TFM Sunrise Update 04-13-2022

The CME and Total Farm Marketing offices will be closed Friday, April 15, 2022, in observance of Good Friday


The corn market is mixed this morning with the July contract down 3 cents at 7.69-1/2, while the new crop December contract is trading 7.31-1/4, up a 1/4 cent.  Remarks from Putin rallied new crop Matif corn futures. Both July and December contracts made new highs Tuesday, on talk of higher feed demand and new export demand.  Higher CPI inflation data also lent support to the market.  EPA action to allow year-round E15 may possibly add near 25 million bu. of demand to old crop corn for ethanol, but lower gasoline use due to high prices may limit the bullish impact from this decision.  Managed funds reportedly bought 8,000 corn futures contracts Tuesday and are estimated to be long 378,000 contracts.  Midwest weather forecast continues to be warm and dry in the west and cool and wet in the east.  Central Brazil and Argentina are dry.



The soybean complex is trading lower this morning with the July soybean contract down 5-1/4 cents at 16.55-1/4, and the November soybean contract is down 6-1/4 cents at 15.00-3/4.  July soybean meal is trading near $464.40 and July soybean oil is near 73.75, down $1.30 and .27 cents respectively.  Matif rapeseed is making new highs even though estimates of EU 2022 acres could be up 18%.  There is talk of slower farmer selling in Brazil due to the short crop, and the trucker strike in Argentina continues, which may slow exports.  The market may be having trouble trading over 17.00 since the USDA lowered China’s imports to 91 mmt, even though China’s coverage July forward is estimated to only be about 10-15% of their needs.  There are concerns that the wet Midwest weather could delay corn planting and increase soybean acres.  Managed funds reportedly bought 7,000 soybean futures contracts Tuesday and are estimated to be long 172,000 contracts.


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This morning July Chicago wheat is down 1-1/2 cents at 11.11, July KC wheat is up a 1/4 cent at 11.67, and July Minneapolis wheat is trading at 11.55, down 1 cent.  There was a tender from Egypt looking for either Russian or EU wheat which rallied Matif wheat to new highs.  The wheat market found support from an increase in US CPI inflation data released Tuesday.  A strong winter storm with 20–22-inch accumulations moved across parts of US spring wheat areas, which led the Minneapolis contract to drop below the KC contract.  As KC wheat continues to find support on warm and dry forecasts for the US southern plains.  Managed funds reportedly bought 11,000 Chicago wheat futures contracts Tuesday and are estimated to be long 38,000 contracts.



The cattle market is called to open mixed to higher.

Cattle futures finished higher despite the strong trade in grain markets as short covering and technical buying lead by demand optimism supported the cattle complex. The Jun contract saw buying strength moving through the 200-day moving average, breaking out of its consolidation range for the past day. Closing back above this price point brought additional short-covering and money flow. The key will be additional follow through into the end of the week. The cash market will still be a key this week, and the strong winter storm across the northern plains may have helped trigger some early cash trade. Some very light trade triggered in the south at $139, up $1 over last week. There has been individual regional talk of firmer prices levels as packer inquiry has been stronger this week. Beef cutouts are higher on the close on Tuesday (Choice 273.47 +.36, Select 260.71 +.42), with improved box movement of 115 loads. Moving past the Easter holiday could help spur some retailer buying as stores prepare for May and the expected uptick in grilling demand. The feeder market climbed nicely off early session lows supported by the buying strength in Live cattle prices. Feeder price action was very positive, with closing trade at the top end of Tuesday’s range and well-off morning’s low for the second day in a row. This could open the upside more today. Apr feeders are likely tied to the index, which gained 0.14 to 155.81 but is running at a slight discount to front-month futures. Cattle price are turning the corner in the near-term, as a firmer cash ton and improved demand prospects going into the late spring are bringing some buying optimism and positive money flow.



The hog market is called to open mixed to higher.

Hog futures finished strongly higher, posting triple digit gains in the front end of the market, and constant building strength in the deferred contracts. Strong retail demand and technical buying helped push hog prices higher on Tuesday.  June hogs broke out of its consolidation pattern, and crossed ack above the 50-day moving average, following through the strong close on Monday. If the upward momentum can continue, price will be looking to test the price gap on the June chart at 120.225 from earlier this month.  The strong price move came against a softer tone in cash trade. National Direct midday values unreported on Tuesday due to “Confidentiality”, and the 5-day average dropped lower to 98.74. The Lean Hog Index was lower, losing .43 to 99.63. With the strong price move, deferred futures added back to the premium over the index, which could be a limiting factor. April hog futures expire on Monday and is tied very closely to the index value. Pork carcasses were firmer on the close, gaining .16 to 106.80 on a strong load count of 305 loads. Daily hog slaughter is estimated at 473,000 head, down slightly from last week, and 10,000 head lower than last year. The hog market numbers are still tight, and the rate of slaughter may be our first indicator of supplies tightening. The price move on Tuesday was technically driven, breaking through key levels of resistance. The overall strength of this rally will need to see a strong tone in the cash market or retail values to lead. Overall, hog numbers are still looking to tighten going into the summer months, and the hog market likely hit a value point to trigger money flow into the group.



Scott Masters

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