TFM Daily Market Summary 06-15-2022


Soybean crush data in the month of May ran at a very strong pace. Wednesday brought the release of the NOPA May soybean crush totals. In May, NOPA crushers used 171.077 million bushels of soybeans, which was a record for the month of May. This total was 4.6% above last year’s levels. Even though the number was a record, the release total was just under market expectations at 171.552. Reflecting good demand, the soybean oil stocks reduced to 1.774 billion pounds, just slightly above trade expectations. Soybean oil yield in May was a record at 12 lbs/bushel of soybeans being crushed. The strong demand tone has been priced into the market, but if the crush pace can stay strong into the summer months, the USDA may have to make additional adjustments on soybean usage for crush and keep tightening soybean old crop carryout.

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CORN HIGHLIGHTS: Corn futures had a rather quiet close today. The market needs either fresh news or a weather issue to break out of the range-bound pattern it finds itself in. Jul gained 5-3/4 cents, to close at 7.74 and Dec lost 1/4 cent, ending the session at 7.21.

The corn market has traded in a relatively sideways pattern over the last several sessions. Weather is a consideration on the minds of traders, but it does not seem like the market is focused on that right now as much as one would think, given that the forecast for the next two weeks mostly is warm and dry across the Midwest. What is likely happening is that the market is more fixated on the economic factors affecting the country right now. It was announced today that the Fed will raise rates 75 basis points to combat inflation. Inflation and recession concerns are having an impact for both consumers as well as in the commodity market, and these worries may be pitting the bulls against the bears. On one hand, the late-planted crops, the problems with Ukraine, and general upward technical momentum should keep the market supported. On the other hand, a potential recession is looming. With the relatively neutral close today, it appears like the market is waiting for news before picking a direction.

SOYBEAN HIGHLIGHTS: Soybean futures closed lower today after trading both sides of unchanged in anticipation of today’s Fed decision to increase interest rates. Crude oil fell as well, bringing soybean oil with it and providing no support to beans. Jul soybeans lost 4-3/4 cents, closing at 16.93-3/4, and Nov lost 1-3/4 cents at 15.23-1/2.

Today’s Fed decision to raise interest rates by 75 basis points was not supportive for the soy complex as the Federal Reserve is becoming more aggressive to combat inflation. Also unsupportive was the report from private exporters that there was a cancellation of sales of 100,000 mt of soybeans for delivery to unknown destinations for the 21/22 marketing year. Thoughts are that the cancellation may be from China, looking to purchase cheaper Brazilian beans. Soybean meal was the only soy product to close higher, while lower crude brought down soybean oil. Soybean crush was a record for May, up 4.6% from last year. Informa updated its planted acreage estimates and reduced soybean acres to 88.735 million acres vs 90.955 million acres. They also raised yields to 52.0 bpa from 51.5 bpa. The Brazilian real has weakened vs the U.S. Dollar Index which has encouraged Brazilian farmer selling, in turn weakening their basis. Soybean oil futures are now trading below their 50-day average for the first time since last year and have had their fifth straight lower close. Jul soybeans have trended lower this past week but still closed above their 50-day moving average.

WHEAT HIGHLIGHTS: Wheat futures settled lower as harvest pace picks up and the market searches for fresh news. Jul Chi lost 1/4 cent, closing at 10.50, and Dec down 2-3/4 at 10.78-1/2. Jul KC lost 9 cents, closing at 11.33-1/4, and Dec down 9-1/2 at 11.48-1/4.

The wheat market had a moderately lower close today as news remains sparse and harvest pressure is beginning to kick in, with 10% of the crop reported to be harvested. The Ukraine situation has, to some degree, become old news, but it remains a supportive factor. It is estimated that about 20 mmt of grain is essentially stuck there. There was recent talk that President Biden is looking to establish some temporary storage facilities on the western border of Ukraine in an attempt to help get grain out of the country. However, there is apparently no timetable, cost estimate, or approval for this yet. It has also been reported that his administration may relax China import tariffs as soon as this week to help combat inflation. On that topic, the Federal Reserve will raise interest rates 75 basis points, the highest amount since 1994 in an effort to control inflation as well. In other news, Kazakhstan will reportedly be limiting wheat exports through September to 550,000 mt – a bullish factor signifying the dire nature of current global supply.

