TFM Sunrise Update 12-7-2020


Corn futures were down a nickel overnight on South American weather.  Dec corn, at 4.12 has fallen back into the lower half of last week’s rather wide trading range and is targeting the low of 4.09.  The South American drought monitor map still looks harsh, but ideas that fewer acres will succumb to stressful conditions is taking some of the premium from the market to begin the week.  Brazil’s bottom line is not bad with most areas getting rain at one time or another and temperatures in a seasonable range.   A general lack of rain in southern Argentina Dec. 14 – 20 will make two weeks without much rain and sufficient warm weather will allow topsoil moisture to be more significantly depleted by the end of the second week stressing crops more seriously than that of this first week.  There is a front seen moving  through the northeast growing region Friday into the weekend.  Weekly Export Inspections will be out later this morning.  In overnight tender activity, Taiwan seeks 65,000 tons of optional-origin corn; South Korea bought 69,000 tons of optional-origin corn.  Trade estimates for U.S. corn ending stocks in Thursday’s monthly Supply/Demand report is  1.691 bil bu versus 1.702 bil in the November report.


The soybean complex traded lower overnight with Jan beans off as much has 13 cents while oscillating around 11.50 and below the contract’s 10 and 20 day moving averages.  Managed Money is net long an estimated 197,000 soybeans; 67,000 lots of soymeal, and; 117,000 soyoil.  Rain being advertised for parts of South America has prices pulling back to support areas awaiting the next surge of buying interest to develop.  Position squaring is also noted ahead of the Dec crop report.  The USDA is scheduled to release the report on Thursday, Dec. 10, at 11 AM, Central.  Trade estimates for U.S. bean ending stocks is 168 mil bu versus 190 mil in the November report.


Winter wheat futures made new lows for the move overnight led by a 10 cent drop in KC to 5.32-3/4 (March).  March CBOT wheat was down 9 cents to 5.66-1/2.  A 33 basis-point technical bounce in the dollar is adding pressure to an already depressed wheat complex.  Spillover weakness from row crops is noted, and, fundamentally while there continues to be active tender business on the world
market, Black Sea region growers or India are getting the business, and Australian and Canadian crops look to leave significant exportable surpluses for export in 2021.  Trade estimates for U.S. wheat ending stocks is 874 mil bu versus 877 mil in the November report.  World ending stocks’ average estimate is 321.14 versus 320.45.


Cattle futures are called steady to lower on lingering weakness from Friday’s softer trade.  December cattle is facing pressure by options expiration and today’s First notice day.  Cash trade has been trading mostly steady for the past 3 weeks.   Expectations are for steady to lower this week due to retail softness.  Choice carcass finished lower by more than $4 on Friday, losing $7-8 for the week. This should add pressure today.


Lean hog calls are mixed to lower.  Pork Production, at 613 Million pounds last week was the highest weekly pork production history, a reflection of heavy slaughter runs and weights.  We view  the heavy pork production and large slaughter as a force against upside potential in the hog markets.  Estimated slaughter was at 497,000 on Friday, and weekly slaughter at 2.45 million head, keeping pressure on cash prices.  The CME Lean Hog Index was lower by .16 to 66.55.  Now at a premium to Dec futures, which could limit some selling pressure with contract expiration on 12/14.  Retail values closed 1.72 higher on Friday to 78.17.   Carcasses where $2 lower from Monday’s trade on the week but trying to find stability.


Matthew Strelow

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