TFM Sunrise Update 01-11-2022


Corn futures were firm overnight as nearby March, up 3-1/2 cents to 6.03-1/4 stays close to the $6.00 price area heading into the January Crop report tomorrow.  Outside markets may be helping support corn this morning as the dollar eases and crude jumps $1.00/barrel.  Dec corn was unchanged at 5.57.  USDA will revise the U.S. 2021 corn crop, estimate U.S. Dec 1 corn stocks, U.S. 2021/22 corn carryout and World 2021/22 corn ending stocks.  Survey results 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. USDA could raise demand especially ethanol.  The agency may eventually need to also increase exports. Weather maps still forecast good rains next week across parts of south Brazil and north Argentina.  South Argentina could miss the rains.  Many feel parts of Paraguay crops, first season Brazil and Argentina corn crops have seen irreversible damage.


Soybean futures were mixed overnight.  March beans are fractionally higher this morning to 13.85-1/2.  Nov is down 3 cents to 12.97-1/2.  March meal is unchanged at 416.2 after leading the complex lower yesterday; And, March bean oil is up .40 to 58.43.  USDA could raise the U.S. 2021 crop tomorrow and lower export demand.  Trade estimates for 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 also 51.3 BPA.  With a USDA report out this week and continuing changes to forecasts, market volatility is likely to remain high with traders quick to move in either direction.  Rains are forecast next week across the dry areas of South America.  AgRural, on Monday said 0.2% of Brazil’s soybean crop has been harvest as work gets under way in Parana and Mat Grosso.  The U.S. Ag Secretary is pressing China to buy the $16 billion dollar deficit in Phase 1 trade agreement.  There are signs that China may be asking for U.S. Sep soybean export prices.  Chinese May bean futures were down 36 yuan overnight; Soymeal down 3; Soyoil up 24; Palm oil up 16; Corn down 3.  Malaysian palm oil prices were up 40 ringgit (+0.80%) at 5069.


The wheat complex was choppy overnight and is firm this morning.  March CBOT futures are up 3-1/2 cents to 7.65-1/2.  March KC is up 2-1/2 cents to 7.80-3/4.  March MPLS wheat is up a penny to 9.15-1/4.  However, wheat continues to trend lower on slow U.S. wheat exports, a strong U.S. currency and talk that USDA could increase U.S. 2022 winter wheat acres in their first estimate tomorrow.  Trade estimates for the U.S. 2022 winter wheat acres are averaging 34.2 mil vs 33.6 last year.  The trade also estimates Dec 1 wheat stocks at 1.421 bil bu vs 1.780 last year.  Trade estimates for U.S. 2021/22 wheat carryout is near 608 mil bu vs 598.  Finally, World wheat stocks are estimated near 278.6 mmt vs 278.2 previously.  There is some talk that the agency could lower U.S. wheat exports and raise the US 2021/22 carryout.  The key to long term prices remains 2022 north hemisphere weather.


Cattle futures are called steady to lower on follow-through from triple digit losses to start the week.  A Reuter’s article released on Monday discussed the impacts of the Omicron variant in packing plants, raising worker absenteeism.  Sources talked about working with “Skeleton crews”, which has the livestock market worried about backing up cattle supplies.  Prices closed at or near support, and with the weak technical close, open to further downside selling pressure.  Estimated cattle slaughter for Monday was at 113,000 head, breaking off the typical 120,000 head/day pace.  A build up of supplies could likely weigh on cash offerings by the packers.  Most cash trade will likely hold off into the end of the week.  Beef values were trending higher at midday and held those gains, firming into the close on good demand.  Choice carcasses added 4.22 to 276.04 and Select was 5.40 firmer to 266.50.  The load count was light at 107 loads.  The cattle market is still trending higher, but the weak price action is testing lower support levels and could leave the market susceptible to additional downside pressure, especially if the Omicron variant of COVID impacts cattle flows.


Hog futures are called steady to lower.  Sellers stayed aggressive in the hog market as prices saw strong triple digit losses, fearing a build up of hog supplies due to plant slowdowns because of Omicron variant of COVID.  The technical picture in the hog markets weaken as the market is concerned about limited production and the buildup of hogs supplies.  Feb and April contracts closed under the 100-day moving averages, and are targeting a further downside move to 75.00 in Feb hogs, and support near 81.00 in April.  Slaughter numbers were noticeably lower last week, and estimated slaughter Monday was 457,000 head, down nearly 40,000 head versus last year.  This will likely affect the cash market.  Pork carcasses were firmer at midday, but prices softened off those midday values, closing .52 higher to 86.42.  Movement was good at 414 loads.  The deferred contracts broke to the downside, reflecting the overall weakness of the market.


Matthew Strelow

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