TFM Sunrise Update 03-01-2022


Corn futures traded sharply higher overnight with nearby March reaching a new high at 7.21 on gains of 23-1/2 cents.  May peaked at 7.15 and is poised to make a new high.  Dec corn rose 16 cents to 6.23-1/4.  Ukraine continues to fight off Russian aggression – Foreign aid continues to form after the leader of Ukraine on Sunday, announced the establishment of an international legion for volunteers. In the wake, interest rates climb, as well as corn and wheat prices.  On Monday, Managed funds were net buyers of 32,000 corn, and are now estimate to be long 403,000 corn contracts.  Over last 5 trading days funds bought 87,000 corn contracts but sold 45,000 last Friday.  U.S. stocks are lower, the dollar and crude are higher, as well as gold and silver ahead of Biden’s State of the Union Address.  Overseas, there remains concern about Ukraine’s ability to plant 2022 crops.  Matif corn futures reached all time highs on lack of Black Sea imports.  In the Southern hemisphere, central Brazil remains dry.


The soy complex was strong again overnight, posting gains of more than 40 cents in beans, $5. to $6 per ton in meal and 3.00 in May soy oil.  May beans rose 45-1/4 cents to 16.82.  Nov was up 42-3/4 cents to 14.78-1/2.  May meal  was up 6.60 per ton to 452.90 while staying inside Monday’s trading range.  May oil gained 3.28 to 75.80.  On Monday, Managed funds were net buyers of 21,000 soybeans, 3,000 soymeal. and 13,000 soyoil.  Those funds are now long an estimated 175,000 soybeans, 89,000 soymeal and 90,000 soyoil.  Over last 5 trading days they bought 56,000 soybeans, but sold 43,000 last Thursday and Friday.  The U.S. and its allies moved to block certain Russian banks access to the SWIFT payment system – Russia produces 10% of global oil and supplies 40% of Europe’s gas.    In South America, Brazil’s soybean harvest is near 44% complete versus 25% last year.  Some crop estimates are near 121 mmt vs USDA 134.  The U.S. Argentina Ag attache estimated their soybean crop near 41 mmt vs USDA 45.

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Winter wheat futures were up overnight while exercising expanded limits again.  Volatility continues to tick upwards in the wheat arena as a large Russian military force heads to the Ukrainian capital. There is talk that Russia grain export ports are closed, and Ukrainian grain ports are mined and closed.  May Chicago futures soared 49-1/4 cents to a new high of 9.83-1/4.  May KC wheat reached 10.00-3/4 on gains of 47-3/4.  May MPLS was dragged 21 cents higher to 10.15.  Matif wheat futures are making all time highs on Black Sea export loss.  The total World wheat trade could be down 440 mil
bu from USDA due to lower Russia and EU exports.  Total Black Sea wheat export supplies could be down 15 mmt.  There is talk India could export a record 7 mmt wheat.  Trade estimates for U.S. 2021/22 wheat carryout is 648.  HRW weather in the U.S. south Plains is warm and dry.  The Delta, TN and OH valley is wet.


Cattle futures are called steady to lower.  The market saw selling pressure, as grain market strength pressured the feeder market thus limiting the gains in the live cattle market.  February cattle finished its trading life on Monday at 140.500.  The weak technical picture keeps the selling pressure in the front end of the Live cattle market.  With the close Monday, The March feeder contract posted its lowest close since November.  April live cattle closed under the 100-day moving average, keeping the negative picture intact.   The USDA Cattle on Feed report released last Friday was well within expectations, but the totals of heavier weight cattle are going to limit the near-term market.  Cattle on feed at 120+ days was slightly below last year, but 11.9% above the 5-year average.  This build up was reflective of the slaughter slow down in January, which limited the cash market despite the strong retail values.  Cash trade was typically quiet to start the week with bids and asking prices undefined.  The cash trade trend will be closely watched this week for direction.  The market will stay volatile this week watching headlines and outside markets.  Cattle markets overall are still in an uptrend, the market has experience a pullback, and searching for a near-term low.


Hog futures opening calls are mixed after selling pressure slowed on Monday, even with some additional long liquidation.  April hogs tested and held the 20-day moving average near $103.  This may be a key level of support, which could open a strong downside move is breached.   Pork cutout values were still trending higher Monday, but lost those gains into the close with pork carcasses trading 1.05 lower to 112.27.  The load count was moderate at 274 loads.  Cash was supportive with the National Direct morning trade marking a base price of 88.37, up 1.88 from Friday and the Cash Lean Hog Index was .36 higher to 98.40.  Technically, the hog market may be looking for some support in the near-term.   Fundamentals remain supportive on a tighter hog supply overall, underpinned by strong retail and improving cash values.  The market is still in a strong uptrend, but watching the depth of this correction.


Matthew Strelow

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