TFM Sunrise Update 12-9-20


Corn futures were unchanged overnight with nearby contracts hovering near 4.20 to 4.25 and at 10 and 20-day moving averages ahead of Tomorrow’s December USDA report.  Most analysts expect minor changes to the balance sheets.  The U.S. China Ag attaché estimates China corn imports closer to 22 mmt vs USDA’s November estimate of 13.  The January USDA report should show more of an increase in U.S. corn demand and lower the U.S. 2020/21 corn carryout.  Weekly Ethanol Stats will be out today, Exports tomorrow morning ahead of the Supply/Demand report.  Overnight export tender activity showed Taiwan buying 65,000 tons of U.S. corn.  Look for quiet trade until these reports begin to come out.  The dollar is headed back lower after a bounce on Monday, giving commodities some outside-market support.  Managed Money is net long an estimated 266,000 corn contracts.


Soybean futures rose 6 to 7 cents overnight as Managed Money and end users use the latest pull-back as a buying opportunity.   January beans continue to oscillate around the psychological 11.50 price level after falling back from a number of attempts to break $12.  Lately, it appears that prices are unable to fall much below 11.50 citing support from demand, concerns about the South American weather forecasts and ideas that prices could begin to firm into the key January crop report amid a tight U.S. balance sheet.  For now, in Brazil, conditions will still be favorable in much of the nation for crop development.  In Argentina, models are mixed over the next 5 days with Euro wetter with 90% coverage versus the GFS with 45% coverage, both with light to moderate amount of rainfall.  Temps run below average.  Managed Money is net long an estimated 187,000 soybeans; 61,000 lots of soymeal, and; 110,000 soyoil.  Tender Activity has Egypt seeking 30,000 tons of optional-origin soyoil, 10,000t sunoil.


Winter wheat futures were down a penny overnight. Spring wheat gained 3 cents.  Managed Money net short an estimated 8,000 contracts of SRW wheat after selling somewhere near 6,000 contracts on Tuesday. Talk of higher Russia, EU and Indian wheat exports and higher Canadian and Australian supplies has eliminated much of the the weather rally from August to October.  The trade will be watching to see if USDA increases World wheat supplies.  The average estimate is 321.14 versus 320.45 last month.  Trade estimates for U.S. wheat ending stocks is 874 mil bu versus 877 mil in the November report.  In overnight tender activity, Japan bought 131,300 tons of U.S./Canadian wheat; South Korea bought 78,000 tons of U.S. wheat.  U.S. wheat shipments totaled 1.8 million tons (mmt) in November, up 13% from a month ago. In spite of recent decreases, U.S. wheat cash prices are still at high levels, up approximately 20% from half a year ago. Recent sales have remained ahead of the 5-year average.


Cattle futures are called mixed after weak finishes on Monday and Tuesday, pressured by weaker cash market at  $108/cwt vs $110 last week.  Choice carcasses finished sharply lower by 5.78 to 225.02 and Select was down 4.06 to 205.42.  The drop in retails triggered strong movement with a 228 load count.   Technically, the chart is challenging support and a 50% retracement of the rally from the end of October to Nov 10th.  200 Day-moving average support is located at 110.21 for the Feb contract, which settled at 110.77 on Tuesday.


Lean hog calls are mixed to lower, but managed to close off their new lows for the move on Tuesday as sellers seemed to move to the sideline in the afternoon.  This was countered by continued cash weakness due to heavy supplies of slaughter hogs.  Tuesday’s slaughter stayed heavy at 496,000 head.  The CME Lean Hog Index was lower by .47 to 65.79 and is now at a premium to Dec futures which closed at 64.55 ahead of next week’s expiration.  Retail values closed firmer on Tuesday up .22 to 78.12 but, carcasses failed to hold afternoon strength, being up 2.00+.  Look for a path of least resistance to be to the downside given the negative fundamental view of the market.


Matthew Strelow

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