TFM Sunrise Update 03-21-2022


Corn futures were up last night with May corn up 11 cents to 7.52-3/4 and Dec up 12 to 6.57-1/2.  Rebounding crude oil markets (up 3.70 overnight) are supportive.  The upcoming USDA March 31 acreage reports, followed by weather should be key to spring prices.  Most trade guesses are near 91.9 mil acres versus 93.4 last year.  For now, increased U.S. export demand due to lack of Ukraine exports and a production drop in South America is buoying price.  Weekly Export Inspections will be out later this morning.  Heading into last night’s trade, Managed Money was estimated long 381,000 corn contracts.  Spot basis bids for corn were steady to firm at processors and elevators around the interior of the U.S. Midwest on Friday, grain dealers said.


The soy complex was up overnight with nearby May beans up 18 cents to 16.86.  The nearby soybean futures contracts have been range bound between 16.50 and 17.25.  Last year’s prices at
this time was near 13.96.  November beans gained 15 cents overnight to 14.81-3/4.  May meal futures were up 3.50 to 480.50; And, May soy oil rose 1.67 to 73.96.  The U.S. soybean crush rate is record high with recent board margins testing 2.23.  Looking ahead to the March 31 Acreage report, trade guesses for U.S. 2022 soybean acres is 87.8 vs 87.2 last year.  In South America, in need of revenue, Argentina increased their soymeal and soyoil export tax 2% to 33%.  On Friday, Managed funds were net sellers 5,000 soybeans and 5,000 soyoil and bought 2,000 soymeal.  Heading into last night’s session, Managed Money funds were estimated to be long 180,000 soybeans, 110,000 soymeal and 98,000 soyoil.  Overnight, Chinese May bean futures were down 33 yuan; Soymeal up 40; Soyoil down 162; Palm oil down 354; Corn up 3;  Malaysian palm oil prices overnight were up 131 ringgit (+2.33%) at 5760.

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Wheat futures traded higher overnight, underpinned by ongoing concerns in Ukraine, and only light weekend rains in the south U.S. Plains.  Rainfall over the next 10 days will be watched with some
weather watchers calling for a ridge of high pressure to build across the south plains starting in mid April.  May Chicago wheat rallied to 10.83-1/2 last night on gains of 19-3/4 cents. 10.50 is key support with resistance near 11.50.   May KC peaked at 10.91-1/4, up 20-3/4 cents.  May MPLS was dragged higher to 10.69-3/4 on gains of 9-1/2 cents.  Weekend news wires messaged: Canadian Pacific Railway (CP) halted operations and locked out workers over a labor dispute early on Sunday, with each side blaming the other for a halt that will likely disrupt shipment of key commodities at a time of soaring prices.  Canada, the largest country by area after Russia, depends heavily on rail to move commodities and manufactured goods to port.  Other newswires read: “If the (Russian/Ukrainian) war does not end before the end of March, there will be no more exports from Ukraine after the summer of this year.”


Cattle are called steady to higher supported by strong retail values and steady cash trade at the end of last week.  April cattle pushed back above the 20-day moving average on the close, showing an improvement in the technical picture.   More fundamental strength may be needed to extend the next leg and challenge the highs.  Southern live cash trade was mostly $138, steady with the previous week, but Northern dressed trade was pegged at $221-222, trending $1-2 higher than the previous week.  The market will be optimistic for a stronger cash tone.  On Friday, boxed beef was mixed at the close (Choice: +1.11 to 258.16, Select: -.03 to 250.65) with demand light at 95 loads.  Choice carcasses were just over $3.00 higher on the week, and the firm close should help support the idea of firmer cash markets this week and help support the open this morning.  Feeder cattle futures saw mostly triple digit gains are prices rebounded on Friday, but the firm tone of grain trade last night could spill into the Feeder market.  The cash market will still be the key as cattle markets are trying to build a path higher.  Gains may be limited with overall demand concerns and available consumer dollars.


Hogs are called steady to lower as long liquidation still pressures the market, despite a firm fundamental tone overall.  The April has challenged the next level of support at the 50-day moving average, near $99.000.  The is a retest of the low from March 7, and a key level of support.  Failure here opens the door for a more technically driven move to additional downside, with a possible test to the 92.000 level.  That weakness would likely spill into the summer month contracts, so the price action today will likely be key.  Cash has been supportive, but traded lower on Friday.  The National Direct morning direct trade was 3.12 lower to 103.70, though the 5-day moving average has climbed to 105.93 with last week’s strength.  Lean hog cash index was .36 higher to 100.77. The April futures has dropped to a discount to the index, which could support the front month.  Pork cutouts trended higher last week, but softened into Friday’s close.  Cutouts were .25 lower to 104.95, and the load count was light at 177 loads.  Pork cuts were $2.00 higher on the week.   Some of the pressure in the hog market this week may be tied to the news the USDA will allow three plants to increase production capacity and chain speed.  This should provide some short-term support in the cash market but add additional pounds of production to the back end.  Estimated slaughter last week was 2.377 million head, steady with the previous week last week, but still 70,000 under last year as tight hog supplies are still in the market picture.  Overall, the market looks poised to test lower levels of support unless the fundamentals encourage the buyer to see a value.


Matthew Strelow

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