TFM Sunrise Update 02-07-2022


Corn futures were up overnight led by the bean complex.  March corn was up 7 cents to 6.27-1/2 and Dec up 4-1/2 to 5.78-1/4.  Overall strength from crude oil trade and talk of a decline in Omicron cases
are offer support.  Crude is down $2.00/bbl this morning after testing Friday’s new highs overnight.   StoneX dropped their World corn crop estimate 4 mmt due to a 3 mmt drop in Argentina.  Brazil’s corn crop could drop from USDA’s last estimate of 115 mmt to 106.  Their 2nd crop weather could rebound the corn crop to 109-110.  Last week’s higher U.S. ethanol stocks, and China cancelling U.S. corn sales is seen keeping recent highs in place.  However, nearby March corn is deemed undervalued if U.S. demand increases and U.S. 2021/22 carryout drops below 1.20 bil bu.  Trade estimates for U.S. 2021/22 corn carryout tomorrow is 1.512 bil bu vs USDA’s January estimate of 1.540.  So far, it appears funds are adding longs going into tomorrow’s Feb monthly USDA report.  Most doubt USDA will drop South America supplies and raise U.S. demand as much as what some of the private analyst see.


Soybean futures traded higher overnight, making new highs.  March gapped to a new contract high of 15.79-1/4 on gains of 26-1/4 cents.  July beans made it to 15.76; And, Nov hit 14.09-1/2 on gains of 13-3/4 cents.  March meal peaked at 450.70 on gains of $6.80/ton.  Soyoil futures were mostly steady.  Increased volatility highlight’s the start of the week with China back from Holiday and tomorrow’s USDA February crop report.  China may need to increase buying of U.S. soybeans due to lower South America supplies.  StoneX dropped their estimate of South America’s soybean crop 30 mmt.  Parana is down 7 mmt,  Rio Grand do Sul down 10 mmt, MGDS down 2 mmt; Argentina down 6.5 mmt and Paraguay down 4 mmt.  This could increase demand for U.S. soybean and drop US 2021/22
soybean carryout below 300 mil bu.

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Wheat futures were firm overnight going into tomorrow’s Feb crop reports.  USDA could drop U.S. wheat exports and raise U.S. carryout.  Last night, March Chicago and KC futures were up as much as 13-1/2 cents to 7.76-1/2 and 7.79-1/4, respectively before trimming gains.  The positive move puts both contracts back into their near-term and 100-day moving averages.  Next resistance for the KC contract is 7.87 to 7.89.  Weather is still key with some forecasting U.S. south Plains dry weather extending into March.  We’ll get a weekly update after the close today.  Last week, the lowest rated crop was in TX and OK.  SRW Crops in IL and OH were rated below average while MO and IN were average or above.  StoneX raised the 2021 Australian crop almost 2 mmt and Ukraine 2022 crop 1 mmt.  March MPLS wheat was up 9 cents to 9.22-1/2 overnight.


Cattle futures are called steady to higher supported by technical buying and softer production this past week due to the storm’s impacts, but should set up some pent up packer for cash cattle to start the week.  Winter storms throughout the country caused some trade disruption with strong demand before the storm and slower trade after the storm hit.  Last week, there was active fed cattle cash trade in the North at $138 to $141 live, and mostly $220 to $222 dressed.  That is mostly $2 to $4 firmer compared to the previous week.  Light trade also developed in the South at $138 to $140 live, which was $1 to $3 higher than the previous week.  The Choice cutout moved $7.65 lower last week, while Select decreased by $2.63/cwt, narrowing the spread between the two.


Hog futures are called mixed to higher.  April futures pushed back above the $100 level on Friday, as a strong demand tone helped support the market.  Hog slaughter lagged a little, but with the snowstorm affecting production, one can only expect those type of market reactions.  Expectations are for the pace to get back to normal this week.  Carcass values trended mostly higher last week, Closing Friday up .20 to 97.41 on light demand of 200 loads.  Cash hog markets showed a firm base.  Direct cash trade was $2.68 higher on Friday to $64.79, and the Lean hog index gained .04 to 83.33 on Friday.  Technically, hog futures showed some topping action last week, but the Friday strength sets up a key week for price direction.


Matthew Strelow

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