TFM Sunrise Update 01-07-2022


Corn futures were mixed to weaker overnight with 5 cent trading ranges posted in the nearbys.  March corn is down 2 this morning to 6.01-/14 while hanging around the $6.00 price level.  For the week, the contract is up 8 cents and consolidating ahead of next Wednesday’s January Crop report.  Dec corn, down 2-1/4 cents to 5.52 is also rangebound near $5.50.  Weekly Export Sales were a disappointment for the market, but underlying weather support remains in place as South America’s row crops remain under the microscope of the trade.  Survey results for next Wednesday’s January Crop report show 2021/22 corn yield at 177.1 bushels per acre versus 177 last month.  The range is 176 to 178.5. Our official estimate is 178.  Total U.S. Production’s average estimate is 15.078 bil bu. Crude oil is charging back higher for the week and offering some outside market support to corn.  In addition, the dollar is trending sideways near it’s historically higher levels.


Soybean futures were down overnight as South American weather forecasts call for mid-month rains that could ease crop concerns.  Jan beans are down 9-1/4 cents this morning to 13.68.  The nearby contract is up 40 cents, though this week.  Nov beans are down 3 to 13.03-1/2 with an overnight low hit at 12.97-3/4.  March meal is down $3/ton to 4.08 while consolidating new contract highs.  Soyoil futures are firm this morning.  Rain forecast for southern Brazil and Argentina following the next 6 days of dryness and heat has put a halt to the recent rally in beans.  Traders are now reacting to up to 2 inches of rain Argentina beginning at the end of next week that could ease crop concerns there.  Meanwhile, two more industry estimates for Brazil Soybeans were out on Thursday.  AgRural pegs the crop at 133.4 mmt vs prior forecast of 144.7 mmt, and AgResource sees the harvest at 131.04 mmt vs 141.03 previously. Last year’s crop exceeded 137 mmt.  Trade estimates for the Jan Crop Report 2021/22 bean production is 51.3 BPA and a 4.434 bil bu crop versus 51.2 and 4.425 (Dec), respectively.  Our estimate is 51.3 BPA.  Overnight, Chinese May bean futures were down 10 yuan; Soymeal down 18; Soyoil up 30; Palm oil up 26; Corn down 12.  Malaysian palm oil prices were up 8 ringgit (+0.16%) at 4993.


The wheat complex was down again overnight with March Chicago slipping 9-1/2 cents to a 7-week low of 7.36-1/2 while heading for 200-day Moving Average support etched at 7.31-1/4.  For the week, the contract has lost nearly 35 cents.  March KC wheat is down 12-3/4 cents to 7.55-3/4 and 65 cents for the week.  March MPLS Spring Wheat futures are down 13-1/4 cents to 9.10-1/2 having now given up the entire rally since October 6 that included the contract high at 10.66-1/4 from Nov 2.  Aggressive long liquidation has taken over the wheat markets amid a strong U.S. dollar, weak exports and a technical breakdown.


Cattle futures are called steady to higher.  The cattle market is still trending higher, but the weak price action has tested lower support levels as money flow has been moving out of the market.  The turn higher technically yesterday, including a bullish reversal on the daily charts could be signaling a turn back higher, but follow through today will be key.  The market strength happened despite a net reduction of 2021 Weekly Export Sales figure by 3,900MT, but new 2022 sales of 18,600MT as some orders were likely rolled over.  Cash trade was quiet on Thursday with light trade ranging from $138-140, mostly steady with last week.  It seems packers are comfortable being relatively short bought.  Beef demand remains strong and carcass values closed higher with Choice carcasses adding 1.63 to 268.56 and Select was 1.03 firmer to 260.64 with a moderate load count of 154..


Hog futures are called mixed.  Weekly export sales helped support the market yesterday with new sales of net sales of 19,400 MT for 2021, and net sales of 18,600 MT for 2022.  The deferred contracts are maintaining their strength and overall uptrend, supported by a tighter hog supply.  Summer contracts broke through the $100 level on Thursday’s trade.  Charts saw follow through support as the Feb contract rallied to test resistance over top, which held at the $84.00 level, before softening into the close.  This resistance held prices in check on the last test, and look to be holding again.  The cash hog market turning higher is helping to support prices after a strong move Wednesday.  This is reflected in the Lean Hog Index trading higher, gaining 1.12 to 73.87, but still holding a 9.080 discount to the futures, which could limit the futures market’s upside.  The prospects of tighter hog numbers are supporting the cash market. The estimated daily slaughter was 465,000 head for Thursday, down 5,000 from yesterday, and 29,000 from last year.  Carcass values were firmer, adding to the buying support.  Pork carcasses closed higher adding 3.64 to 89.56, on a moderate load count of 411 loads.


Matthew Strelow

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