TFM Sunrise Update 04-23-2021


Nearby corn futures made new highs overnight on technical momentum before reversing lower on pre-weekend profit-taking.  May attained a new high at 6.54-1/2 and is currently down 11 to 6.39-3/4.  July, at 6.20-1/2, got to 6.35.  Dec corn is at 5.43-1/2 versus yesterday’s new contract high of 5.53.  For the week, the contract is up 40 cents, and 76 cents since March 31.  The steep rally has left prices extremely overbought from a technical standpoint.  Managed Money is now estimated net long 560,000 corn contracts.

In Brazil, little to no rain is expected through next Thursday in northern Parana, northwestern Sao Paulo, eastern Mato Grosso do Sul, western Minas Gerais, southern Goias, and far southeastern Mato Grosso. This will keep concerns elevated about Safrinha corn production in these driest areas and monsoonal moisture is gradually exiting Brazil.  The dollar is down 31 basis points this morning highlighting a lower trend.  In overnight tender activity, South Korea feed groups seek 342,000 tons of optional origin corn.

Daily price limits for CBOT grain and soy futures will expand in May following a routine half-yearly review, CME Group Inc, parent of the exchange, said on Thursday.  The new limits go into effect on May 2, for trades dated May 3, CME Group said, potentially increasing volatility.  The wider daily limits follow the exchange operator’s move on March 15 to expand speculative position limits, raising the number of CBOT futures contracts that non-commercial traders can hold.  For corn futures, the daily limit will move to 40 cents per bushel, from the current 25 cents. Limits for CBOT SRW wheat futures and K.C. HRW wheat futures will rise to 45 cents, from 40 cents.  For soybeans, the daily limit will widen to $1 per bushel, from 70 cents currently.  The limit for soymeal futures will expand to $30 per short ton, from $25, and the soyoil  limit will rise to 3.5 cents per pound, from 2.5 cents.


Soybean futures are moderately lower this morning with May down 6-1/2 to 15.26-3/4, July down 7-1/4  to 15.07; and, Nov down 10 cents to 13.28-1/4.   For the week, the new crop contract is up 54. cents and 72 cents since March 31.   All three contracts failed to make a run at yesterday’s new contract highs while, instead slumping on profit-taking.  Meal is lower, too.  Bean oil, however, is seeing follow-through push to new highs this morning.  Managed Money is net long an estimated 219,000 soybeans; 61,000 soymeal, and; net 122,000 soyoil.

Chinese Ag futures (September) settled up 54 yuan in soybeans, up 22 in Corn, up 42 in Soymeal, up 154 in Soyoil, and up 156 in Palm Oil.  Malaysian palm oil prices were up 75 ringgit at 4,064 (basis July) at midsession supported still on tight supplies, higher rival vegoils.

Planting progress will hit its stride next week after an unseasonably cooler spell.  The Biden administration hopes to convince farmers to set aside four million more of acres of land for conservation this year by raising payment rates in an environmental program, but farmers said surging crop prices make it a tougher sell. The push to enroll more land into the 36-year-old Conservation Reserve Program is a part of the administration’s campaign to counter climate change.  About 21 million acres are enrolled in the program, below the Congress-set limit of 25 million acres.  The cap will gradually increase to 27 million acres by 2023.


Wheat futures were mixed overnight and are currently lower this morning.  July CBOT wheat is off 7-1/2 cents to 7.02-1/2 while respecting Thursday’s new high of 7.13-1/2.  For the week, the actively traded contract has advanced more than 50 cents from the March 31 settlement to yesterday’s new high.  Managed Money is net long an estimated 35,000 contracts of SRW wheat.  July KC is down 3 to 6.71-3/4 and is up 55 cents for the week.  July MPLS spring wheat futures are down 3 cents to 7.11-3/4, up 41 cents for the week.  Look for choppy trade today as prices consolidate after a strong performance.  Lower trade in the dollar was noted overnight as that weaker trend continues.  Last evening’s GFS weather model was notably wet from West TX through the western half of OK May 2 to 4 with as much as 2.00 to 8.00 inches of rain suggested, and notably drier for the Northern Plains in week 2 of the outlook compared to the midday GFS model.

Elsewhere, Russian agriculture consultancy IKAR has downgraded its forecast for Russia’s 2021 wheat crop to 79.5 million tonnes from 81 million tonnes, it said.  The forecast was lowered as farmers will need to resow wheat on a large area of Russia’s central region after the winter, IKAR said in a note.


Cattle futures are called steady to firmer.   Yesterday afternoon’s USDA cold storage report showed total pounds of beef in freezers were down 6% from the previous month and down 4% from last year, reflecting the good demand.   Prices were lower yesterday on tech selling, sending June cattle to their lowest price levels since January.  Beyond the technical pressure, a strong move in grain markets triggered selling in the livestock complex, and especially in Feeder cattle, which posted strong triple-digit losses.  The cash market has also been a disappointment, staying steady to softer than last week.  Most southern trade is ranging $119-120 and Northern trade from $121-124.  Choice carcasses were 1.85 higher to 282.31 and Select was 1.81 higher to 273.69.  Demand was light to moderate on 93 loads.  Weekly export sales and shipment were strong for beef this week.  The cattle market is also squaring up long positions for this afternoon’s Cattle on Feed report.  Expectations are for cattle on Feed at 106%, Placements at 134%, and Marketing at 101%.  Those numbers will look skewed vs the COVID lock down situations last year, and the market may look toward trends from 2019 instead.  Prices will likely stay choppy to close the week, going into the report.


Hog calls are mixed to higher.  USDA Cold storage data was supportive showing frozen pork supplies down 7% from the previous month and down 27% from last year.  Stocks of pork bellies were down 6% from last month and down 55% from last year.  Hog futures saw additional follow through selling yesterday as additional long liquidation and technical selling dominated the day’s trade.  The market is still looking for a bottom, and may be in the building process of finding that floor.  Weekly export sales were a bit of confusion this week as the USDA made a correction from the market being over-reported in 2020.  Net sales for the week were a -22,100 MT, as over-reported 54,476 MT for Mexico in 2020 were taken from the weekly totals.  Overall, exports saw China add 13,1000 MT last week, and weekly shipments were a market year high of 43,900 MT.  The cash market remains aggressive with the index gaining .70 to 105.12.  Carcass values were supportive at 114.70, gaining 1.06 on moderate demand of 346 loads.  At $114, pork carcasses are trading just below the high for pork carcasses at $121, established last year during the COVID pandemic price surge, and nearly $60 above the 5-year average.


Matthew Strelow

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