TFM Sunrise Update 01-18-2022


Corn futures were down a nickel in the front months overnight.  March corn slumped to 5.91 while consolidating inside Friday’s trading range and at the contract’s 50-day Moving Average.  Dec corn is fractionally lower to 5.57-1/2.  New highs in crude this morning are offset by a 20 point hike in the dollar.  A news wire report from Reuters this morning headlined Brent oil prices are primed to rise above $100 per barrel later this year, Goldman Sachs analysts said, adding the oil market remains in a “surprisingly large deficit” as demand hit from the Omicron coronavirus variant is so far smaller than expected.  Meanwhile, moisture slated for parts of Argentina this week is dampening bullish enthusiasm in row crops to begin the holiday-shortened week-of trade.  Central Buenos Aires is forecast for rains every day this week.  Brazilian producers are now expected to harvest 115.6 mil tons of corn in the 2021/22 season, agricultural consultancy Safras & Mercados said in report, citing drought issues in Southern states.  Volume is below the 116.08 mil tons estimated in Dec, but still higher than the 90.77 mil tons produced in 2020/21.  Weekly Export Inspections will be out later this morning.


Soybean futures continued to weaken overnight with nearby March beans losing as much as 15-3/4 cents to 13.52; and, Nov 15-1/2 lower to 12.77-1/4.  Declining price momentum reinforces more price weakness this week.  March meal broke near-term support overnight, losing as much as 10.00/ton to 395.60 before trimming losses.  The National Oilseed Processors Association is scheduled to release its monthly report on Jan. 18.  U.S. December soybean crush is seen at 184.5 mil bu, 0.7% higher than Dec of last year and an increase of 2.8% vs a month ago.  Oil stocks at the end of last month are seen at 1.872 bil lbs vs 1.699 bil a year earlier.  Overnight, Chinese May bean futures were up 39 yuan; Soymeal down 12; Soyoil up 72; Palm oil up 150; Corn down 2.  Malaysian palm oil prices overnight were up 67 ringgit (+1.31%) at 5190.


Wheat futures were up 8 to 10 cents across the board overnight.  March Chicago wheat  is trading at 7.50, and KC at 7.53 while potentially ending a three-day losing streak.  Price strength to begin the 4-day week of trade indicates weather watchers are still concerned about continued dryness across the South Plains HRW crop areas.  KC wheat had become technically oversold and ripe for this bounce.  HRW export basis continues to trend higher.  EU wheat prices are near 3 month lows and looking for export business.  March MPLS is at 8.86-1/4 after forging a new low of 8.72-1/4 last night and breaking 200-day moving average support.


Cattle futures are called steady to higher as optimism over an improving slaughter picture and good demand help support the market.  Trendline support held April live cattle around the $140 level, and resistance at $142, kept prices in check on Friday afternoon.  The recent spike in COVID cases has pressured the cattle market on its impacts of cattle numbers and supply chain, but the market is more optimistic that this will be a short-term issue.  Light cash trade occurred last week with a range of $136-$138 catching most trade, $1-2 lower than the previous week.  Beef carcasses maintains its trend higher.  At the close on Friday, Choice carcasses added 3.55 to 287.78 and Select was 3.08 firmer to 277.05.  The load count was light at 49 loads.  At midday, Choice carcasses were trading more than $10.00 higher than Monday’s close.  Lighter slaughter numbers may be triggering a product shortage, and with demand strong, helping to lift retail values.  The firmness in Live cattle, and mixed grain trade kept the feeder market searching for direction.  January feeders expire on Jan 27th , and are closely tied to the cash index.  The Feeder index was .21 lower to 161.81.  The cattle market is still trending higher overall, but near-term, prices are in a consolidation pattern looking for a reason to move either higher or lower.


Hog futures are called steady to higher.  Strong buying came into the hog market to end the week last week as retail values jumped more than $10.00 on the Thursday afternoon close, triggering money flow to end the week.  Charts improved technically as prices were trading well off the lows for the week.  Follow through support will be the key going to this week.  Slaughter numbers are still trending lower as estimated slaughter for the week was 2.407 million head, down 160,000 from the previous week.  There is optimism that the COVID issues and plant speed may be short-term issues for the slaughter pace..  Pork carcasses closed 6.21 lower to 89.07 on Friday, but still trading $3.00 off of Monday’s close.  The load count was moderate to light at 358 loads.  The deferred contracts are building some recovery of recent lows as prices moved back to challenging or passing the $100.00 level.  The longer term concern of a tight hog supply picture supports the longer-term market.


Matthew Strelow

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