TFM Sunrise Update 03-07-2022


Corn futures were up overnight in keeping with the strong, sharply higher trend.  May corn rallied to within 2-1/2 cents of Friday’s new contract high of 7.82-3/4, and is up 18 cents to 7.72-1/4 this morning.  December corn made a new high of 6.50 on gains of 20-1/2 cents.  In outside markets, the dollar and crude continued to shoot up overnight with the greenback posting a new high, and crude topping $130 barrel.  Stock index futures continued to soften, losing more than 500 points.  The Russian war against Ukraine continues to jolt grain prices higher.  For corn, not only can South America corn exports be down, but Black Sea corn exports could also shrink 15 mil metric tons.  Some analyst estimate U.S. corn 2021/22 carryout near 1.20 bil bu versus USDA’s 1.540.  Weather in the U.S. Delta and Ohio Valley will see above normal rains that could slow plantings.  Weekly Export Inspections will be out later this morning.  On Wednesday, we’ll get the Monthly USDA Supply/Demand report.  Last Friday, Managed funds were net long an estimated 391,000 corn corn contracts.  Spot basis bids for row crops fell sharply at processors, elevators and river terminals around the U.S. Midwest on Friday, grain dealers said.  Soaring futures prices have caused dealers to cut their basis levels to blunt the subsequent increase in cash prices.  Bids notched the biggest decreases at river terminals, as soaring shipping costs have eaten into profit margins for dealers who load barges with grain.


The soy complex traded higher overnight.  May beans were up as much as 36-1/4 cents to 16.96-3/4 cents to test last week’s highs.  November beans rose 22 cents to 14.72-1/4.  May meal was up 9..20 per ton to 469.60; And, May meal was up 1.76 to 74.56.  On Friday, Managed funds were net buyers of 5,000 soymeal and sold 5,000 soybeans and 5,000 soyoil.  Coming into last night’s trade, they were estimated to be long 206,000 soybeans, 100,000 soymeal and 88,000 soyoil.  The significant increase in the demand for soy oil worldwide boosted the prices for this by-product to record levels in Brazil and in the United States.  Lower exports of sunflower oil from Ukraine (because of the war) and the lack of palm oil in Indonesia increased the demand for soy oil. Besides, oil valuations raise the interest in biodiesel, for which soy oil is the major raw material.  Chinese Ag futures overnight showed May beans down 24 yuan; Soymeal up 107; Soyoil down 58; Palm oil down 134; Corn up 16;  Malaysian palm oil prices overnight were up 350 ringgit (+5.58%) at 6626.

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Winter wheat futures jumped up to the .85 daily trading limit last night, propelling prices to another round of new highs.  May Chicago and KC contracts gapped higher and quickly locked in new highs at 12.94 and 12.99-1/2, respectively.  May MPLS wheat is the .60 limit higher at 12.07.  The Russian war against Ukraine is adding risk premium to commodities, and the conflict is stressing an already strained global supply chain.  Spot basis bids for hard red winter wheat eroded at grain market terminals across the southern U.S. Plains as dealers tried to counteract a futures market rally that pulled cash prices sharply higher.  Some dealers rolled their basis bids to deferred K.C. hard red winter wheat futures contracts that were trading at sharp discounts to the most-active May contract.  Some dealers were not posting any bids for hard red winter wheat due to the high prices.


Cattle futures are called steady to lower triggered by strong grain prices, and a softer cash market tone.  Cattle futures saw strong selling pressure, crossing below technical support to end last week.  Apr cattle futures traded lower for the 8th consecutive session.  Prices gapped lower on the open and traded through support, bringing a round of long liquidation and technical selling on Friday.  Prices did rejected the session low of 133.500, but technical damage was done to the charts.   There was moderate to active fed cattle cash trade in the North at mainly $140 to $143 live, and $222 to $226 dressed.  That is mostly steady to $3 softer compared to the previous.  Light trade developed in the South at $140 live, which was to $2 softer than the previous week.  The Choice cutout moved $4.89 lower last week, while Select decreased by $6.76/cwt.  Supply is getting more manageable and with spring approaching, prices are expected to begin to move higher soon.  Feeders traded in a wide trading range, and finished mid-range Friday, rejecting session lows.  Last night’s price strength in grains will have a large impact on feeder cattle price direction this week.  The near-term trend is still lower in cattle markets, but markets overall are still in an uptrend, but now challenging that trend while trying to find a near-term low.  The cattle market is moving in value territory, and could find some buying support.


Hogs are called lower.  The April chart was building a “bear flag” pattern with a series of higher highs over the past few sessions,  and that broke to the downside on Friday sending the front end lean hog contracts limit lower on the session.  Hog futures will have expanded limits of $7.000 today.  With expanded limits, the next technical downside target will be the $98.000 level down to the $96.000 and the 50-day moving average.  Pork carcasses lost 2.42 to 103.99 last week.  The load count was moderate at 257 loads.  Cash was supportive with the National Direct morning trade, marking a base price of 94.66, up .18 from Thursday, and the Cash Lean Hog Index was 0.14 lower to 99.70, but was 1.66 higher on the week.  The Apr futures lost the majority of premium to the cash market with the price move today, currently is still holding a .750  premium to the index, which could limit selling pressure.   The fundamentals stay supportive overall, but the technical selling will likely drive the market.


Matthew Strelow

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