TFM Sunrise Update Oct 29, 2020

CORN

Corn futures were down 3 to 4 cents overnight on follow-through long liquidation. For the week Dec corn, at 3.97-1/4 has lost more than 20 cents with Tuesday's peak at 4.22-1/4 signifying a top in the market. Traders have been reducing positions ahead of the month end and U.S. elections next week.

Newswires report:Democrat Joe Biden would immediately consult with Americas main allies before deciding on the future of U.S. tariffs on China, seeking collective leverage to strengthen his hand against Beijing if he is elected president, Biden top advisers said; the two Biden aides said the starting point would be to not repeat the mistakes of President Donald Trump when he slapped tariffs on European and Canadian goods as part of his America First agenda, antagonizing key U.S. partners.

A weaker dollar and expectations for widespread rains across Brazil's central and southeastern Parana/Santa Catarina and southwest Sao Paulo areas is also noted. The next chance for rain in Argentina is in the 6-10 day period. Meanwhile, the trade awaits new Chinese buying of U.S. corn. USDA will issue their 10 year baseline supply and demand estimates for the grains next week, which will include USDAs first estimates for 2021-22 US corn. USDA's estimate of Chinas 2020-21 corn imports at 7.0 mmt seems low, and USDA will likely show a 2020-21 U.S. corn carryout over 2.30 bil bu. Weakness into next week could be viewed as a buying opportunity, looking for additional Chinese buying of U.S. corn which could result in higher U.S. exports and lower carryout. One source reminds us that "export sales ... do get canceled at times". Trade estimates for this morning's USDA Weekly Export Sales are 700,000 to 1.50 mil tons.

SOYBEANS

Soybean futures lost 5-1/4 cents overnight to 10.52 (Nov) as long position-holders move to the sidelines ahead of first notice day for November futures on Friday. Improving weather in South American soybean areas has been also been a negative factor, and a drier weather forecast for the Midwest should allow soybean harvest to be completed in most areas in the first half of November. Brazil has no major changes as rainfall is seen in most of the nation at one time or another, but rainfall will be least frequent and least significant in the interior south. Argentina looks to be having drier weather now for about a week, but some chance of precip in the 6 to 10 day forecast. USDA will issue their 10 year baseline supply/demand estimates for the grains next week, which will include USDAs first estimates for the 2021-22 U.S. soybeans. Trade estimates for this morning's USDA Weekly Export Sales are 1.0 to 2.0 mil tons for beans, 100,000 to 450,000 tons for meal; and, 5,000 to 40,000 soyoil.

WHEAT

Winter wheat futures were off as much as a dime in Chicago overnight, 7-3/4 in KC; and, 5 in Mpls after settling lower 4 of the past 5 sessions. The recent surge in the U.S. dollar coupled with talk of better U.S. weather and lower row crops have helped drive wheat off of last week's contract highs. Trade estimates for this morning's USDA Weekly Export Sales are 200,000 to 700,000 tons. In overnight tender activity, Jordan bought 120,000 tons of option-origin wheat.

CATTLE

Cattle futures calls are steady to higher after seeing additional short covering and value buying flare up on Wednesday. Yesterday's Fed Cattle Exchange ranged from $105.50 to $106.25. Last week was $105 to $106/cwt. Early bids for countryside cash were at $103 to 104 vs a $108 asking price. Choice Carcassessoftened at the end of the day, finishing down .91to 205.79 and demand concerns still weigh on front month cattle. Increased overall choice product movement is a sign of improving demand, though. Looking at today, the improved technical picture in both live and feeder contracts will need to see additional follow through tocomplete the turn. Weakness in grains is helping Feeder cattle prices.

HOGS

Lean hog calls are called steady to lower on the heels of Thursday's late trade failing to hold early gains. This again clouds the technical picture for today. This morning's Weekly Export Sales will be closely monitored to gauge Chinese activity. The CME Lean Hog Indexwas .70lower to77.47, but still holds large premium to Dec contract, and will providesupport to Dec., but trend has turned lower. Retail valuesgave up midday strength, closing34.31 lower to 84.52, and belly cuts were down 22.00 in afternoon trade.