TFM Daily Market Summary 09-19-2022


Equity markets will likely stay extremely volatile this week waiting for the Fed meeting and interest rate announcement on Wednesday.  After U.S. inflation was registered at 8.3% for the month of August last week, and slightly above expectations, the equity market has been on the defensive as the prospects of further interest rate hike looks to be a reality.  Expectations are for the Fed to raise rates by 75 basis points after their planning meeting this week, in an effort to try and control inflation.  The tighter monetary policy has helped lift the value of the U.S. dollar, and put pressure on many assets investments, including commodity markets.  Dow futures are looking to possible retest the June 17 low of 29,820 on the Dow futures.


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CORN HIGHLIGHTS: Corn futures started Monday trading both sides of steady. However, double digit losses in the wheat complex weighed on corn futures, dragging them lower, however firmer soybeans late in the session helped pull corn steady to higher. A week ago Monday, the most recent USDA report was released and for all practical purposes was neutral compared to expectations. Since, new positive news has been lacking and a pull back in both wheat and soybeans likely pulled corn a little weaker as well, with futures now trading approximately 20 cents from a week ago Monday’s high. Yet, futures are holding near 6.75. Today’s close in December had futures gaining 1 cent to end the session at 6.78-1/2. December of 2023 gained 2 to close at 6.22.

Export inspections were supportive at 21.6 mb, bringing the year-to-date total to 45 mb. This, despite slow export sales of late is running 84% ahead of last year at this same time. It is reflective of tighter supply in the pipeline and end users need to secure inventory sooner than later. Keep in mind, New Orleans was shut down for a month in 2021 due to a hurricane. With December corn hoovering near 6.75, end users may stay on a buy as needed basis until harvest further develops. The marketplace will be interested in yield and if there will be further reductions. Yet, we can’t help but also recognize the USDA dropped total usage 250 mb, no small amount or the equivalent of near 1.5 bushels an acre. High prices curb usage. Add to that China’s economic woes and it leaves the marketplace uncertain. Moving into harvest, it may be beneficial from a marketing perspective to view price not from where it came down from, but how much it has come up. The low for December corn in mid-July was 5.61-3/4.

SOYBEAN HIGHLIGHTS: Soybean futures closed higher today following a reported sale to China, solid domestic demand, and the lifting of Covid lockdowns in some Chinese cities. Crude oil dipped early in the day, but recovered and gave the soy complex some support. Nov soybeans gained 12-3/4 cents to end the session at 14.61-1/4, and Jan gained 12-1/4 to 14.67-1/2.

Soybeans started the day off to a lower start, but quickly began moving higher following reports from the USDA that a sale of 136,000 tons of soybeans to China for 22/23 occurred. This is significant because there have been concerns about the level of Chinese demand for US soybeans as China has been purchasing from South America, and especially after relations have become more inflamed due to Taiwan. The fact that there is still Chinese interest in US beans shows that they are still consuming despite the large scale Covid lockdowns, which only have just begun to lift, with the city of Chengdu of 21 million people coming off a two-week lockdown today. Earlier today, the USDA said 19.1 mb of soybeans were inspected for export last week, but export sale commitments are up 13% from a year ago. Domestically, demand for soybeans is strong despite the upcoming harvest, and last week’s crush report showed 165.5 mb of beans crushed in August, up 4% from a year ago. In addition, Friday’s USDA report showed FOB rail prices for bean meal in Illinois and Iowa roughly 30 dollars higher than the October futures price. Friday’s CFTC data showed funds as net buyers of 12,489 contracts increasing their net long position to 112,127 contracts. Nov beans remain in an upward trend and closed safely above their 100-day moving average today.

WHEAT HIGHLIGHTS: Wheat futures were lower today on a lack of bullish news and increasing Russian production estimates. Dec Chi lost 29-1/4 cents, closing at 8.30-1/2 and Mar down 28-1/4 at 8.46-1/2. Dec KC lost 25-1/2 cents, closing at 9.09-3/4 and Mar down 26-1/4 at 9.08.

Wheat took somewhat of a beating today with all three US classes, as well as Paris milling futures, closing sharply lower. There wasn’t a lot of news to propel this downturn, but perhaps just that (a lack of news) contributed to the weakness. According to Taras Vysotskyi (Deputy Minister of Agrarian Policy and Food of Ukraine), Ukraine has no threat of a shortage of wheat domestically with twice as much collected as annually needed. As to how much of that makes its way to export points remains a big question mark. Currently, both Russian and Ukrainian wheat prices are cheaper than US prices. It is possible that some of today’s softness came from Russian consultant IKAR forecasting their wheat crop at 99 mmt (whereas the USDA is at 91 mmt). In the southern hemisphere, rains in Argentina may have benefited their wheat crop, which may have also contributed to weakness today. In other news, wheat inspections were pegged at 29.0 mb with total 22.23 inspections now at 256 mb.

CATTLE HIGHLIGHTS: Live cattle futures were mixed to mostly higher to start the week as the choppy outside market, stronger U.S. dollar and waiting for direction in cash trade limited the activity in the live cattle market.  Feeders saw some price recover supported by the overall weaker tone in wheat and corn markets. Oct cattle gained .225 to 145.725 and Dec cattle traded .075 lower to 150.900.  October feeders traded 1.050 higher to 182.300.

October and December live cattle futures were choppy during a relatively quiet session again on Monday as prices consolidated.  Prices are poised to push through the topside, but the market will need positive news to trigger the potential strength, and that may take a strong cash tone on the week. . 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 was undeveloped, typical on Monday trade.  Expectations are for cash prices to be steady to higher again this week.  Packer margins are still in the black and will allow them to stay supportive the cash market.  Today’s estimated slaughter totaled 127,000 head, 2,000 head over last week, but 8,000 above a year ago. This week will give the market the next round of cattle on feed numbers with the September report to be released on Friday after the market close. Retail values were softer last week as choice carcasses traded $5.67 lower and select beef dropped $6.09 as the heavier slaughter numbers kept ample supplies in front of the market. Midday retail trade on Monday was mixed with choice carcasses trading 1.10 higher to 253.50, but select dropped .73 to 225.92. The load count was light at 64 midday loads. The choice/select spread has jumped to a wide $27.58 at midday, reflecting the strong demand tone for Choice beef still in the market.  The feeder market saw some strength, lifting off recent lows, supported by weaker grain tone and firm live cattle prices. The Feeder Cash Index has been trending lower but found some strength to start the week gaining 1.10 to 177.92. Sept feeders were trading at a small premium to the index and may keep Sept tied to the index value, expiration coming for Sept options and futures on 9/29. Overall, the high prices in the grain market have put pressure on the feeder cattle market in general.  Direction this week will likely be tied to the cash market tone, and expectations of the cattle on feed report on Friday. The concerns regarding outside market weakness may limit cattle market gains and the Fed meeting this week could keep things volatile.

LEAN HOG HIGHLIGHTS: Lean hog futures were mixed to mostly higher, supported by technical buying and the anticipation that the cash hog market may be starting to find some footing.   Oct hogs were .425 lower to 96.475, but Dec hogs gained .175 to 88.150.

Hog futures had a quiet session as prices consolidated at the top of last week’s trading range, looking for verification that the cash market is looking to turn higher. The cash trade has been trending lower, but after 5 weeks of pressure, the Lean Hog Index looks to be building a turn higher.  The Lean Hog Cash Index traded slightly higher again on Monday, adding .20 to 97.97.  Oct futures is trading at a 1.495 discount to the index and if the index were to lift higher, it could lift the futures higher as well.  In looking at deferred futures, December hogs are trading at a 9.820 discount to the index, which will likely support that contract if the index is turning higher.  Midday direct trade was still softer, losing .79 to 89.95 with a 5-day average of 94.16.  Retail values were higher at midday on Friday, gaining .54 to 106.39. Today’s midday load count was good at 232 loads as demand looks supportive. The estimated hog slaughter for today was 484,000 head, up 9,000 from last week, and 19,000 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 and holding that strength to start the week was important.  Hog supplies will be looking to tighten, and prices are looking supported to test higher level, especially if the cash market is looking to turn higher going into the end of the year.

DAIRY HIGHLIGHTS: During today’s trade, October Class III contract traded up to $21.90 this morning before settling 9 cents higher at $21.54. That daily high is 15 cents off the high from last Monday as the market is still struggling to make that next leg higher after making a technical breakout move above $21.51. Class IV action was mixed to start the week. At 2:00 PM CST, the August Milk Production report was released which sent futures lower after production came in at 19.02 billion lbs, up 1.6% YoY. July production was revised from a 0.20% gain to 0.50% higher. This may be enough to hinder the recent uptrend in milk futures, although the spot market strength is still bullish.

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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