TFM Sunrise Update 03-31-2021


Corn futures were unchanged overnight as the trade braces for the March 31 Prospective Planting and Quarterly Grain Stocks report scheduled for release at 11:00 AM (central).  Nearby May futures, at 5.40 were driven below their 50-day moving average on Tuesday when Dec broke sharply lower and breached its 50-day.  May corn and Dec are trading near initial support near 5.40 and 4.50, respectively.  The new crop contract is up a penny this morning to 4.53-1/2.  The rally in the dollar helped pressure commodities and made another new multi-month high overnight before settling back.  Improving U.S. Midwest and Argentina weather is offsetting drier Brazil weather.  Once today’s fundamental data is released and factored into the market, we expected weather reports to dominate market news.  Heading into today’s USDA report, trade positioning will continue to be affected by pre-report thoughts of higher than expected ending stocks.  The average guess is for March 1 stocks to come in near 7.767 bil bu within a range of 7.573 to 7.980.  A number above 7.800 would suggest USDA may not have counted all bushels in transit vs their lower than expected estimate of Dec 1 corn stocks.  Most still estimate U.S. 2020/21 corn carryout closer to 1.100 than USDA 1.502.  There is also concern that USDA could estimate U.S. corn acres near last year’s March initial guess of 97.0 mil acres.  However, the average trade guess is 93.2 mil.  Today’s Weekly EIA ethanol production is expected to show a modest increase from last week, with a small draw in ethanol stocks expected from last week.  Heading into today, Managed Money was net long 339,000 corn after long-liquidation in the grain and oilseed complex on Tuesday.


The soy complex was up overnight after seeing soybeans and soyoil trade sharply lower on Tuesday.  There was some end user buying near session lows yesterday once prices approached support levels.  May beans are up 7-3/4 cents to 13.74-1/2 this morning.  Nov is up 4-1/4 cents to 11.90-1/2 after falling below 12.00.  Traders are reacting to ideas that USDA may “find” corn and bean bushels in today’s Quarterly Stocks report.  The average is for March 1 stocks near 1.534 bil bu with a range of 1.440 to 1.825.  A number above 1.575 would suggest last year’s crop could have been bigger.  May bean oil had dropped below 51 cents on lower China vegoil and lower palmoil prices, but is trading at 51.33 this morning.  Chinese Ag futures (May) settled up 21 yuan in soybeans, down 26 in Corn, down 7 in Soymeal, down 272 in Soyoil, and down 182 in Palm Oil.  Malaysian palm oil prices were down 31 ringgit at 3,543 (basis June) at midsession awaiting government data updates.  Heading into today, Managed Money was net long an estimated 116,000 soybeans; 58,000 lots of soymeal, and; 58,000 soyoil.


Wheat futures were narrowly mixed overnight, consolidating after posting further weakness on Tuesday pressured by spillover long liquidation in row crops, and a strong dollar.  Improved U.S. winter wheat weather and crop outlook, lower World wheat prices and a drop in World wheat demand is also noted as prices seek a level that will encourage new demand.  May CBOT and KC contracts are up 2 to 4 cents to 6.04-1/2 and 5.60-1/2, respectively. Heading into today, Managed Money was net short 11,000 contracts of SRW wheat.  The March report has the trade estimating wheat stocks at 1.278 bil bu vs 1.415 last year and 1.674 on Dec 1, 2020.  The trade also estimates U.S. 2021 all wheat acres at 45.0 vs 44.3 last year.  May Spring wheat futures are fractionally higher this morning to 6.02-1/2.


Opening calls call for cattle are steady to higher ahead of today’s USDA grain reports, and expiration for April options that end their trading life today with the $120 level holding the largest area of open interest.  This could keep prices in check.  The cash market has yet to develop.  Bids are hard to find, but feedlots are asking $118-120, as the cash trend looks to stay higher.  The market will see the Fed Cattle Exchange trade today with underlying support stemming from retail values, which saw strong closing gains.  Choice carcasses gained 5.30 to 244.83, and Select gained 3.42 to 235.92 on a solid 179 load count.  The feeder market was mixed to mostly higher while trading at a historical value, but over-bought.  A bullish reaction from the USDA reports today could open the door for profit taking.


Hogs are called higher while still probing for a top, supported by strong fundamental.  Though historically high, we believe there is still room to move technically higher.  With the ability to shrug off a shaky start to the week, the May-July contracts closed at new contract highs.  The Lean Hog Index accelerated higher, gaining 1.41 to 97.38, it’s highest level since October 2014. This represents the strength in countryside cash as the packers are looking to secure hogs.  Pork carcasses were firmer at midday, but closed softer losing .95 to 106.89 on a good count of 401 loads.  With carcasses over the $100 level, there is plenty of momentum to support the cash market.  Estimated slaughter yesterday was 490,000 head, about 25,000 over last week, but trending slightly less than last year.  For the first two days of the week, estimated hog slaughter was down 13,000 head from last year’s numbers.


Matthew Strelow

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