TFM Sunrise Update 02-24-2022


Corn futures traded limit-up overnight in an abrupt follow-through reaction to the long-feared attack on Ukraine by Russian forces.  Russian President Vladimir Putin, in an early Thursday morning address in Moscow, announced that Russia would launch a military action in Ukraine.  Soon thereafter, NBC News reported that explosions were heard in Kyiv, the Ukrainian capital.  Some reports indicate missiles being fired at airports and military infrastructure in at least 25 cities.  The United Nations Security Council had just convened an emergency meeting Wednesday night.  Corn contracts took little time to rally the 35 cent daily trading limit imposed by the CME.  The move sent May corn to a new peak at 7.16-1/4, and Dec to 6.46-1/4.  March, May, July and Sept contracts are locked higher with large unfilled buy pools forming as of this morning.  Dec corn is still trading, and was last quoted at 6.45.  Outside markets show the dollar up sharply – 88 basis points, crude trading wildly up to $100 per barrel on gains of more than $7.50 per barrel and stock index futures plunging 800 points.


The soy complex was sharply higher overnight in response to the Russian invasion news.  May beans rose to a new high of 17.59-1/4 on gains of 88-1/4 before slipping 15 cents off that high.  Nov beans are up 52 cents this morning to 15.39-1/2 versus last night’s new high of 15.55.  The daily trading limit for soybeans is .90.  May meal hit 487 per ton on gains of 18.80 per contract.  May soyoil is  up 4.00 per contract to 74.58.  The daily trade limit for soymeal is $25 per contract; Soybean oil is .40.  Right now, little else matters to grain and oilseed money managers and traders until more is known overseas.  However, the launch of the invasion by Putin and Russia is certain, putting market participants in ‘buy’ mode.  Chinese Ag futures overnight show May Soybeans down 1 yuan; Soymeal up 122; Soyoil up 352; Palm oil up 404; Corn up 39.  Malaysian palm oil prices overnight were up 471 ringgit (+7.87%) at 6453.

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Winter wheat futures are limit-up across the board this morning on what Russian President Vladimir Putin authorized “a special military operation” against Ukraine to eliminate what he called a serious threat, saying his aim was to demilitarize Russia’s southern neighbor.  50 cent gains are locked in place at in Chicago and KC putting May futures at 9.34-3/4 and 9.68, respectively.  The breakout adds to yesterday’s new highs.  Nearby March MPLS wheat stopped trading at 11.00 per bushel, up 99 cents.  The May contract is up 60 cents to a new high of 10.62-3/4.  MPLS spring wheat contracts have a .60 cent daily trade limit, which contracts hit overnight, but with little, to no buy orders building up as is the case in winter wheat futures, where 50 cent daily trading limits are in place.   Russia has suspended movement of commercial vessels in the Azov sea until further notice, but kept its ports in the Black Sea open for navigation, its officials and five grain industry sources said on Thursday.  The Chinese customs said in a notice dated Wednesday that it will allow wheat imports from all of Russia.


Cattle futures are called steady to lower on follow-through from Wednesday’s selling pressure.  The April contract fell through the 20-day moving average and closed at its lowest level for the month of February.  Prices look to be completing the head and shoulders pattern, and further downside move could have the market testing 142.500 and trend line support.  February expires on 2/28 and expiration of the contract may be adding some market instability.  On Friday, the USDA will release the next cattle on Feed Report, and the market is positioning for those numbers.  Expectations are for; Total Cattle on feed to be at 100.8% of last year, Marketings at 97.3% of last year, and Placements at 99.2% of last year.  Cash trade was still undeveloped with scattered bids posted at $144, firmer than last week.  Asking prices were firmer at $144-145 in the countryside, and cash trade will likely build into the end of the week.  Retail values have been trending lower and could be getting close to a seasonal low.  At the close, boxed beef prices were mixed, (Choice: -.76 to 260.88, Select: -4.68 to 258.96) with demand was improved at 196 loads.  Feeder cattle finished lower, limiting gains in the live market, as a strong surge higher in gain markets weigh on sentiment. The Feeder cash index traded .13 higher at 162.26.  Cattle markets overall are still in an uptrend, but momentum has slowed.  Prices may be reaching winter highs, and a potential pull back may be in front of the market as charts have turned more negative.


Hog futures are called steady to lower. higher.  Hog futures closed sharply lower on Wednesday as technical selling overtook the market sending contracts to triple digit losses.  The hog market was technically over-bought, and the poor price action on Wednesday saw charts post bearish key reversals, which could lead to additional long liquidation this morning.  The first level of support under the April contract could be the 10-day moving average at $106.000.  Pork cutout values are still trending higher, gaining $5.45 at midday, and held some of those gains, finishing .36 higher to 109.12.  The load count was moderate at 248 loads.  The Cash Lean Hog index gained 2.93 to 98.16.  Even with yesterday’s price action, the April futures is still holding a 9.865 premium to the index, setting up some profit taking as the market nears the end of the month.  Technically, the hog market is looking to change direction, or at least see some needed profit taking.  The depth of the correction and follow through going into the end of the week will be key.  The fundamentals stay supportive, on a tighter hog supply overall.


Matthew Strelow

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