TFM Sunrise Update 01-14-2022

The CME and Total Farm Marketing offices will be closed Monday, January 17, 2022 in observance of Martin Luther King Jr.


Corn futures were firm overnight, posting 1 to 3 cent gains across the board.  March corn is up 1-1/2 cents to 5.89 and down 15 cents for the week.  Technically, the contract has broken near-term support after closing below the contract’s 50-day moving average yesterday for the first in almost 3 months.  Resistance is now back up at $6.00.  Support is seen at 5.80 and then 5.60.  Dec corn is up 2-1/4 cents to 5.60 and up 3 cents for the week.  A drop in South America’s production forecast offers support.   However, the Jan crop report was considered neutral.  USDA raised the U.S. crop by 53 mil bu, raised ethanol 75 mil bu, but lowered exports 75 mil bu.  The net result was a carryout of 1.540 bil bu vs 1.493 in Dec and 1.235 last year.  Spot basis bids for corn eased at rail terminals in the Eastern U.S. Midwest, as well as processors on Thursday, grain dealers said.


Soybean futures continued to weaken overnight after big losses on Thursday.  Today is the last trading day for January contracts.  March beans are down 6 cents this morning to 13.71-1/4. The contract has shed nearly 40 cents this week.  Nov beans are down 6-1/2 cents to 12.98 and down 23 cents this week.  Bearish chart signals have turned Funds into sellers this week aided by a lack of new bullish news and the prospects for needed rains early next week across some of the dry areas of South America.  Santa Fe, Argentina is getting triple digit heat through tomorrow before rain moves in.  Spot basis offers for U.S. soymeal eased for soymeal loaded onto barges upriver from the U.S. Gulf on Thursday, as well as at the Gulf, dealers said.  March soymeal futures were unchanged overnight at 408.90.  Chinese Ag futures May bean futures were up 1 yuan; Soymeal down 30; Soyoil down 44; Palm oil down 24; Corn up 8.  Malaysian palm oil prices overnight were down 38 ringgit (-0.74%) at 5123.


Winter wheat futures remained on the defensive overnight with nearby contracts (March) in Chicago down 7-1/4 cents to 7.39-1/2.  Next support is 7.34.  KC wheat is down 10-1/2 cents to a new 3-month low of 7.49-1/4 where key support lies.  Both contracts have given up more than 20 cents this week.  March MPLS Spring wheat is down 15 cents to 8.80-1/2 and 43 cents for the week.  Technical support was discovered overnight in the form of the contract’s 200-day moving average at 8.79-3/4.  Price action had been softening into the January Crop Report before being zapped with a bearish U.S. Carryout number of 628.  USDA lowered U.S. wheat imports 10 mil bu, lowered feed use 25 mil bu and exports 15 mil bu.  If U.S. 2022 weather is dry, volatility should remain high.  World wheat production in the 2022/23 season could rise for a fourth year to a fresh record, the London-based International Grains Council said in an emailed report.


Cattle futures are called mixed.  The market is still trending higher overall, but near-term prices are challenging support levels.  Money flowed back into the cattle markets on Thursday, as strong retail values and a sell-off in grain markets supported cattle prices.  The cattle market is moving into consolidation type trade over key support levels.  Trendline support held April live cattle around the $140 level.  Prices are looking for direction, but with the near-term trend working lower, a possible break to the down side is still a possibility.  Cash trade looks wrapped up for the week, with little business done on Thursday.  Light cash trade occurred this week with a range of $136-$138 catching most trade.  This is $1-2 lower than last week and disappointing.  Beef carcasses maintains its trend higher, supporting prices.  At closing with Choice carcasses added 2.93 to 282.86 and Select was 1.78 firmer to 272.76.  The load count was light at 127 loads.  Lighter slaughter numbers may be triggering a product shortage, and with demand tone strong, helping to lift retail values.  Estimated cattle slaughter for yesterday was 114,000 head.  Selling pressure in the grain market led to buying strength in the Feeder cattle market.  January feeders expire on Jan 27th , and are closely tied to the cash index.  The Feeder index was .20 lower to 162.01.


Hog futures are called steady to higher.  Hog futures saw mixed trade on Thursday, as selling pressure stayed in the front end of the market despite a strong surge higher in midday retail values.  The deferred contracts are building some recovery off recent lows as the tight hog supply picture supports the longer-term market.   Feb and April contracts are consolidating just above support, but could be targeting a further downside move to 75.00 in Feb hogs, and support near 82.00 in April.  Slaughter numbers are still trending lower with yesterday’s estimated slaughter at 456,000 head, down nearly 28,000 from last week.  The mid-day cash hog market values were .53 higher than Wednesday as the cash market tries to find some footing.  The Lean Hog Index traded lower, slipping .07 to 75.06, and still holding a 2.790 discount to the futures.  The spread will likely limit the near-term upside in the futures market.  Pork carcasses exploded higher at midday, gaining 15.05, and the market held the majority of those gains, closing 10.82 higher to 95.28.  The load count was moderate to light at 298 loads.  The firm retail close should support prices on the open this morning.  Weekly export sales saw new sales of 19,800 mt for the first week of the marketing year.  Mexico and Japan were the top buyers of U.S. pork last week.


Matthew Strelow

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