TFM Sunrise Update 01-19-2022


Corn futures traded higher overnight with nearby March back up and above $6 to 6.06-1/2 on gains of 7 cents as crude makes new highs and the dollar pulls back from Tuesday’s rally.  Dec was up 4-1/4 cents to 5.62.  Optimism for fewer planted acres in the U.S. next year has supported these higher prices, along with the fact that the South American crop could come in lower than expected, thus adding to U.S. export potential. China’s 2021 corn imports are reported to be record large at 28.35 mmt.  South American weather forecasts are wet for the next 10 days with 3 to 6 inches predicted for Argentina.  A drought on the Pampas crop belt that’s reining in harvest estimates is expected to curb Argentina’s GDP in 2022 by $4.8 bil, or 1% of the IMF’s GDP forecast for the country, the Rosario Board of Trade said in a report.  Rains in the last few days may have improved the outlook for crops in some area.  Yields in northern Brazil are expected to be above average, but there is concern over quality because of wet conditions. 


Soybean futures rebounded overnight from Tuesday’s multi-week lows.  March beans rose as much as 15-1/2 cents to 13.76-3/4.  Nov was up 12 cents to 12.96.  Soymeal futures retreated from trendline resistance the past week to sub $400/ton and are now making a modest $3 recovery this morning to 393.10.  Yesterday was the fifth down day out of the past six sessions for March meal. The wet 10-day forecast for Argentina and Southern Brazil has pressured the market.  The U.S. is expected to pick up some soybean meal export demand though, because of the lower Argentina crop.  Basis bids for soybeans shipped by barge to the U.S. Gulf Coast were mixed on Tuesday, with nearby values lifted by good demand and tight supplies due to winter barge shipping delays, traders said.   Dec NOPA crush rose to 186.4 mil bu compared to 183.2 mil bu a year ago.  Chinese Ag futures for May beans were up 14 yuan overnight; Soymeal down 8; Soyoil up 76; Palm oil up 168; Corn up 10.  Malaysian palm oil prices overnight were up 91 ringgit (+1.81%) at 5125.


Wheat futures posted double-digit gains overnight at all three exchanges.  March Chicago wheat is up 13 cents this morning to 7.82.  KC wheat is up 15-1/2 to 7.88-1/4; And, MPLS is up 18 cents to 9.35.    Prices remain in a short term downtrend despite recovering last night and nearly 30 cents yesterday.  Rumors that China is buying wheat and barley are helping to rally prices at this time.  U.S. HRW wheat is $12 to $13 per metric ton cheaper than Russia wheat, also adding support to the market.  The Russian wheat export tax is expected to drop next week.  Algeria recently bought 600,000 mt of milling wheat last week last week likely from Argentina and the E.U.  Spot basis bids for hard red winter (HRW) wheat held steady in the southern U.S. Plains on Tuesday while protein premiums rose in a light bounce from declines last week and futures rallied, dealers said.


Cattle futures are called steady to lower.  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.  Trendline support held April live cattle around the $140 level, and resistance at $142, kept prices in check again this afternoon.  April cattle have traded within this range for 9 consecutive trading sessions.  Prices are looking for direction, but with the near-term trend working lower, a possible break to the down side is still a possibility.  The recent spike in COVID cases has pressured the cattle market, but the market is more optimistic that this will be a short-term issue.  Estimated slaughter today may be showing some movement out of that concern.  For yesterday, 117,000 head was forecasted for kill, up 3,000 head from last week.  Cash trade is typically slow to start the week, but some very light trade did occur at $137, but not enough to establish a clear trend.  More trade will develop later on in the week.  At Closing, Choice carcasses added 1.63 to 289.49 and Select was 1.34 firmer to 278.39.  The load count was light at 124 loads as the trend higher in retail beef continues.


Hog futures are called steady to higher.  Hog futures saw some follow through buying strength to start the week, as slaughter numbers may be on the rebound.  Resistance is still over top the front month contracts, as February looks to be targeting the $82 area, and April is headed towards $90.  The deferred contracts are building some recovery off 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.  There is optimism that the COVID issues and plant speed may be a short-term effect on the slaughter pace.  Estimated slaughter for Tuesday was 468,000 head, up 13,000 head from last week.  The Lean Hog Index traded higher, gaining 1.30 to 75.90, and still holding a 5.700 discount to the futures.  The spread will likely limit the near-term upside in the futures market.  Pork carcasses traded higher at midday, helping support the jump in futures prices. At midday today, Pork carcasses were 1.79 higher, but closed down 4.73 to 87.21.  The load count was moderate to light at 331 loads.


Matthew Strelow

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