TFM Sunrise Update 02-04-2022


Corn futures were up overnight with March gaining 4 cents to 6.20-3/4 and Dec up 3 to 5.71-1/4.  Soaring crude oil futures, up again to a new this morning is helping give a friendly edge to corn as far as outside-market support.  The dollar is sharply lower on the week, too.  For the week, Nearby March corn is down 16 cents and 22 cents below Monday’s contract high trade of 6.42-1/2.  Dec corn is up 2 cents for the week and down 9 cents from Wednesday’s intra-day contract high of 5.80-1/4.  Rain is expected in Paraguay and Northeastern Argentina over the weekend and then possible rains over much of Argentina later next week.  Looking ahead to the February monthly USDA Supply/Demand report next Tuesday, trade estimates for U.S. 2021/22 corn carryout is 1.512 bil bu vs USDA’s January estimate of 1.540.  It could drop as low as 1.200.


Soybean futures traded higher overnight, though looking top-heavy after a big run-up to new contract highs.  March beans are up 7-1/4 cents this morning to 15.51-1/2 versus Wednesday’s contract high of 15.64.  For the week, the contract is up nearly 1.00 per bushel.  In the month of January, the contract rallied $1.50 per bushel. Nov beans advanced a nickel overnight to 13.97-3/4 and have rallied 46 cents this week.  Both contracts are running into contract high resistance ahead of the weekend.  Wild price swings aren’t uncommon for oilseed market, although this time it’s a virtual straight shot upward, so far in the early months of 2022, driven, in part, by bets on weather that impacts demand.  Meal prices are firm and have backed off new contract highs the past couple of sessions to trade an ‘inside day’ on the charts. As we move closer to next Tuesday’s USDA report, trade estimates for U.S. 2021/22 soybean carryout are near 310 mil bu vs 350 in January.  Malaysian palm oil prices overnight were up 104 ringgit (+1.89%) at 5617.  Bean oil futures are up .68 this morning.


Wheat futures were firm overnight in tandem with the corn market.  March CBOT wheat is up 3 to 7.54-3/4.  For the week, the contract is down 31 cents while settling in above 200-day moving average support drawn at 7.43-1/2.  Funds have been actively shorting the nearbys due to a slower U.S. export pace and a hedge against long corn and soybean positions.  March KC wheat has been volatile and is up 6 this morning to 7.75 and down 27 cents on the week.  The contract rallied from the Jan 14 low of 7.43 to the Jan 25 high of 8.49 only to drop to yesterday’s low at 7.53. Talk of a drier than normal U.S. south Plains for the rest of February and March could stress the U.S. 2022 HRW crop.  In addition, a drop in EU and Russia wheat exports from USDA’s estimate and an eventual increase in tension
between Russia and Ukraine and Russia and NATO could still rally prices.  Trade estimates U.S. 2021/22 wheat carryout at 629 mil bu vs USDA’s January number of 628.  The trade also estimates World 2021/22 wheat ending stocks at 279.9 mmt vs USDA the Jan estimate of 279.9.  March MPLS is up 6 cents to 9.06-3/4 this morning while struggling to stay above $9.00 and the contract’s upward trending 200-day moving average at 8.96-1/2.  For the week, the contract is down 13 cents.


Cattle futures are called mixed as prices reach over-bought territory in search of a near-term top.  Cattle futures finished mixed on Thursday, as prices consolidate near the top of the trading range.  A softening in retail values may be enough to slow the upward momentum.  Most live cattle futures pushed to new contract highs again on Thursday before sliding off of those levels.  Cash trade for the week is trending $3-4 higher, as $140 seems to be the bid.  This is keeping the support in the front end of the live cattle market.  The cash feeder index was slightly higher, gaining .16 to 158.93, which could limit the front-end March contract.   Carcasses have been trending lower on the week, which is weighing on the deferred live contracts, possibly limiting gains.  Boxed beef values were lower at the close (Choice: -1.69 and Select: -3.10).  The load count was light at 134 loads.  Weekly export sales saw new sales of 20,100 MT, with Japan, South Korea, and Taiwan as the top buyers of U.S. beef last week.  Despite weakness in grain markets, the slowing of momentum in the live cattle market weighed on feeders, finishing with slight losses.


Hog futures are called mixed to lower.  Hog futures dropped off session and new contract highs yesterday as the market lost its upward momentum, reflecting an over-bought market.  For the second straight day, April hogs tried to push through the $100.00 barrier, only to drop off that high.   The weak price action posted a technical hook reversal lower, showing the loss of upward momentum.  This maybe due to profit taking after a strong week.  Follow through going into the end on the week may be key to determine direction.  The cash market has a more friendly tone with the Index trending higher, gaining .15 to 83.29.  The index is still trading at a 3.160 discount to the Feb futures, and with expiration just around the corner, keeps the rally potential limited.   Retail values were softer, which weighed on prices, but firmer into the close. Pork retail values were .77 higher to 97.21 on a load count of 332 loads.   Weekly export sales were 30,400 MT of new sales with Mexico, Japan, and Canada as the top buyers of U.S. pork.


Matthew Strelow

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