TFM Daily Market Summary 09-15-2022


The USDA released back-dated export data on Thursday morning as the reporting system was dealing with technical difficulties, and the 2022-23 soybean exports sales are one of the best in history for this time frame.  As of September 8, the U.S. has sold 25.3 MMT soybeans to start the 2022-23 marketing year.  This total is higher than last year for this time window and reaching 45% of the current USDA export target for the new marketing year.  There is an above-average pace for this time of year.  The concern to the soybean market going forward will be the ongoing demand pace.  Will purchases stay active, given the tightening supply picture, or will sales slow, effected by the high soybean prices, slowing demand, and global competition?  Regardless, exports will look to be off to a strong start this fall as harvest progresses.


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CORN HIGHLIGHTS: Corn futures traded both sides of steady, however, slumped into the close following wheat prices lower, giving 4 to 7 cents. Wheat futures lost over 25 cents, likely tugging on corn prices that, at times, had traded 5 or more cents higher. A rebound in the dollar yesterday, sharp losses in crude oil today, and a non-eventful export sales figures allowed prices to drift. December corn, now the front month, closed 4-3/4 lower at 6.77-1/2. December 2023 lost 8 cents to close at 6.20. What appears to be an aversion of a rail strike may have also weighed on futures.

After four weeks without export sales, today’s figures were uneventful and old news.  It might be argued that after today, the corn market looks a little tired. Today’s sales figure at 23 mb for 2022/2023 puts the year-to-date total at 484 mb, well behind the same pace as last year (967 mb). Soybean sales remain robust at 31 mb today and a new crop total of 929 mb, up from 819 mb the same time last year.  Harvest is underway and will slowly pick up steam in the days and weeks ahead, especially for those who are trying to deliver before the end of the month. The implication is two-fold. Unless yield results vary significantly, prices are likely to drift and end user buying remain in a just in time inventory mode. World inventories, less China, remain snug and will limit downside price potential. Yet, keep in mind that bulls need new news or at least the perception that supplies could tighten to keep buying. If behind on sales, move forward now. There is little carry to encourage holding excess inventory.

SOYBEAN HIGHLIGHTS: Soybean futures closed modestly lower today after bouncing around both sides of unchanged throughout the day. Crude oil dropped significantly which was a bearish factor, and demand concerns continue to grow as US beans are at a premium to other exporters. Nov soybeans lost 3-1/2 cents to end the session at 14.51-1/2, and Jan lost 3 cents to 14.58.

The news that the Biden agreement came to a tentative agreement with the railroads to avoid a strike tomorrow sent soybeans and other grains higher this morning, but prices soon began to fade. After wheat put in a bearish reversal earlier, soybeans and corn soon followed. Weekly export sales were at 5.755 mmt of exports over the last three weeks with meal at 391,000 and oil at 2,400 mt. The USDA reported an increase of 31.0 mb of soybean export sales for 22/23 last week and an increase of 1.1 mb for 23/24 with primary destinations to China, unknown destinations, and Taiwan. Last week’s export shipments totaled 13.8 mb and export commitments now total 16 mb for 22/23 and are up 13% from a year ago. Although export business has been strong, there are concerns that demand for US beans will slow down in favor of cheaper Argentinian and Brazilian beans. With supplies being so tight, the world will need US beans regardless, especially if there are any issues with South American production. Nov beans have closed lower for three days in a row but are still higher overall following Monday’s USDA report, and they closed a penny above the 100-day moving average today.

WHEAT HIGHLIGHTS: Wheat futures closed sharply lower in a bearish technical reversal that came on little to no news. There is drought in the Southern Plains, last week’s export sales were low, and spring wheat harvest is nearing completion in the US. Dec Chi lost 27-1/4 cents, closing at 8.45 and Mar down 27-1/2 at 8.60-1/2. Dec KC lost 20-3/4 cents, closing at 9.26-1/4 and Mar down 21-1/2 at 9.25-1/4.

Wheat started the day higher following news that a tentative deal had been made with the railway workers, but things fell apart about an hour into the day as technical selling kicked in. The majority of losses were in the Chicago and KC wheat contracts with Dec Minn only losing 9 cents. The USDA reported an increase of just 8.0 mb of wheat export sales for 22/23, and last week’s export shipments totaled 24.9 mb. Saudi Arabia is tendering for 535,000 mt of milling wheat for 12.5% protein hard wheat with a deadline of September 16. In the US, weather forecasts continue to show hot and dry conditions for the already drought ridden Southern Plains with conditions worsening in Colorado and Kansas. Nebraska and Kansas have had one of the driest Augusts on record. This comes at a time when global wheat supplies are already tight and droughts ravage wheat growing regions in other countries as well. With the US dollar trading so high, US wheat is increasingly less competitive than Ukrainian and Russian offers. Dec Chi wheat bounced off the top of its Bollinger Band in the premarket for a bearish reversal and is exiting over-bought territory.

