TFM Sunrise Update 01-12-2022


Corn futures were narrowly mixed overnight with nearby March corn down a penny this morning sitting right at $6.00.  Dec corn is fractionally lower to 5.56-3/4.  Volume was light as the trade awaits the release of the January Crop Report at 11:00 AM Central time, which is historically one of the more volatile reports of the year for grains.  Survey results show 2021/22 corn yield back at 177 bushels per acre versus 177 last month.  This equates to a production total of 15.069 bil bu on 86.186 mil harvested acres vs 15.062 bil on 85.085 mil acres.  The estimate for U.S. Quarterly Stocks is 11.602 bil bu vs 1.236 in the last Quarterly update in September and 11.294 bil last month.  The agency could raise demand especially for ethanol, and may eventually need to also increase exports.  World Ending Stocks’ average estimate is 304.08 mil tons vs 305.54.  Weather maps still forecast good rains next week across parts of south Brazil and north Argentina, but for now, heat and dryness underpin the market.  Trade estimates for South America’s 2021/22 corn production is 53.59 mil tons in Argentina, down from 54.50 in December; And, 116.17 mil tons vs 118 in Brazil.  Weekly Ethanol Stats will also be out this morning.  Production through Jan 7 is seen lower than last week at 1.041 mil barrels per day.  Stockpiles average estimate is 21.566 mil bbl vs 21.359 mil a week ago.  This would be the highest since August.


Soybean futures were softer last night with March beans down a nickel to 13.81-1/2, and Nov down 5-1/2 to 13. 22.  Meal is down 2.70 to 410.40 after having lost more than $11 in the past two sessions as sellers push prices back to the downside.  Soyoil is unchanged.  USDA could raise the U.S. 2021 crop later this morning and lower export demand.  Trade estimates for 2021/22 bean production is 51.3 BPA and a 4.433 bil bu crop versus 51.2 and 4.425, respectively.  Trade estimates for the U.S. Quarterly Stocks figure is 3.129 bil bu vs 256 mil bu in Sept and 2.947 bil last month.  World Ending Stocks’ average estimate is 99.93 mil tons vs 102.  Look for weather to quickly take over market sentiment once reaction to this data plays out.  Trade estimates for South America’s 2021/22 soybean production is 48.11 mil tons in Argentina, down from 49.50 in December; And, 141.62 mil tons vs 144 in Brazil.  Overnight, Chinese May bean futures were down 32 yuan; Soymeal down 11; Soyoil up 6; Palm oil up 64; Corn up 22.  Malaysian palm oil prices were down 29 ringgit (-0.57%) at 5040.


The wheat complex was weak overnight in light trading ahead of today’s USDA data.  March CBOT futures are down 4 cents to 7.66-1/4.  March KC is down 4-1/2 to 7.87-1/4.  March MPLS wheat is down 1-3/4 cents to 9.26-1/2.  USDA could increase U.S. 2022 winter wheat acres in their first estimate today.  Trade estimates for the U.S. 2022 winter wheat acres are averaging 34.255 mil vs 33.648 last year.  There is some talk that the agency could lower U.S. wheat exports and raise the US 2021/22 carryout.  Trade estimates for U.S. 2021/22 wheat carryout is near 608 mil bu vs 598.  The trade estimates Quarterly U.S. Wheat Stocks at 1.421 bil bu vs 1.780 in the September report, and 1.703 bil last year.  Finally, World wheat stocks are estimated near 278.6 mmt vs 278.2 previously.  As is the case for row crops, look for weather to quickly take over market sentiment once reaction to this data plays out.


Cattle futures are called mixed after some price recovery supported by early cash trade and retail strength.  Cattle charts are still trending lower in the near-term, as concern of a slower cattle slaughter pace and a potential build up of front-end cattle weigh on the market.  Price action on Tuesday did battle back to hold trendline support, and establish a “Hook” reversal off the session lows.  Light cash trades was noted Tuesday with $137 catching trade in the South.  This is $1 lower versus last week, but that value was above the futures market, bringing in some buying strength.  Beef demand remains strong and that is reflected in carcass values that were trending higher again on Tuesday.  Choice carcasses added 2.18 to 278.22 and Select was 2.13 firmer to 268.63.  The load count was light at 150 loads.  The turn higher on the charts technically yesterday may be helping signal a short-term bottom off this most recent push lower.  However, the market may be susceptible to additional downside pressure, especially if the Omicron variant of COVID does have an impact of cattle flows.


Hog futures are called steady to lower.  The technical picture in the hog markets stays weak amid concerns over limited production and the buildup of hogs supplies.  Feb and April contracts remain under pressure, and are targeting a further downside move to 75.00 in Feb hogs, and support near 82.00 in April.  The deferred contracts tried to find some footing, but the market was heavily bear spread with front end selling pressure.  Long distance deferred futures were trading higher on the tighter overall hog supply picture.  Slaughter numbers were noticeably lower last week, and estimated slaughter Tuesday was 458,000 head, down nearly 40,000 head versus last year, and cumulative total for the week is around 6,000 under last week.  The cash hog market values on midday direct trade were 1.58 under Monday yesterday, helping pressure the market.  The Lean Hog Index traded higher, gaining .97 to 74.70, and still holding a 3.150 discount to the futures, which saw some additional tightening with the price action of the futures and hog index.  Pork carcasses had a difficult close, losing 4.80 to 81.62.  The load count was moderate at 413 loads. This will likely pressure today’s open.


Matthew Strelow

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