TFM Sunrise Update 9-23-20


Corn futures traded two-sided overnight just below their upward trending 10-day moving averages.  Topping action continues to solidify on the charts as a consolidation pattern builds.  As of this morning, Dec corn was down 1-1/2 cents to 3.67-1/4, reflecting softer trade in beans and meal.  On its own, corn has retreated from overbought levels which is viewed as a bearish indicator that could reinforce lower price action.  The next downside target is 3.62 if first support at 3.65-1/2 is breached.  Farmers are picking corn in a number of locations this week, so we’ll be gathering yield reports as we reach out to help with marketing recommendations.  Weekly Ethanol Stats will provide the trade with some routine data.  Exports are out tomorrow morning.  In tender activity, S. Korean feed groups bought 134,000 tons of optional-origin corn


Soybean futures were a mover overnight with November trading both sides of steady from a session low of 10.11 to a high of 10.25-1/5.  As of this writing, the contract was unchanged at 10.19-3/4. Managed Money still holds the ‘buy cards’ in the complex with their large net long positions.  A recovery in the equity markets, which is up again this morning, is helping offset the advance in the greenback.  The aggressive export pace led by Chinese purchases keeps support underneath prices.  Meanwhile, talk of bean harvest getting underway creates headwinds for buying interest.  We’re hearing 50 to 70 bushel yields coming out of Minnesota, so far.  The 6 to 10 day forecast for the Midwest continues with dry weather for the week across the region but, transitioning to seeing a front come through over the weekend and another front early next week.


The wheat complex was unchanged overnight in light volume.   Futures look to trade an inside day for the second consecutive session, awaiting fresh market-moving news.  Prices at all three exchanges remain supported by all their respective moving averages, but have fallen back to where the 10-day MA resides.  In tender activity, Japan seeks 86,000 tons of optional-origin wheat; Taiwan bought 91,300 tons of U.S. wheat; Jordan passed on 120,000 tons of optional-origin wheat; S. Korea bought 65,000 tons of optional-origin feed wheat; And, Egypt bought 405,000 tons of Russian wheat.  Egypt’s strategic reserves of wheat were sufficient to cover the country’s needs for 7 months, the supply ministry said on Tuesday following the government’s latest purchasing tender.


Cattle calls are mixed with a weaker bias based on short-term weaker chart patterns and yesterday’s lower close.  A rally in hogs could change that opening call, though.  Cold storage data for beef was slightly supportive, but is not expected to have much of an impact on today’s trade.  Total pounds of beef in freezers was up 5% from the previous month, but down 2% from last year.  Look for the premium of Dec live cattle futures to cash, which is still undeveloped for this week, to keep a lid on higher price movement.  USDA will have their Cattle on Feed report after the markets close on Friday.


Lean hog futures are expected to see higher trade this morning based on a number of market factors:  Chinese domestic hog prices are rising amid tightening supplies; The cash hog market is strong and supporting front months; Though softer on Tuesday, retail prices trending higher; And, The cash index hit 71.29 up 1.71 on Tuesday and to its highest level since Sept 2019.  In addition, the Cold storage report was viewed as friendly, given the carcass weights.  Frozen pork supplies were up 2% from the previous month but down 23% from last year.  Stocks of pork bellies were down 28% from last month and down 33% from last year.  We’ll get the Quarterly hogs and Pigs report tomorrow.   


Matthew Strelow

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