TFM Sunrise Update 02-18-2021


Corn futures were down 3 cents overnight in quiet action ahead of USDA Outlook Forum results.  The group is expected to show raise U.S. 2021/22 corn and soybean carryout due to higher acres and yield which would be viewed as negative for the market.  Corn acreage has been polled at 92.9 mil acres.  Producers will report planting intentions to the USDA at the beginning of March, and those numbers will be published at the end of next month and factored in to balance sheets until the next acreage survey results are revealed at the end of June.  May corn traded both sides of 3.50 last night and is below that level at 3.47-1/4 this morning as prices consolidate around the 10-day moving average which is drawn laterally across the last 7 days’ trade.  Dec corn is trading at 4.57-1/2, within last night’s 2-1/4 cent range.  Weekly Ethanol Stats will be out today followed by USDA export sales tomorrow due to the Government holiday on Monday of this week.  Open interest in corn has dropped this week, suggesting weak longs may be liquidating positions.  Tomorrow marks the expiration of March options.  First Notice Day for March futures in grains is next Friday, so rolling to the May contract is expected to continue today.


Soybean futures traded lower overnight, down 6 cents in front month March beans to 13.77-3/4.  Nov beans shed 4 cents to 11.85.  Market pressure is coming from position-squaring tied to talk that Argentina could see needed rains In the 11 to 15 day period.  Their 6 to 10 day forecast is dry.  All in all, South American production estimates are coming in strong, thus offering resistance to the rally in the bean complex mid-month.  The key again turns to China demand.  The two-day USDA Outlook Forum has the trade looking for 89.4 soybean acres and a 2021 U.S. soybean crop of 4.506 bil bu. Trade estimates U.S. 2021/22 soybean carryout at 179 vs 120 this year.


Wheat futures were mostly unchanged overnight and are trading as if the recent record cold weather did little to harm the U.S 2021 winter wheat crop.  Looking ahead, more normal U.S. temperatures are forecast for the south Plains next week.  Weekly U.S. wheat export sales report will be delayed until tomorrow.  Tender Activity overnight had Japan buying 82,393 tons of U.S. wheat, Jordan bought 60,000 tons of optional-origin wheat, Philippines passed on 145,000 tons of optional wheat; And, S. Korea bought 55,000 tons of optional-origin feed wheat. This week’s annual USDA Outlook Forum is expected to show 45.3 mil all wheat acres, a 2021 U.S. wheat crop near 1.874 bil bu and 2021/22 U.S. wheat carryout near 769 mil bu vs 836 this year.  This could offer support to post harvest wheat futures.  Uncertainty over Russia’s wheat export policy could also offer key support to wheat futures.


Cattle futures are called steady to lower with the market seemingly having priced-in the impacts of harsh winter weather affecting cattle movement and packing plants in the south. The loss of shifts and some shutdowns in general are viewed as negative for cash this week.  Estimated slaughter was at 99,000 head yesterday, and Tuesday was revised lower to 91,000 head, versus total of 116,000 to 120,000 last week.  With slow down, packers are soft on bids for cattle, as early cash trade has been steady at $114 at best.  The back up in cattle has weighed on front month feeders on demand concerns in the feedlots. Technically, charts are breaking to support levels, and today will be a key test of the uptrend.  Retail values stayed supportive with Choice carcasses closing 2.74 higher to 237.51 and Select 3.61 higher to 225.64 on moderate demand.  USDA will post their Cattle on Feed report tomorrow after the close.


Lean hog futures are called steady to lower.  Hog slaughter has rebounded from difficult weather restricting activity, back to an estimated 492,000 head slaughtered yesterday.  The April contract was extremely over-bought and due for a correction, so we saw momentum slowing on Tuesday and follow through selling yesterday.  The Lean Hog index is trading at its highest levels since October, gaining .97 to 75.51, but still 9.39 discount to April, which underpins the front month futures contract.   Pork carcasses lost midday strength on Wednesday, finishing .54 lower to 9.17 on 277 loads.  The softness on the close will weigh on market at the open.  Deferred contracts finished mixed on Wednesday, as the longer-term picture stay supportive given demand optimism, and tighter overall potential hog supplies.


Matthew Strelow

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates