TFM Sunrise Update 04-05-2022


Corn futures are firmer this morning with the May contract up 7 cents at 7.57-1/2 and the December contract up 5-1/2 cents at 7.04-1/2.  Corn is likely finding some strength from a higher crude oil market and while the US Dollar is slightly weaker, as are equities.  We estimate the managed funds to be long 355,000 contracts, following the purchase of 14,000 contracts yesterday.  Forecasts for continued cold and wet Midwest weather add concern over planting delays and combined with expected lower acreage in the US could mean December prices are undervalued.  USDA announced a flash sale of 1.084 mmt to China yesterday, roughly 700,000 for the 2021 crop year and 400,000 for 2022, and there is talk of another 2-3 mmt purchase.  Informa released their updated estimates which reduced Brazil’s 2022 corn crop to 119.5, and they estimate Ukraine’s 2022 corn crop to be 20.0 mmt versus 41.9 last year.  Weather forecasts are calling for April temps to be normal with normal rainfall, May to be warm and dry to the west while normal in the east.  This summer the long-range forecast is showing warm and dry to the west and more normal conditions to the east.



The soybean market is higher this morning with May soybeans trading 16.17-1/4, up 15 cents, while November soybeans are trading 14.49-3/4, up 10 cents.  The soybean market is finding support on talk of higher demand for US soybeans, and while China is on holiday, some feel they could return as buyers later this week. We estimate the managed funds were buyers of 10,000 contracts yesterday and are now long 143,000 contracts.  Brazil’s soybean harvest is 80% complete, while their crop is estimated to be 123 mmt versus the USDA’s estimate of 127 mmt.  Argentina’s crop is now estimated to be 39 mmt versus the USDA’s estimate of 43.5 mmt.  Weather forecasts are calling for April temps to be normal with normal rainfall, May to be warm and dry to the west while normal in the east.  This summer the long-range forecast is showing warm and dry to the west and more normal conditions to the east.


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The wheat market has all three classes trading higher this morning.  May Chicago is 10.42-1/2 which is up 32-1/4 cents.  The May KC contract is up 29-1/2 cents at 10.67-1/4, and the May Minneapolis contract is up 17 cents, trading at 11.02. We estimate the managed funds were buyers of 13,000 contracts yesterday and are now long 31,000 contracts.  Prices are higher this morning on lower-than-expected crop ratings and the continued Black Sea concerns.  Yesterday the USDA rated the US 2022 winter wheat crop at 30% good to excellent versus 40% expected and 53% last year. This is the lowest rating since 1996 when final yields came in at 37.1 bpa.  While peace talks between Russia and Ukraine continue, Russia’s shelling of Ukraine’s ports in Odessa raises concerns about exports from the region.  The weather forecast is warm and dry for the southern plains, and though some rain is forecasted for next week, it may favor areas to the east.



Cattle (Mixed to lower):

Cattle futures saw selling pressure to start the week, led by a weak feeder cattle market, pressured by strength in the grain markets. Cash market was mostly undeveloped to start the week. Some very light trade developed at $138 in Kansas, steady with last week, but not enough to establish a trend. Market is hoping for steady to high cash led by an uptick in demand. Beef carcass values were mixed on the close on Monday with Choice adding .90 to 268.04 and Select .82 lower to 261.70 on load count of 63 loads. Feeder cattle broke technically, and are challenging multi=week lows as a strong move in grain prices brought follow through selling after Friday’s weak close. The cattle market is looking technically challenged as the strong grain markets have triggered selling. An uptick in demand as the calendar moves closer to summer may be enough to help stabilize the market, but the short-term trend is lower.



Hogs: (Mixed to lower)

Hogs futures saw strong selling pressure on additional long liquidation from an over-bought market as the premium of futures to the cash hog market weighs on the futures. June hogs have dropped $11 in three trading sessions, and prices are testing the 50-day moving average. Failure at this level opens the door to a test of the $110 level, or the 100-day average down at $106.250 Hog futures were under pressure despite a strong retail market. Midday pork carcasses traded 8.23 higher, and still closed with a gain of 2.75 to $106.35 on the day. This should help support hog futures on the Tuesday open. Cash hog prices have been trending lower. On Monday, afternoon direct trade was 1.39 lower to 99489, and the 5-day trend has dropped to 103.09. The weakening trend in cash hogs is pulling futures prices lower. The Lean Hog Index was .50 lower to 102.63. The April contract is trading at a 3.18 discount to the index, which support the front month contract with expiration on the 14th. Hog futures are in the middle of a technical break as price have tumbled. The Hog market is still in a long-term uptrend but is likely moving to test the support under the rally.


Scott Masters

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