TFM Sunrise Update 04-21-2021


Corn futures traded higher overnight and now sit atop their highest levels in nearly 8 years.   Nearby contracts again forged new highs.  May was up as much as 8 cents to 6.14-1/2 after pushing through little resistance at $6.00 yesterday.  July was up 6-1/2 cents to a new high of 5.98-1/2 and seems destined to follow suit.  Dec corn rose to 5.33-1/4 to test Tuesday’s new high at 5.33-1/2.  The market is getting a boost from continued fundamental and technical support.  Brazil and Chinese corn prices round out strong global prices, and dryness in the Northern and Western corn belt is providing weather premium early in this growing season.  Brazil’s second corn crop was planted at the slowest pace in at least a decade and now weather is threatening to reduce the crop’s potential, especially in the south.  Last night, Chinese Ag futures (September) settled up 19 in corn.  China’s agriculture ministry published guidelines overnight for the reduction of corn and soymeal in pig and poultry feed, in a move that could reshape the trade flows of grains into the country.  The move follows a surge in imports of corn by China last year as it faced a growing deficit of the grain, used largely in animal feed.  The aim of the guidelines is to improve the usage of available raw materials and create a new formula that better suits China’s conditions, the Ministry of Agriculture and Rural Affairs said.


Soybean futures traded higher again overnight and into new highs for the nearbys.  May carved out a new high at 14.87-1/2 on gains of 15-1/2 cents before trimming gains.  July got to 14.72-1/4.  Nov stayed bound by Tuesday’s trading range, gaining as much as 9-1/4 cents to 13.08-1/2.  U.S. domestic soybean basis has traded sharply higher as crushers are unable to get summer coverage.  Cash crush margins are positive.  Some of the strength and momentum is linked to talk of Brazil dropping import duties on soybeans and soyoil.  July Soyoil pushed to new highs overnight, too.  Chinese Ag futures (September) settled up 47 yuan in soybeans, up 17 in Soymeal, up 240 in Soyoil, and up 314 in Palm Oil.  Malaysian palm oil prices were up 90 ringgit at 3,895 (basis July) at midsession on tightened supplies.  The World climate summit this week could result in higher U.S. green fuel which could increase soyoil biofuel use.  In South America, some shower and thunderstorm activity will be locally meaningful from Rio Grande do Sul into Parana, Brazil Friday through Sunday; though, this rain is unlikely to reach Sao Paulo, central and western Minas Gerais, eastern Mato Grosso do Sul, and southern Goias.  Conditions in Argentina will still be mostly good; though, rain tonight through Saturday will lead to some fieldwork delays and may slow crop maturation


Wheat futures were up overnight after easing late Tuesday and closing off their new highs for the move posted earlier in the day.  Chart momentum fueled good gains overnight with July Chicago up 10 to 6.7-1/4.  The market has now rallied 90 cents off the March 31 lows and is extremely overbought, technically.  July KC was up 8 to 6.36.  July MPLS was up a dime to 6.86.  Frosts and freezes in the mornings today and tomorrow are still expected to cause crops to get burned back from the Hard Red Winter Wheat Region and West Texas through the Corn Belt, Virginia, northern North Carolina, and far northern part of the Delta.  Stats Canada in a report due out April 27 is looking for all wheat plantings down versus a year ago while canola see rising.


Cattle futures are called higher.  After seven consecutive days trading lower, cattle caught a bid and finished mostly higher on value buying.  Strong retail demand supports the market.  Choice carcasses closed 2.09 higher to 278.26 and Select gained 1.34 270.47, on moderate load count of 91 loads.  Strong retails should support the cash market this week.  Cash trade stayed quiet again for Tuesday, with no bids established.  Today’s Fed Cattle exchange will start the cash trade and most activity will likely hold off into the end of the week.  We do not think the market is “out-of-the-woods” yet, but seems to be building a bottom, and will be looking at more fundamental news with USDA cold storage report on Thursday and the Cattle on Feed report on Friday.  The trade is looking for placements up nearly 34% versus a year ago with on feed up 6%.


Hogs are called steady to higher.  Prices saw follow-through buying strength on Tuesday as front-month contract pushed higher with triple-digit gains.  The correction of last week’s sell-off may be building some upward momentum, being led by the strong fundamental base in the hog market.  Strength comes from the retail demand, as carcass values remain strong, closing higher at the end of the day.  Carcasses were .95 higher, and trading at a historical high of 115.03 for this time of year.  Load counts were good at 353 loads.  The cash market stays supportive as the Lean Hog Index gained .52 to 103.76, maintaining its upward trend.  The technical picture is improved and could bring additional money flow into the buy side of the market.



Matthew Strelow

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