TFM Daily Market Summary 8-19-21


Friday’s USDA Cattle on Feed report should reflect a tightening cattle supply picture.  Expectations for total cattle on feed as on August 1st to be at 98.2% of last year, or down about 200,000 total head at 11.081 million head of cattle.  The prospects of the tighter supply have been in front of the market and the tighter picture may likely be priced in.  The marketings in July should run around 94.6% of last year, as labor issues have slowed the packing pace, backing up the cattle supply.  With most Cattle on Feed reports, placements will be closely watched.  Expectations are for 93% of last year, down 7%.  The impact on placement may come from the tighter cattle  supply, plus the cost of inputs, mainly corn still trading at multi-year highs.  As with most reports, the numbers are important, but the reaction of the market on Monday after the report will be key.  The cattle market has been strong and representing very good value, and if the numbers are heavier than expected, could be poised for some price correction.

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CORN HIGHLIGHTS: Corn futures closed weaker today. September lost 11-3/4 cents to close at 5.50 and December down 14 at 5.50-3/4. A rising US dollar and growing concerns with Covid-19, along with weaker energy prices and technical selling, were all considered reasons why prices dropped today. Corn was not alone as soybeans, wheat, and livestock also suffered moderate to sharp losses. The Pro Farmer Tour in Illinois found a corn yield of 196 vs the USDA’s 214 (last year they had a yield of 189 vs the USDA’s 192). Weekly export sales at 8.5 mb old crop brings the total for the current marketing year to 2.768 bb, or 99.8% of total sales forecasted at 2.775 bb. Sales for the new marketing year (starts September 1) were 20.1 mb. Today seemed to be one of those days were there just not an appetite for buying. Managed money, as of the last Commitment of Traders report, was near 270,000 contracts long. This could be what we might term a heavy number of long contracts moving toward a harvest season.

SOYBEAN HIGHLIGHTS: Soybean futures suffered sharp losses as November lead today’s losses, closing 33-1/4 cents weaker at 13.20. Nearby September lost 35-1/4 cents to end the session at 13.23-1/4. The US dollar reached its highest level since last November, and this coupled with sharp losses in the energy market seemed to be enough to send prices aggressively lower. Part of today’s trade may have been a risk off in almost all commodities, as uncertainty with COVID-19 grows and concern over world trade is heightened. Mix this in with recent developments in Afghanistan and traders may have a less than warm and fuzzy feel, and might be using tight stops to exit long positions. Adding to the defensive tone is an increasing chance for rain in the Plains states, which could help bean pod development. We’re just not sure on this year’s crop at this point. We have communicated with numerous farmers throughout the Midwest and would suggest there is significant variability to the bean crop and yield potential. This morning’s export sales figure at 78.7 mb was excellent, yet the market focused on near-term concerns. Prices triggered additional selling once they pushed through the 100-day moving average.

 WHEAT HIGHLIGHTS: Sept Chi up 9 3/4 cents, closing at 7.27 1/2 & Dec up 8 1/2 cents, closing 7.42 3/4.  Sept KC wheat down 9 1/4 cents at 7.14 1/2 & Dec down 9 cents, closing at 7.36 3/4. It’s hard to blame anything for today’s fall in wheat in looking at wheat fundamentals.   Yes, there is some reason predicted in the northern and western Plains, however, it’s not new news nor will it help the spring wheat crop at this point.  Today’s fall was more to do with outside market pressure spilling into grains. The drastic fall in the DOW, the rise in the US dollar, crude falling, the situation in Afghanistan, Covid-19 concerns here in the US – all of these items piled together made sure they touched just about all markets today. Fundamentally, wheat is still in a bullish spot, especially from a global aspect. Egypt tendered wheat this week (180,000 mt) paying the highest prices in six weeks. As expected, our exports were nothing to be impressed by today, reported at 306,700 mt – it’s worth nothing that China was the top buyer. China is expected to be in demand of wheat after their excessive flooding this year.

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John Heinberg

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