside-market support.  For now, the 20-day moving averages are serving as a pivot-point for prices.  U.S. corn prices are the lowest in the world, and rumors that China bought 1.0 mmt of U.S. corn for April 2021 has helped lift futures off their lows.  Trade estimates for this morning’s USDA Weekly Export Sales are 800,000 to 1.60 mil tons versus 1.665 mil last week.


Soybean futures were up as much as a dime overnight as prices find technical support at their 20-day moving averages.  Managed Money lightened their net long position the first half of the week on technical selling, and once Jan futures fell back 50 cents to the 11.50 area, end-users were believed to have found value within the steep up-trending market.  The contract actually shed 56-1/2 cents in just 3 days before rebounding.  Managed Money is net long an estimated 172,000 soybeans; 61,000 lots of soymeal, and; 99,000 soyoil.  South American weather will continue to sway prices, as well as pre-positioning for next Tuesday’s USDA report.  Showers  and thunderstorms look to impact much of the Brazilian growing regions over the next 5 days with moderate to good rainfall amounts and up to 90% coverage. Temps hover around average.  Dry weather looks to dominate Argentinian growing regions over the 5 days with the GFS model having rainfall retuning in the 6 to day period while the European model turned dry. Temps hover around average.  Trade estimates for this morning’s USDA Weekly Export Sales are 400,000 to 1.15 mil tons versus 768,000 last week.  Meal sales are expected to be between 100,000 and 300,000 tons and soyoil between 8,000 and 40,000 tons.


Winter wheat futures were down 3 cents overnight to settle back into yesterday’s higher trading ranges where prices closed near session highs on rumors that China was asking for U.S. wheat prices. Last week China bought U.S. white wheat.  New lows in the dollar combined with a bounce in row crops may also be allowing the wheat complex to form a near-term bottom after breaking out to the downside to start the week and new month.  The 100-day moving average at 5.72 in the March Chicago wheat contract created a downside barrier for technical traders this week, and the contract is now back up to the 5.85 area with the 50-day and 10-day moving averages converging near $6.00.  Spring wheat futures in Mpls are steady this morning while mirroring the movement in Chicago and KC contracts.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 700,000 tons versus 795,000 last week.


Cattle futures are called mixed for today.  New lows in the dollar may have a supportive impact on a plethora of commodities including the cattle complex, particularly on a day of scheduled Weekly Export Sales data.  December options expire tomorrow, most open interest in around the $110 strike level.  Cash trade is progressing slowly with some additional $110/cwt transactions and up to $112 traded.  Dressed trade was at $172-$174.  That was $1 higher to lower with last week.  Choice Carcass values were softer on the close, down 2.51 to 240.89 and Select softened .13 to 222.95. Carcasses were lower from midday values and may be topping, but still have good strength at the $240+ level.  Feeder cattle, trading above the key $140 level should trade two-sided as grain markets stabilize.   


Lean hog calls are mixed after struggling yesterday to maintain Tuesday’s breakout to the upside.  Prices rallied off negative midday trade which offers support on the open today.  The CME Lean Hog Index was down .14 to 66.67 and is now in line with the soon-to-expire Dec contract.  Most of the open interest is now in the Feb contract that sits at 67.87.  Carcasses closed 2.78 higher to 79.86 with a moderate load count moderate at 365.11 loads.  Talk that Chinese domestic pork prices are climbing should support the demand side of the hog market.  We’ll get a glimpse today looking at weekly export sales and shipments.


Matthew Strelow

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