TFM Sunrise Update 01-24-2022


Corn futures were mixed overnight with a weak tone as the dollar pushes higher and weighs on row crops.  Nearby March corn traded a high of 6.19-1/2 and low of 6.13-1/2.  This morning the contract is down 1-1/2 cents to 6.14-3/4.  Dec is down 2-1/4 to 5.63.  USDA Weekly Export Inspections will come out later this morning.  Money managers remain heavily long the corn market despite a pull-back in numbers.  Weekly CFTC data shows the funds long 326,523 corn contracts as of Jan 18, a change of -17,856 from the previous week.  Basis bids for row crops shipped by barge to the U.S. Gulf Coast were mixed on Friday as river shipping delays kept supplies tight at export terminals, traders said.  As the harvesting advances in southern Brazil, agents observe a lower productivity, on average – the first crops to be harvested were the most damaged by high temperatures and low rainfall.  Thus, supply may change as activities advance.  In Rio Grande do Sul, the dry weather hampered maturation. According to Emater/RS, some farmers opted for not harvesting corn in some regions, due to low quality.  Until Jan. 20, 27% of the crops in Rio Grande do Sul had been harvested.


Soybean futures were active to start the weak.  March beans peaked at 14.23-3/4 and bottomed at 14.06-3/4.  This morning, the contract is down 4 cents to 14.10-1/4.  Nov beans are down 5-1/4 cents to 13.11.  Soybean meal is up slightly, and oil down .56.  Weekend newswires included a Dow Jones story from Farm Progress, a division of Informa indicating a 6% jump in 2022 U.S. planted acreage to 92.38 mil acres due to high input costs.  Corn acres would slide nearly 3 million acres to 90.39 mil.  This would be the first time since 2018 and second time overall that U.S. farmers plant more beans than corn.  If realized, the data points to the largest bean crop on record, surpassing 2017’s record of 90.2 mil acres.  In South America, Argentina’s bean crop is still struggling.  Rains that fell in recent days on the Pampas crop belt “weren’t significant or widespread,” the Rosario Board of Trade said in a report.  Yields will be limited for earlier-planted soy despite the rains, while late-planted beans still have potential to perform decently.  Overnight, Chinese Ag futures had May beans up 58 yuan; Soymeal up 6; Soyoil up 86; Palm oil up 132; Corn down 12.  Malaysian palm oil prices overnight were down 63 ringgit (-1.18%) at 5259.


Wheat futures were higher overnight led by KC contracts.  March KC are up 6-3/4 cents to 8.00 after slipping from last night’s high of 8.08-3/4.  March CBOT wheat is up a nickel to 7.85.  March MPLS wheat is up 2 to 9.38, near the lower end of last night’s 14 cent range between 9.50 on the high side, and 9.36 on the low end.  Prices are currently buoyed above last week’s multi-week lows.  Tensions between Russia, Ukraine and the NATO countries overseeing the turmoil have the wheat market on edge, though.  Crop is dormant in Ukraine and western Russia and in generally poor condition.  Spot basis bids for U.S. hard red winter wheat were unchanged at country grain elevators in the southern U.S. Plains on Friday, while protein premiums in the K.C. milling market rose for most wheat grades, rebounding from steep declines the previous week, dealers said.  Dryness and drought in the southwestern Plains continues to be a concern for dormant winter wheat.  Favorable conditions for winter wheat establishment is seen in southern Europe.  Spain is seeing poorer conditions, however.


Cattle futures are called steady to lower.  Friday’s USDA Cattle on Feed report came in on the heavy side, which could add to selling pressure to start the week.  Total Cattle on Feed as of Jan 1 was at 101% of last year, above the top end of the expected range as the market was looking a steady to a slight decline.  Totaling more than 12 million head, this was the second highest January total on record.  Placements were well above expectations at 106% versus a 101.8% expectation, and well above the trading range.  This was the highest December placement number on record.  Cash trade last week saw light to moderate trade in the North at mostly $137 to $138 live, and $218 dressed. That is mostly $2 softer than the previous week.  Light trade also developed in the South at $136 live, which was $2 lower.  Carcass values were higher last week with the Choice cutout $14.30 higher, while Select increased by $12.12/cwt.  The large increases are largely driven by reduced slaughter due to labor issues surrounding the latest COVID variant.


Hog futures are called mixed to higher.  Hogs finished out a strong week as bull spreading pulled the front of the market higher.  Strong export and retail demand also helped support technical strength into new highs.  The cash hog market values on midday direct trade Friday were .69 lower than Thursday at 60.45, as the cash market failed to participate in the rally.  Pork carcasses traded sharply higher at midday, helping support the jump in futures prices.  The Lean Hog Index traded lower, slipping .06 to 76.79, and still holding a large 9.410 discount to the futures.  The spread could limit the near-term upside in the futures market.  Deferreds pushed through the $100 barrier again and established new contract highs again Friday as the longer term concern of a tight hog supply picture supports the longer-term market.


Matthew Strelow

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