TFM Sunrise Update 02-11-2022


Corn futures rebounded overnight from a reversal off of new highs in yesterday’s trade where prices took on a defensive posture into the close.  May corn is up a nickel this morning to 6.45-1/2 and up 23 cents for the week with the March/May futures spread seeing heavy volume.  December corn is up 3-1/4 cents to 5.88 and up 15 cents this week.  USDA failed to make many changes to their January on Wednesday, but the market continued to extend gains on Thursday before topping out for the moment.  End users and World buyers continue to be large shorts while the U.S. farmer and hedge funds hold long positions.  A new reduced corn forecast of 51 million metric tons in Argentina will be achieved only if it rains sufficiently in February, the Buenos Aires Grain Exchange says in a weekly report.  Spot basis bids for corn weakened at interior elevators and processors around the U.S. Midwest on Thursday, according to grain dealers.


Soybean futures saw a tech bounce overnight to the tune of 11 cents in the May bean contract to 15.87-1/2.  Nov was up 9 cents to 14.41.  May meal gained 4.20 per ton to 456.0; and May soyoil is up .43 to 64.93.  Fund buying and short covering rallied May beans to a new contract high of 16.34-1/2 yesterday only to fade at the close to 15.76-1/2.  Managed funds sold and estimated 11,000 soybeans, 5,000 soymeal and bought 2,000 soyoil.  For the week, the May bean contract is up 30 cents.  Nov is up 45 cents.  Price volatility highlights the end of the week after USDA, on Wednesday lowered U.S. 2021/22 soybean carryout to 325 mil bu due to a 25 mil bu increase in crush.  They left exports at 2.05 bil vs 2.261 last year begging the question why U.S. exports were not increased amid a lower South American production estimate?  Argentina weather looks warm and dry which suggest their crop could be lower than 45 mmt.  Chinese May bean futures overnight were up 12 yuan; Soymeal up 8; Soyoil down 52; Palm oil down 64; Corn down 7.  Malaysian palm oil prices were up 38 ringgit (+0.69%) at 5573.

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Wheat futures were mixed overnight with May Chicago wheat up 7 cents to 7.86 and up 16 cents on the week.  May KC wheat traded mostly lower, but is up 1-1/2 cents this morning to 8.05-1/4 and up 16 cents for this week.  May MPLS wheat is up 4 cents to 9.42-1/4 and up 32 cents this week following Tuesdays lower Canada estimate of Dec 31 wheat stocks.  Wheat tended to be a follower to corn and soybeans this week.  Lower Argentina and Canada stocks were partially offset by higher China and Ukraine estimates.  USDA raised World wheat demand 2.5 mmt and increased World wheat exports to 206.7 mmt from 204.4.  Imports were raised to N Africa, Middle East and SE Asia.  A strong push higher in the dollar overnight may create headwinds for wheat today.


Cattle futures are called mixed.  April live cattle peaked at 148.70 yesterday, capping a strong week of trading and highlighting a rally off the intra-day low of 139.02 from January 24. The inflationary move coupled with fewer Covid cases and easing concerns in Ukraine has the market still searching for a top and dragging cash with it.  Live prices in the north were $141 to $143/cwt.  Feb cattle, at 142.35, will align with cash prices while approaching expiration later this month.  Feeder supplies are rather tight. Technically, the cattle complex remains in rally mode, but is overbought which should lead to some backtracking as indicated with yesterday’s pullback.


Hog futures are called mixed after yesterday’s wide trading ranges ended with triple digit losses in the April and May contracts to 103.42 and 107.70, respectively.  For the week, April hogs gained 3.40, not including Thursday’s new contract high of 107.70.  The bearish key reversal may signal a near-term top for the rally.  Cash has been volatile with Wednesday’s impressive gain of 7.99 on the National Direct Afternoon report noted.  Overseas, China’s sow herd fell 2.9% by the end of the fourth quarter of last year from the previous quarter, the agriculture ministry said overnight.  The size of the herd, at 43.29 million head, was 4% greater than the previous year.  China’s pig herd at the end of December was up 10.5% from the previous year, at 449.22 million head. The numbers were also up 2.6% on the quarter, the figures showed.


Matthew Strelow

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