TFM Sunrise Update 03-10-2021


Corn futures were down 9 cents to 5.36-3/4 (May) overnight as prices ease following a somewhat disappointing March USDA report where the agency left its outlook for domestic corn and soybean supplies unchanged at seven-year lows.  While the stocks forecast was slightly bigger than what analysts were expecting, it showed that supplies will remain tight until U.S. farmers begin harvesting crops in the fall when a big-crop will be needed to satisfy robust domestic and export demand.  Nearby March futures contracts in grains and beans expire this Friday.  Dec corn was down 4 to 4.80-3/4, supported by the need for record U.S. 2021 planted acres and prefect spring and summer weather.  The corn market is also maintaining a friendly bias after coming back to close in the upper tier of yesterday’s two-sided trading ranges.  We’ll get Weekly Ethanol Stats today, Exports tomorrow.  Demand is expected to further increase once more Americans are vaccinated and the economy improves.


Soybean futures traded 14 cents lower overnight after USDA left the U.S. 2020/21 soybean ending stocks balance sheet unchanged yesterday.  May beans, at 14.28, as well as the rest of the bean contracts did manage to stay above Tuesday’s session lows overnight.  Nov beans fell to 12.49.  Chinese Ag futures (May) settled down 15 yuan in soybeans, down 38 in Corn, down 57 in Soymeal, down 76 in Soyoil, and down 84 in Palm Oil.  Malaysian palm oil prices were up 60 ringgit at 3,975 (basis May), a 13 year high, over concerns of labor shortages, India imports.  Malaysia’s palm oil inventories fell more than expected in February as production declined to its lowest in five years and imports plunged, industry regulator data showed.  USDA, on Tuesday raised Brazil’s soybean crop 1 mmt to 134.0 and reduced Argentina’s crop from 48.0 to 47.5.  Many expected Argentina’s crop to be lower.  USDA raised U.S. domestic soyoil use 200 mil lbs, but lowered exports 150.  Technically, the uptrend in beans and soyoil remains solidly intact.

In Argentina, dryness is still an issue; though, some erratic shower and thunderstorm activity is still expected to increase later this week and especially in the first half of next week.  Last evening’s GFS model run was notably drier in Argentina Mar. 19 – 21.  In Brazil, conditions in the north will still be wetter than preferred leading to additional fieldwork delays.  Net drying will occur in the south into next Tuesday which will benefit fieldwork progress.  Some timely rain is likely in southern Brazil in week 2 of the outlook.


Wheat futures were lower overnight led by KC contracts.  May KC wheat fell a dime to 6.16-1/2.  May Chicago wheat was down as much as a dime to 6.46-1/2 while settling into a series of inside trading sessions for the week; And, May Mpls spring wheat was down 7 to 6.40-1/2.  USDA left the U.S. 2020/21 wheat balance sheet also unchanged.  The agency did drop white wheat ending stocks 20 mil bu and raised HRW 20 mil bu.  U.S. HRW weekly crop ratings decreased, according to USDA, but the KS crop is coming out of dormancy with some thinking conditions look better than feared.  A significant and important precipitation event is still expected Thursday through Sunday from the HRW wheat region through the Corn Belt and northern Delta.  In other areas impacted by this system, rain and thunderstorm activity will occur with a potential for strong to severe thunderstorms, especially from Oklahoma into the Delta ns southwestern Missouri.  In overnight tender activity, Algeria bought 450,000 to 660,000 tons of optional-origin wheat.  Philippines seek 385,000 tons of optional-origin feed wheat.


Cattle calls are for steady to higher after holding session gains yesterday as prices attempt to build some upward momentum on value and technical buying.  April futures will face continued resistance from supplies of heavy cattle, but a 10 pound drop in carcass weights last week is helping the contract stay supported.  Cash markets are still at a standstill ahead of today’s Fed Cattle Exchange set to start at 10 AM.  Asking prices are $116/cwt vs last week’s $114.  Beef carcasses finished mixed after softening off of midday strength.  Choice carcasses, trading near $230 and 17% over last year and nearly $15 over the 5-year average for this time of year, lost 2.05 to 229.03, and Select gained .67 to 223.08. Movement was very good at 158 loads.  Deferred contracts have pushed to new contract highs or high closes, supported by the prospects of improved demand and projected tighter cattle supplies.


Hog calls are for steady to higher.  Strong retail demand has supported the hog market, and pork carcasses closed 1.91 higher to 96.84 on strong movement of 421 loads.  At these price levels, pork carcasses are way above the 5-year average near $72 for this time of year, thus bolstering the cash market.  The Lean Hog Index is trading at its highest levels since June of 2018 after gaining .75 to 85.32, as the trend stays aggressively higher.  The strength in cash helps support the April contract break out of its most recent consolidation range.  Deferred contracts closed with new contracts highs Tuesday while holding their trend supported by the prospects of long-term demand and tighter hogs supplies.


Matthew Strelow

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