CATTLE HIGHLIGHTS: Live cattle futures found some buying strength on Thursday as the cash market trade ticked higher this week, while feeders treaded mixed held in check by technical selling and high grain prices.  Oct cattle slipped 1.275 to 145.625 and Dec cattle traded 1.275 higher to 151.325.  October feeders traded .500 lower to 108.925.

October and December live cattle futures held support levels early in the session and displayed strong price action into the close.  Trading near the top of the range on Thursday should help support the market open on Friday.  The August price highs look to be the next possible upside target at 146.250 for October and 151.775 for December. The cash market started seeing some light trade on Thursday and prices ticked higher.  Southern trade was $142-143, up $1 over last week’s totals, and northern dress trade was also firmer with $226-227 catching most business. The firm cash tone may be starting to reflect the potential tighter cattle numbers and the packers need to find higher quality beef.  Overall, a supportive trend.   Retail values have been softer this week and saw mixed trade at midday Thursday with choice carcass trading .64 lower to 252.83 but select gained .42 to 230.53. The load count was light at 74 midday loads. For the first time in four weeks, the USDA released weekly export data.  Last week saw new net sales of 15,100MT of beef sold last week as South Korea, Japan, and Mexico were the top buyers of U.S. beef last week. Today’s slaughter totaled 125,000 head, 2,000 below last week, but 6,000 greater than a year ago. The feeder market was mixed with weakness in the front of the market.  The Feeder Cash Index has been trending lower recently, losing .09 to 179.97. Sept feeders were trading at a small discount to the index and may keep Sept tied to the index value, expiration is around the corner. Overall, the high prices in the grain market have put pressure on the feeder cattle market this week.  The stronger cash market tone was very friendly and supportive of prices on Thursday.  The market has been anticipating a strong cash tone as cattle supplies look to tighten, and maybe the start of that trend is beginning.

LEAN HOG HIGHLIGHTS: Lean hog futures saw good buying support with the potential settlement of the U.S. rail strike, and supportive export numbers released on Thursday morning.  Oct hogs gained 1.350 to 96.050 and Dec hogs gained 2.350 to 87.650.

Hog futures are putting in good turn higher this week as short covering and technical buying supported the market.  Front end hog futures pushed through resistance to start the session, and the money flowed into the market during the day.  The USDA released 4-weeks of export sales data this morning , and that brought some support to the market.  Last week, USDA announced new sales of 25,100 MT of pork sales on the books for the marketing year.  It was the sales for the previous week that were the friendliest with new sales of 36,400MT, of which China added 17,100 MT of U.S. pork.  Chinese pork prices are on the climb again and China announce the releasing on 15,000 MT of pork into the market to help control prices.  The cash trade is still trending lower, and midday direct trade was softer, losing 2.03 to 94.99 with a 5-day average of 94.19. The Lean Hog Cash Index continued to slide, reflecting the recent cash weakness, losing .09 to 97.58. Oct futures are still trading at a 1.530 discount to the index. In direct cash trade, October is at a premium, and the weak cash tone is still a concern to the market. Retail values had a strong close on Wednesday afternoon, trading 2.11 higher, but were softer at midday Thursday, slipping .71 to 106.17. Today’s midday load count was good at 268 loads. The estimated hog slaughter for today was 482,000 head, up 5,000 from last week, and 16,000 over last year. The front-end supplies have stayed heavy, which has made it difficult for the cash market to find footing. The hog market looks to have made the turn higher starting last week, and the strong price action overall this week has helped build that potential low is in place.  Hog supplies will be looking to tighten, and prices are looking supported to test higher level, but with the cash market still a concern, this could be a fleeting rally.

DAIRY HIGHLIGHTS:After a very strong start to the week, where second month Class III gained 74 cents and Class IV futures saw decent gains, the momentum has cooled some later in the last two days of trading. Even with the sell-off today, the Class III and IV markets are up substantially since the end of August on the backs of strong dairy product trades. Spot butter settled at $3.17/lb today, off slightly from yesterday’s trade but a gain of nearly 20 cents since August 24. The spot powder market has recovered off its 2022 low from August 9 at $1.46/lb to settle at $1.58/lb today with 15 total loads traded to move the market up 3 cents. The spot whey market has had a similar pattern to powder, setting 2022 lows in early August at $0.42 per pound to finish today’s trade at $0.4775/lb. The long-term trend for milk was recently turned back to up as strong cheese and butter demand could continue to push milk markets higher into the holiday season.

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John Heinberg

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