TFM Sunrise Update 03-18-2022


Corn futures are narrowly mixed this morning as overnight trade volume weakens.  May corn is down 2 cents to 7.52-1/2 while trending sideways below contract high resistance.  For the week, the contract is down a dime.  Dec corn is fractionally higher to 6.45-1/4, and down 7 cents on the week.  However, lower South American corn production and the threat to Ukraine’s supply keeps the narrative alive surrounding additional U.S. corn export demand.  Weekly corn export sales were 1.8 mmt and higher than expected.  On Thursday, Managed funds were net buyers of 13,000 corn with their long position estimated at a market-friendly 354,000 contracts less than two-weeks from the March 31 Perspective Plantings report.  Outside markets are higher for the dollar by 35 basis points, Crude is up 1.15; And, the stock index futures are down 189 points.


Soybean futures were up overnight with nearby May up 12 cents to 11.80-1/2.  For the week, the contract is up 4 cents.  November beans are up 2 cents this morning to 14.71-1/4, and down 20 cents for the week.  May meal is up $4.90 to an overnight high of 479 and up from last Friday’s settlement off 477.10.  May Soy oil is down 1.23 to 73.40, shedding 2.63 this week.  The complex held up this week supported by strong U.S. basis and record pace of U.S. soybean crush, as well as a lower South America soybean supply that could add to U.S. soymeal demand.  Brazil soybean export basis remains at historically high levels.  U.S. 2021/22 soybean exports could be 80 mil bu higher than USDA’s forecast, suggesting a carryout of 205 mil bu vs USDA’s 285.  As of March 10, total 2021/22 bean export sales are at 56.3 mmt, or 1.97 million bushels.  On the weekly sales charts, the surge higher is very noticeable after January, the time window the global soybean market began to realize the smaller South American soybean crop.  Talk of lower sun oil supply and higher biofuel demand underpins soy oil.  Chinese Ag futures, overnight were: May beans down 5 yuan; Soymeal up 35; Soyoil up 98; Palm oil down 70; Corn up 22.  Malaysian palm oil prices overnight were down 304 ringgit (-5.12%) at 5632.

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Wheat futures calmed down overnight, trading two-sided at all three exchanges.  May Chicago futures lost 11-1/2 cents to 10.86-1/2 while trading squarely inside yesterday’s 90-1/4 cent trading range.  For the week, the contract is down 20-1/4 cents.  Support is near 10.50 as hope of a Russian/Ukrainian ceasefire offers strong overhead resistance near 11.00.  May KC wheat is down 8 cents this morning to 10.84-1/2, losing a nickel on the week.  Rains pushing through U.S. HRW crop country are also weighing on price.  May MPLS futures are off a nickel this morning to 10.74 while managing 4 cent gain on the week.  On Thursday, Managed funds were net buyers of 10,000 Chicago wheat keeping their position on the short side for the week at an estimated 6,000 contracts.


Cattle futures are called mixed as the market seeks some overall direction.  April cattle held support and buying strength on the 10-day moving average, and saw favorable price action into the close.  Currently, April cattle are 2.175 higher for the week, so today’s close could be very key.  Cash was disappointing this week, but retail demand is trending higher.  Cash trade began developing on Thursday, with trade at $138 in the south.   Trade will likely wrap up for the week with some clean up trade for Friday.  The retail market may be starting to show a boost in spring demand for beef retail values.  The retail market was mixed at the close on Thursday, (Choice: -1.03 to 257.05, Select: +.41 to 250.68) with demand light at 148 loads.  USDA released  weekly export sales on Thursday morning, and new sales were 19,700Mtm down 28% from last week.  China, Japan, and South Korea were the top buyers of U.S. beef last week.  Feeder cattle futures took triple digit losses yesterday, pressured by a strong recovery in the grain markets.  The feeder cattle cash index was 1.09 higher to 154.23.  The $2.32 premium of the futures market to the cash index has been weighing on Feeders.


Hogs are called steady to lower on follow-through from strong losses as the disappointing price action on Wednesday led to technical selling on Thursday.  The April hog futures failed to break out to the upside on Wednesday, setting the table for technical selling on Thursday.  Price broke through the 10 and 40-day moving averages, with a test of the 50-day at 98.800 likely.   Summer months look to be forming a “double top” as prices failed to hold new contract highs yesterday.   Cash has been supportive, the National Direct morning direct trade was .17 higher to 102.44, and the 5-day moving average has climbed to 101.18.  The lean hog cash index was .08 lower to 100.41, and April futures have pulled in line with the index.  Pork cutouts have been trending higher this week, but were lower at midday, pressuring the futures market.  Cutouts were 1.84 lower at midday, but recovered to close up .18 to 105.20, keeping the trend higher on the week with a moderate 293 load count.  USDA weekly export sales posted a strong 38,300 MT of new sales on the books for last week.  This was up 51% week over week.  Mexico, Japan and Australia were the top buyers of U.S. pork last week.


Matthew Strelow

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