TFM Sunrise Update 03-23-2021

CORN

Corn futures were unchanged overnight while trading a defined sideways pattern above 10 and 20-day moving average support in the nearby May contract.  Dec corn, at 4.47 is moving in tandem with a weaker bias and below it’s 10 and 20-day MAs.  Informa estimates U.S. 2021 corn acres near 94.3 million versus 90.8 last year.  Most estimates are near 93.0.  Their 2021 production is estimated near 15.587 bil bu vs 14.182 last year.  Informa also estimated CRP acres near 20.7 versus 21.9 last year.  Prevent plant acres are estimated near 2.9 versus 9.3 last year.  All crops U.S. 2021 acres are estimated near 319.9 million versus 307.7 last year.  In outside markets, the dollar is up 40 basis points while building a base of resistance on its chart, crude is down $2/bbl while building a base of support; and, stock index futures are off 100 points.

SOYBEANS

Soybeans are up this morning led by soaring soyoil futures which gapped higher overnight following a sharp spike on Monday.  Nearby May beans rose a dime to 14.28-1/2, and Nov 5-3/4 cents to an overnight high of 12.21-3/4.  Chinese Ag futures (May) settled up 40 yuan in soybeans, down 33 in Soymeal, up 270 in Soyoil, and up 302 in Palm Oil.  Malaysian palm oil prices were up 129 ringgit at 3,972 (basis June) at midsession supported by President Biden’s green energy push.  The rally in oil is helping offset weakness in meal while giving the complex a boost.  Informa estimates U.S. 2021 soybean acres near 89.7 million versus 83.0 last year.  Most estimates are near 90.0.  U.S. 2021 soybean production is estimated near 4.534 bil bu vs 4.135 last year.  Informa also estimated double crop soybean acres near 4.8 mil versus 3.8 last year.  Prevent plant acres are estimated near 2.9 versus 9.3 last year.

WHEAT

Winter wheat futures continued to face pressure overnight with new lows for the move in KC.  May was down a nickel to 5.73-1/4.  May Chicago wheat fell 3-1/2 cents to 6.23-3/4 while respecting Monday’s trading range.  USDA’s NASS rated 45% of the Kansas winter wheat crop in good-to-excellent condition on Monday, up from 38% a week earlier.  Soil moisture readings were improving in Kansas, the top U.S. winter wheat producer.  The USDA reported that Kansas topsoil moisture as of Sunday was short-to-very short in 17% of the state, a drop from 24% the previous week and 47% two weeks ago.  For Oklahoma, another major wheat state, the USDA rated 62% of the winter wheat crop in good-to-excellent condition, up from 57% a week earlier.  The USDA said 36% of the state’s wheat had reached the “jointing” stage of growth, ahead of the five-year average of 31%.  For Texas, the No. 2 winter wheat state by planted area, the USDA rated 29% of the crop as good-to-excellent, up from 27% the previous week.  Tender Activity has South Korea seeking 35,000 tons of U.S./Canadian wheat, Philippines seek 155,000 tons of optional-origin milling and feed wheat; and, Thailand seeks 430,000 tons of optional-origin feed wheat.

CATTLE

Cattle calls are steady to higher.  Prices consolidated on Monday after last week’s Cattle on Feed report was fairly neutral and expectations were viewed as having been priced in.  Yesterday’s Cold Storage Data isn’t expected to have a big impact on price.  Total red meat supplies in freezers were up 3% from the previous month but down 12% from last year. Total pounds of beef in freezers were down 2% from the previous month but up 3% from last year.  Front month cattle will stay under pressure with on feed supplies at 102% of last year, but the majority are heavy weight cattle in the front end of the market that has kept pressure on cash prices over the past handful of weeks.  Retail carcasses finished firmer on Monday, Choice carcass gaining .96 to 230.95, and Select +3.10 to 223.05, keeping the higher trend intact from last week, this should build some cash optimism and support prices.  Deferred contracts were trying to find some footing, and the placement numbers under last year at 98%, help support the idea of a tighter cattle market and improved demand for the second half of 2021 and later.  Cash markets will be key to prices this week, and was undeveloped on Monday, and most trade will likely hold off until later in the week.

HOGS

Hog futures are called steady to higher.  Frozen pork supplies were up 7% from the previous month but down 24% from last year, according to the latest Cold Storage report.  Stocks of pork bellies were up 22% from last month but down 49% from last year.  Fundamental strength remains in the market, supporting prices, but front month contracts saw some additional profit taking on Monday.  Talk of the Chinese hog herd continuing to be rebuilt, despite ASF issues, and softening Chinese pork prices aids profit taking, as prospects of longer-term demand may soften, and hog market still extremely over-bought.  The lean hog index traded .47 higher to 91.71, and still is at a 3.34 discount to April futures, which will act as a drag on the April contract.  Carcass values maintained their strength, gaining 3.39 at midday, and holding some gains, closing .27 higher to 103.26 on 260 loads. This should help support prices.  Quarterly hogs and pigs data will be released on Thursday (3/25) and will help give a snapshot of the U.S. hog herd and where the industry stands with expansion.  Prices will likely stay choppy going into that report.

Author

Matthew Strelow

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