TFM Sunrise Update 9-16-20



Corn futures slipped lower overnight after peaking in Monday’s session.  Dec corn fell as much as 4-1/4 cents to a one-week low of 3.61-3/4 despite a 1% drop in crop rating to 60% G/E and a new corn purchase in the export news.  A downturn in soybeans and weakness in wheat markets are influencing corn price movement, triggering some long liquidation.   Managed Money sold 12,000 corn contracts yesterday and are seen net long about 46,000.  The recent 50 cent rally off of the contract lows has given producers reason to book sales at a time when most had very few forward sales made.  This, and a technically overbought market may point to a near-term high for the market.  Weekly Ethanol Stats are on tap for today, Exports tomorrow.


Soybean futures traded two-sided overnight within a 10 cent range between 9.95 and 9. 85 (Nov).   Weekly crop ratings dropped 2% to 63% G/E, but soybean futures saw some profit taking in an overbought market.  Last week’s rain did allow for some stability in the crop in Iowa and Illinois, and after a $1.50 rally in a little over a month, prices are susceptible to a pullback.  Export sales remain plentiful with two new sales announces to China and Unknown destinations on Tuesday morning.  The 6 to 10 day weather forecast model for the Midwest had no major changes as dry weather dominates the upcoming weekend before a front moves in bringing light rainfall mainly for the middle to northern sections of the region early next week.  Things look wetter for portions of the Midwest in the longer term forecast.


Wheat futures were mostly unchanged overnight, though Chicago wheat did take out Tuesday’s low while finding support at the contract’s 50-day Moving Average situated at 5.33.  Dec closed back under the 200-day MA, which triggered some of the long liquidation.  Large global wheat supplies keep selling pressure prominent in the wheat market this week.  We view the market being susceptible to more downside risk.  Tender Activity showed Ethiopia seeking 400,000 tons of  optional-origin wheat, Egypt in the market for option-origin supplies; and, Turkey bought 440,000 tons of optional-origin wheat.


Cattle calls are steady to firmer after futures managed to settle well of their session lows yesterday.  The futures’ hefty premium over cash coupled with downward trending beef prices should keep a lid on rallies mid-week.  However, cash cattle are priced higher this week after finding a firm tone at the end of last week, and show lists are smaller.  This will help create an environment for choppy, two-sided action for traders, particularly as cattle disengages from the influence of the hog market.


Lean hog futures are called steady to higher.   Carcass cutout values stayed strong at midday, bringing support to the cash market in the nearby contracts.  Meanwhile, the discovery of additional cases African swine fever in wild hogs in Germany keeps buying support in the market on the prospects of new export demand to fill the void created by German export bans.  However, news that China’s pig herd increased more than 31% in August from a year and the sow herd is up 37% takes some of the wind from the sails.


Matthew Strelow

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