TFM Sunrise Update 9-24-20


Corn futures fell to a 1-1/2 week low overnight trailing the bean complex.  Dec was down 5-1/2 cents to 3.63 and back below the contract’s 20-day moving average for the first time in more than a month as harvest pressure exerts itself on row crop prices.  Managed Money is still net long an estimated 65,000 corn contracts.  The 6 to 10 day outlook favors rapid progress and good yields are being reported in the early stages.  China’s crop issues that have underpinned their record price hike, strong demand for U.S. corn and decent ethanol production despite lower demand remain supportive factors, however, there’s not enough there to offset seasonal harvest pressure at this time.  In its September report, the Ministry of Agriculture lowered its China corn production estimate by 1.8 million tons to 265 million tons amid typhoon-induced damage.  U.S. ethanol production last week sank to a 12-week low, but the running deficit versus previous years has been shrinking over the last month, bringing output slightly closer to normal levels.  Look for corn to post a fourth consecutive loss today.  Trade estimates for this morning’s USDA Weekly Export Sales are 1.050 to 1.80 mil tons.


Soybean futures saw some fairly major losses overnight, losing as much as 13-1/2 cents to extend a 3-day price skid and slump below the 10-day moving average at 10.13 in the November contract to 10.01.  Once below the psychological 10.00 level, the 20-day moving average support at 9.87-1/2 is a bearish target and will likely shake loose some more of the Managed Money longs.  Trade estimates for this morning’s USDA Weekly Export Sales are 2.0 to 3.0 mil tons, and more export announcements are likely, particularly as beans get cheaper.  But for now, U.S. bean yields are coming in above average and with good weather, this will keep a lid on rally attempts as the market unwinds its overbought market condition.


Winter wheat futures lost 5 to 6 cents overnight on spillover selling pressure from row crops.  Spring wheat was down 2.   Chart action is mirroring that of corn and beans as the market solidifies a top and downward correction.  Wheat, on its own is lacking the conviction to move higher anyway without a steady dose of bullish news and the dollar etching a two-month high overnight.  The path of least resistance is lower.  Dec Chicago wheat, at 5.43 appears headed for the contract’s 50-day moving average support at 5.36. Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 600,000 tons.  Export wires showed Japan making a routine purchase of 86,000 tons of U.S./Canadian wheat.


Cattle calls are flat/firm ahead of tomorrow’s Cattle on Feed report due out after the close.  Cash markets are seeing some light trade around $104/cwt which offers little direction for traders.  So, we’ll stay cautious with Dec live cattle, at 111.17, and nearby Oct at 107.15 maintaining a premium over cash.  Friendly cold storage data could offer some lingering support, and boxed beef values finished firmer on moderate movement.  All in all, look for choppy, two-sided trade with a firmer bias.


Lean hog futures are called steady to firmer after front month contracts ended Wednesday’s session near their daily highs on support from the cash market.  Retail prices were trending higher but softened on Tuesday down .31 to 88.97.  October hogs, at 69.50 are at their highest point since March 10 and are likely targeting 70.00, fueled by the strength in the index.  We’ll get a Quarterly Hogs and Pigs report later today which will have traders continuing their focus on squaring positions in today’s session.  The report is expected to show the herd steady from year ago.


Matthew Strelow

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