TFM Midday Update 06-08-2022

CORN

Jul corn up 9 @ 7.66
Corn is higher following the USDA’s report that US exports of ethanol jumped from 125.1 million gallons to 185.2 million gallons in April, with biodiesel exports increasing from 29,252 mt to 70,214 mt
In the US, daily ethanol production has fallen, which is the first decline since early April, down to a rate of 1.039 million barrels per day from 1.071 million barrels per day last week
Today is the third consecutive day of bull spreading, which reflects demand and may suggest a condition where actual supplies are becoming tighter than what the USDA is estimating
The USDA showed basic price differences between corn and its products at a comfortably wide margin of 2.02 a bushel in Iowa, strong incentive to buy corn for processing

Jul soybeans up 16 @ 17.44
Both July and November contracts made new contract highs this morning and are currently trading a few cents off them
Both soybean oil and meal are higher after the USDA reported that one bushel of 17.57 soybeans in Illinois can produce 20.10 worth of meal and oil, a strong incentive to crush
By the end of August, there may be a soybean surplus of less than 200 million bushels, which would be the lowest in six or seven years
There has been talk about China buying multiple cargoes from Argentina, the US, and Brazil for varied delivery times

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Jul wheat down 4 @ 10.68, Jul KC down 3 @ 11.46, & Jul MNPLS down 13 @ 12.24
Wheat is trading quietly this morning after Russia and Turkey met regarding grain exports with no resolution as to the opening of a corridor
Friday’s USDA report may show concerns about the Canadian, US, and European wheat crops
The war in Ukraine, along with adverse weather in North America, may reveal tighter world wheat supplies for 22/23
The trend remains higher for new-crop contracts of KC and Minn wheat and are sideways for July Chicago

Jun LC up 2.175 @ 135.900 & Aug FC up 2.150 @ 174.650
Live cattle futures are higher with cash trade beginning to be established so far with 136 being traded in the South, and asking prices at 137-138
Cash trade is called 2 to 3 dollars higher this week, putting futures at more of a discount and leaving more room to the upside to run
The packer is paying up to find choice beef with the choice/select spread now 21 dollars
Feeder cattle are higher yet again despite higher corn, pointing to tight calf supplies and strong underlying fundamentals
Choice cuts up 2.12 and select down 0.32
Cattle slaughter projected at 126K
CME Feeder Cattle Index for 6/7: down 0.04 @ 158.49

Jul hogs up 0.075 @ 109.350 & Jun pork cutout down 0.325 @ 110.500
Hogs are slightly higher following a strong move up in cash yesterday as the packer becomes aggressive to replenish supplies
Even though cash was higher, the cutouts are what is driving the market and cutouts fell 0.96 yesterday, which isn’t providing support
The trend has been strong cash trade at the beginning of the week while the packer gets caught up on inventories followed by lower, lighter trade into the end of the week
National Direct Afternoon report has cash up 4.65
Hog slaughter projected at 477K
CME Lean Hog Index for 6/8: up 0.46 @ 107.80

Amanda Brill