TFM Sunrise Update 12-31-2020


THURSDAY, DECEMBER 31: The CME has regular trading hours. Total Farm Marketing offices will close at 2:00 CT; There will be no 4:30 update.

FRIDAY, JANUARY 1: The CME and Total Farm Marketing offices will be closed.


Corn futures traded higher overnight, posting new contract highs on gains of 6 cents.  March corn’s new high now stan3 to 4 cents lower overnight led by a retreat in the bean complex.  March corn hit a new high of 4.67-1/4 on Tuesday as the market targets $5.00.  The next level of resistance could be the 2014 highs near 5.19.  Drier than normal South Brazil and Argentina weather should lower crop potential there and some analysts feel South American corn production estimates are as low as 146mmt versus 153 mil last year.  A drop in the size could raise final U.S. exports and lower US 2020/21 carryout.  Last week China may have bought as many as 10 cargos of U.S. corn, the first purchases in some time.  While the official Chinese production estimate for the corn crop just harvested is 260-265 mmt, commercials and crop tours are in the 230-235 mmt range.  All pointing to a 25 to 30 mmt corn import program.  As much as 10 mmt of corn could be imported from Brazil and the Ukraine, this would leave 15-20 mmt coming out of the U.S.  We’ll get Weekly Export Sales tomorrow.  Managed Money is net long an estimated 350,000 corn contracts.


Soybean futures were down overnight on another round of profit-taking as the complex exhibits mixed signals heading into the year-end.  Managed Money is net long an estimated 219,000 soybeans; 95,000 lots of soymeal, and; 116,000 soyoil.  Key resistance is at $13 may cap the rally briefly as traders prepare for the 3-day holiday weekend.  Jan beans traded a 15-3/4 cent range overnight between 12.95-1/2 and 12.79-3/4.  Fundamental support is still prevalent, though, as dry conditions in South America and strong demand, particularly from China exist.  Reuters news reported Argentina’s CIARA soy crushing chamber said late on Tuesday that it signed a contract with oilseed workers, ending a 20-day wage strike that had paralyzed exports from the world’s top supplier of soymeal livestock feed.  The deal includes a gradual, two-part 25% increase in salaries from January to August, with increases for the rest of the year to be determined by official inflation figures, CIARA said in a statement.  The loading of 162 ships had been delayed in Argentine grain and agro-industrial ports, bogging down $1.458 billion in exports.  Soy crushing and other farm industry activities have been put on hold since the workers walked off the job on Dec. 9.


Winter wheat futures were down 2 to 3 cents overnight on spillover weakness from near-term topping action in row crops.  The dollar is poised to make new lows which helped limit losses going into today’s trade.  An apparent end to the strike in Argentina strike and some needed moisture forecast for some of the dry areas of U.S. south plains and Russia is also noted.  Still the  higher trending corn market and talk of lower wheat exports from both Russia and EU offers support.  There is talk that Russia is slowing wheat exports to try to keep supplies for domestic use and Ukraine’s export supply is 70% sold.  While nearby corn and soybeans were making new highs, March Chicago wheat, at 6.16, is still below key October resistance near 6.38.  Overnight, the Taiwan Flour Millers’ Association purchased an estimated 82,325 tons of milling wheat to be sourced from the United States in a tender which closed on Wednesday, European traders said.


Cattle futures look to trade choppy at the opening bell.  Correctional trade occurred on Tuesday amid steady cash bids and tomorrow’s expiration of the nearby December futures contract.   We still expect cash to be higher than last week’s $110/cwt values.  Early bids were at $110 with feedlots asking $112 to $113.  There were some very light $110 transactions in the north.  Today’s Fed cattle exchange may bring some clarity.  Feb cattle failed at resistance at 116.00 and fell to test 10-day moving average. The technical trend is higher and the gap on the Feb chart at 119.475 from back in Feb may be a potential upside target.  April has that gap at 120.775.  Wholesale carcass finished mixed and off midday strength, as Choice carcasses gained 2.48 to 210.30 and Select was down 1.17 to 195.48.  The choice/select spread is beginning to widen at 14.82.  We question whether feedlots are getting more current?  Wholesale values seemed to be trying to find some stability.  90% trim prices (Ground Beef) are trending higher and can support the cattle prices overall.  Trim has been well under 5-year averages. 


Lean hog calls are mixed after futures finished higher supported by firmer cash and retail valuesFront months are battling overhead resistance, and will need some fundamental support to push higher.  Cash is finding support from a snowstorm over the northern states, but slaughter numbers should stay heavy into the first half on the year, weighing on prices.  Feb is trading over the index by 6.60, which will limit upside potential.  Retail values were up on Monday, and strong buying support in the pork belly cut supports carcass values.  Meanwhile, the pork product index is trending lower and may be trying to find a bottom.


Matthew Strelow

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