TFM Sunrise Update 04-22-2021


Corn futures traded higher overnight ahead of Weekly Export Sales.  New contract highs were posted again across the board with May up 12 cents to 6.37-1/2, July up 11-1/4 to 6.17-3/4; And, Dec up 8 cents to 5.44-1/2.  Trade estimates for this morning’s exports are 300,000 to 800,000 tons for old crop, 50,000 to 300,000 tons for new crop.  Dry conditions in Brazil where second crop corn is projected to be lower, weather concerns in the U.S. given drought monitor updates and minimal sub-soil conditions greet planters combined with strong demand from China and the ethanol industry are feeding the bull during this rally.  The U.S. attache sees China’s 20/21 corn imports at 28 mt versus the current USDA estimate of 24 mt (sees 21/22 corn imports at 15 mt).  A lower dollar and growing talk of inflation hitting commodity prices are also noted talking points.


Soybean futures traded aggressively higher again overnight and into new highs.  May peaked at 15.23-1/4 on gains of 26 cents.  July reached 15.04-1/2 on gains of 25 cents.  Nov beans got to 13.27-3/4 on gains of 17-1/2 cents.  Chinese Ag futures (September) settled up 63 yuan in soybeans, up 43 in Corn, up 147 in Soymeal, up 144 in Soyoil, and up 184 in Palm Oil.  Malaysian palm oil prices were up 57 ringgit at 3,951 (basis July) at midsession on tight production, soyoil gains.  Weekly U.S. soybean old crop export sales are estimated from negative 100,000 tons to +250,000 tons; 250,000 to 500,000 tons for new crop.  Meanwhile, tight supplies supporting basis levels, and talk that end users are considering taking delivery for the first time ever is helping guide beans higher.  Short covering before May deliveries also offers support.  Soyoil gets its lift from concerns with veg oil supplies, weather issues for Europe and Canada and talk of the U.S. using soyoil as biofuel for jet fuel.


Wheat futures were up 8 to 10 cents overnight to new highs.  July CBOT futures reached a new high of 6.83-1/2.  July KC rose to 7-week high of 6.46, versus the Feb 24 contract high of 6.67.  July MPLS wheat hit a new high of 6.95-1/2.  Updated weather and conditions equate to 1% lower 2021/22 U.S. wheat production to 48.7 mil tons.  The current median estimate puts national-level winter wheat yield at 50.0 bpa, with a range from 46.3 to 52.6 bpa, 1.4% below trend yield of 50.7 bpa.  This leads to total winter wheat production of 33.9 mil tons, down 1.3% from the last update.  Spring wheat production is unchanged at 14.8 mil tons (with durum and other spring wheat at 1.4 and 13.4 million tons, respectively).  Last evening’s GFS model run was notably wetter in the Northern Plains in week 2 of the outlook compared to the midday GFS model. This is evidence of a potentially more active pattern in the Northern Plains and in the southern Canada Prairies. Rain prospects are still expected to improve in early May for both of these regions which will be beneficial for increasing soil moisture.  Trade estimates for this morning’s exports are zero to 200,000 tons for old crop, 200,000 to 500,000 tons for new crop.


Cattle futures are called steady to lower after a round of technical selling and profit taking pushed cattle futures to new lows, testing key support at the 100 day moving average yesterday.  The market has arguably entered a weaker trend and most contracts are now below the 50-day moving average.  If short term support is broken the next likely objective would be the 200-day, which for June, July and August comes in at 113.50, 112.50 and 115.40, respectively.  A strong move in grain markets pressed feeders to sharp losses, thus weighing on live cattle prices.  The cash market failed to support futures as early cash trade started to develop on Wednesday.  Some light trade was established today at $120 in the south and $122-123 in the North, steady to lower than last week, adding to the selling pressure.  Carcass values continued their surge higher as Choice gained 2.20 to 280.46 and Select was up 1.41 to 271.88.  Movement was moderate at 114 loads.  This should help support cash prices.  The market is looking toward tomorrow afternoon’s Cattle on Feed report.


Hog calls are mixed. Sellers reestablished themselves and finished with losses on Wednesday.  The June contract failed to push higher early in the session and turned negative on the charts.  The volatility is tied to technical trading, because the fundamentals remain supportive.  Cash markets remain strong with the Lean Hog Index advancing .66 to 104.42.  Demand remains aggressive as pork even with carcasses slipping on the close on Wednesday.  Carcasses were 1.39 lower to 113.64.  At this level, pork carcasses are approaching last year’s product high of 121.66 from last May, and trading $42 above the 5-year average.  Weekly export sales will be reported this morning, and could help set the tone for the end of the week.


Matthew Strelow

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