CATTLE HIGHLIGHTS: Live cattle futures finished sharply higher as cash prices climbed on Wednesday, and traders are closely watching hot weather across the Midwest and its impacts on the cattle herd. Jun cattle gained 2.350 to 137.550, and Aug cattle were 2.725 higher to 136.800. Feeders finished the day with strong gains as Aug feeders were 1.975 higher to 173.275.

The most actively traded Aug contract posted a strong gap higher on the open, and with the gap established on Monday, developed an island bottom in the Aug contract. In addition, prices surged above and held the 100-day moving average, which has acted as a swing point on the Augt chart. The strong technical close will have cattle challenging the most recent high at $138. Cash trade was trending higher on Wednesday as Southern bids and trade moved up to $138, and Northern cash trade was established at $145. Both numbers were higher than the Tuesday action and overtop last week’s totals. More cash trade will likely build into the end of the day. The retail demand will stay clearly in focus after the Father’s Day retail buying is complete. At midday, Choice values gained 0.11 to 269.55 and Select was 1.23 higher to 248.05. The load count was moderate at 79 loads. The surge of hot weather across the Midwest this week has caught the market’s attention. An article reported feedlot death loss of 10,000 head in Kansas as animals were overwhelmed by the heat and humidity. The heat was an impact on the strong cash cattle prices, but with daily slaughter estimated at 126,000 head, that death loss accounts for 8% of today’s slaughter run. Feeder cattle were supported by the strong live cattle market. Feeder cattle futures are challenging areas of resistance and are poised for an additional push higher if money flows into the market. A strong move higher in the cattle complex on Wednesday was supported by the weather concerns and the strong cash tone as packers are trying to secure cattle. Like most markets, the cattle market will be watching the outside markets very closely and the actions of the Fed with interest rates. The outside markets may go a long way in the price action on cattle markets into the end of the week.

LEAN HOG HIGHLIGHTS: Hog futures closed higher today after a big jump in cash as packers were aggressive in purchases yesterday, despite the cutout erasing the gains from the previous day. Jul hogs gained 1.650 to 108.275, and Aug hogs gained 0.775 to 104.325.

The National Direct Afternoon report had cash up 6.09 at yesterday’s close after the packers aggressively purchased hogs to make up for last week’s low slaughter numbers. While lean hog futures have been mostly following changes in the cutout, that was not the case today with this morning’s cutout 2.71 lower, erasing the gains made yesterday afternoon. Slaughter pace has been lagging with a large revision lower from the original stated number on Monday, and it remains to be seen how aggressive they were today, but high temperatures have caused them to bid up. Jul hogs have taken over as the new front month and are carrying a discount to cash and where Jun went off the board as well. Jul hogs bounced off the 40-day moving average which has acted as resistance this past week but is in an uptrend for the week. Trade will look to slaughter numbers and cutout values to determine demand and the direction of futures.

DAIRY HIGHLIGHTS: After a three-day slump in the US cheese market, buyers returned aggressively on Wednesday and took blocks up 4c and barrels up 3.50c. This brings the block/barrel average back up to $2.2175/lb, which is still down about 20c from the high of year. Some bearish news came out of this week’s regional cheese reports. In the Midwest, it was reported that spot milk prices have been as low as $5.00 under Class III. In the northeast, cheese inventories are sturdy and retail cheese sales are flat to weaker. On the positive side, export demand is still hearty at this time. It was also reported that European cheese stocks are still tight at this time. The cheese recovery today helped prop up Class III milk futures a bit, but new buying interest was quiet.

Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency. A customer may have relationships with all three companies. TFM Market Updates is a service of Stewart-Peterson Inc. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.


Amanda Brill

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