TFM Sunrise Update 02-24-2021


Corn futures were narrowly mixed overnight with a firm tone.  May corn was up a penny to 5.53-1/2 while staying a step ahead of 10 and 20-day moving average support near 5.47-1/2.  December corn traded to a new high of 4.74-1/4 yesterday and was up 2 to 4.71-3/4 last night.  Talk that Brazil’s corn crop being 15% planted compared to lay year’s 50% rate combined with the fact that Matif corn futures have been making new highs for more than a week offers support to the renewed uptrend in the market.  Look for support to remain in place as the trade prepares for the USDA March 9 Supply and Demand report.   The upcoming U.S. planting season has shaped up to be among the most highly anticipated ones in history due to unusually tight stockpiles and elevated prices.  The thought of U.S. farmers planting a projected 92 million corn acres and a producing a near record yield to get a U.S. 2021/22 carryout near USDA’s projected 1.552 bil bu should support prices.  Weather-wise, scientists with and the USDA Midwest Climate Hub have drought in focus for much of the central region of the U.S. through the spring season.  The NOAA Climate Prediction Center seasonal drought outlook, which runs through the end of May, calls for drought to remain in western Iowa, and to either remain or develop over all but the southeastern portion of the Plains.  For now, there is little-to-no heavy snow cover in some of the northern tier states.  Weekly Ethanol Stats will be out today followed by exports tomorrow.


Soybean futures consolidated in the upper half of Tuesday’s higher ranges overnight.  May beans are up 9 to 14.17-1/2 as a fresh wave of technical buying above $14 supports the market.  Growing talk of inflation is also noted.  Nov is up 4 to 12.26 with the trade looking ahead to the next monthly USDA report on March 9 followed by the March 31 Planted Acreage report.  More probing to the upside is likely now that U.S. ending stocks projections are slim and at historical lows.  In addition, bean oil is a driving force behind the complex amid surging Chinese vegoil and Malaysian palmoil markets.  Farther south, Brazil’s soybean crop, though forecast to be a record, is facing quality issues.  Locally, their 2020/2021 soybean crop forecast was raised to 134 mln tons from 132.4 mln.  Last evening’s GFS model run removed a notable amount of rain that was shown in the midday GFS model for Argentina March 5  to 10, particularly in central and southeastern areas, so net drying will continue across much of nation through next Tuesday.


Wheat futures were unchanged overnight with May Chicago trading a range between 6.75-1/2 and 6.68-3/4, and May KC a 5-1/2 cent range from 6.50-3/4 and 6.45-1/4.  Weekly USDA winter wheat crop ratings did not drop as much as feared on Monday, and there is also forecast that over the next week U.S. south Plains could see close to normal rains.  This could help the crop that was stressed by last weeks record cold temps.  Concern about EU and Russia wheat supply and a weaker dollar offers support.  May Spring wheat futures in MPLS saw a narrow 4 cent range between 6.49-3/4 and 6.45-3/4 overnight.  In tender activity, Philippines seek 145,000 tons of optional-origin wheat.


Cattle calls are for steady to lower trade following a round of technical selling and long liquidation on Tuesday after the April contract broke support.  Traders are likely to test the 50-moving average near $120, which was support on the previous pull back.   Cold Storage data showed total red meat supplies in freezers were up 3% from the previous month, but down 12% from last year.  Total pounds of beef in freezers were down 3% from the previous month but up 6 percent from last year.  This should not be market-moving numbers today.   Large cattle numbers are weighing on the front end of the market, and have pressured cash prices.  This week’s cash market still developing, but early indications are steady with last week at $114.  The Fed Cattle exchange today should bring clarity.  Strong packer margins due to retail prices could support the cash market, but packers have plenty of supply to choose from overall.  Carcass values stayed strong finishing up .31 to 240.29 and Select carcasses were up .55 to 230.53 on moderate to good product movement.  With pullback, cattle market may start looking like a value given the strength in retail prices and overall product demand.


Lean hog calls are steady to higher.  USDA’s cold storage report highlight the product movement despite the strong slaughter numbers as frozen pork supplies were up 11% from last month, but still down 26% from last year, pork belly supplies down 56% from last year.  A strong retail market and demand tone support the hog market throughout.  Cash markets stay strong, with the lean hog index gaining an additional .31 to 77.44, but is trading at an 8.6850 discount to April, which could limit upside.  April looks to test the most recent contract high, and could hold there, given its premium to the Cash Index.  Retail carcasses finished .64 higher to 92.75, holding strength above the $90 level on good product movement.  Hog charts are technically strong, especially the deferred contracts.


Matthew Strelow

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