TFM Daily Market Summary 12-09-2021


Led by strong demand, Class III milk futures are pushing towards the end of the year, reaching new contract highs. January milk futures are within a few cents of the key psychological $20.00, and traded to new contract highs for the second consecutive day, as milk futures represent good value for dairy producers. The strength in the milk market comes from demand for U.S. milk and dairy products overseas. Products such as cheese, butter, non-fat dry milk powder, dried whey are trading near or at their highest levels for the year as well, lending buying support to the milk market. The dairy export market is red hot, looking at a record year for dairy export demand. The top buyer of U.S. dairy products is China, which has been on a buying spree lately. U.S. dairy exports to China were up 32% during the first half of the year on a milk equivalent basis. China has been looking for food protein, whether it has been meat products or, in this case, dairy products. The strong export demand will likely be a focus on the market going into next year, as the strength in the milk process will be supported by this strong overseas demand.



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CORN HIGHLIGHTS: Corn futures initially traded quietly two-sided today prior to the USDA report and closed with slight gains keeping the short-term trend higher for now. The Mar contract settled at 5.91-3/4, up 4-1/2 cents. The Jul contract gained 3 cents to also close at 5.91-3/4, while the Dec 2022 contract shed 2-1/2 cents to close at 5.52-1/4.

Today’s USDA report was viewed as neutral overall. Trade was anticipating a slight decrease for carry-out levels, however, the USDA left ending stocks at 1.493 billion bushels, unchanged from the November report. There were no changes on the report for corn; all supply data was left the same as the November report, and each demand category was also left unchanged from November. Trade had been anticipating an increase for corn use for ethanol on this report, which would have been the reason for tighter carry-out, however, the USDA appears to want to wait until the January report before making any significant changes. On the global scene, the USDA increased corn carryout for the 2020-21 crop year to 292.7 million metric tons, up from 291.9 in the November report. The increase in old crop carryout is then counted as an increase on the spreadsheet for carry-in for the 2021-22 balance sheet. Regarding global corn production, the USDA noted an increase for Ukraine corn at 40 million metric tons, up from 38 on the November report. There was also a slight increase noted for European Union corn now pegged at 70.35 million metric tons, up from 67.85 last month. A production decrease was noted for China. China production was indicated at 273 million metric tons in November and now is listed as 272.55. The net result was larger carryout for global corn for the 2021-22 crop year at 305.5 mil metric tons, up slightly from the 304.4 number in November.


SOYBEAN HIGHLIGHTS: Soybean futures started the day lower, trading with losses of 14 cents, but managed to finish the day with modest 2 to 4 cent gains. Nearby Jan soybeans settled at 12.64-1/2, up 3-1/2 cents, while the Jul contract closed 2-1/4 cents higher at 12.84-3/4. The Nov 2022 contract settled at 12.47-3/4, up 3-3/4. There was a daily sale of 280,000 metric tons of soybeans for delivery to unknown destinations. Of the total, 140,000 metric tons is for delivery during the 2021/2022 marketing year and 140,000 metric tons is for delivery during the 2022/2023 marketing year. The bigger market mover today, however, was the monthly USDA WASDE report.

Today’s USDA report was viewed as neutral to slightly supportive for soybeans. Trade had been anticipating larger carryout supplies for soybeans, and on today’s report, the USDA left every single category for U.S. production unchanged from the November report. Soybean ending stocks are again pegged at 340 million bushels for the 2021-22 crop year. As the market had been anticipating a slightly larger increase, the fact of no increase to supplies was enough to allow soybean prices to shake off the negative trade activity of the morning and finish the day with modest gains. For the global aspect of this report, the USDA made no changes to Argentina or Brazil production levels. And while China does not grow many soybeans, relying instead primarily on imports, the USDA did note a modest decrease in Chinese production for the 2021-22 crop year. Chinese production is now pegged at 16.4 million metric tons, down from 19.00 in the November report. The USDA left overall Chinese soybean imports unchanged at 100 million metric tons. Global ending stocks for soybeans for the 2021-22 crop year were reduced to 102 million metric tons, down from 103.8 last month.


WHEAT HIGHLIGHTS: Wheat futures had another difficult day as the prospect of glowing supplies and sluggish demand have pushed prices lower, testing key support levels. Mar Chi lost 17-3/4 cents, closing at 7.76-3/4 and Jul down 16 to 7.74-3/4. Mar KC lost 15-3/4 cents, closing at 7.94-1/2 and Jul down 15-1/4 at 7.91-1/4.

Technical selling stepped into the market as prices crossed through the psychological 8.00 barrier, as selling pressure was seen throughout the session prior to the USDA WASDE report. While the USDA report was quiet for other grains, the wheat market saw slight adjustments higher in the U.S. and global wheat supplies. The USDA raised U.S. wheat carry-out to 598 million bushels, up 15 million bushels from the November report, and slightly above expectations. This number was largely achieved by removing 20 million bushels from export demand. Globally, USDA world wheat ending stocks were raised to 278.18 MMT, up 2.38 MMT from November and slightly above market expectations. These U.S. demand concerns were reflected in weekly export sales numbers. Last week, U.S. exports posted new sales of 8.8 million bushels and shipments of 7.8 million bushels. Wheat export commitments now total 535 mb in 2021-22 and are down 24% from a year ago. That is well below USDA’s estimated pace. Wheat futures are trading close to $1.00 of most recent highs, and prices were consolidating, holding support. The break below this consolidation in the Chi Mar wheat futures opens the door for additional long liquidation. The 7.60 area is the next possible landing spot, and the technical picture looks extremely weak.


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.


John Heinberg

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