TFM Sunrise Update 04-26-2022


Corn futures were up overnight on follow-through from yesterday’s near-term reversal action and slow planting progress.  July and Dec corn gained 6-1/2 cents to 8.04-1/2 and 7.40-1/2, respectively.  Corn planting is off to a slow start with only 7% completed versus the 5-yr average of 15%. Top states: Iowa 2% (15%), Illinois 2% (21%), Nebraska 10% (11%), Minnesota 0% (10%), Indiana 1% (10%).More new highs in the dollar overnight create headwinds for commodity exports and crude is flat/weaker this morning.  Nat gas is higher.  Gold, silver, copper, coffee, cocoa, sugar and cotton are higher.  On Monday, Managed funds bought 6,000 corn corn contracts, keeping their net long position in the neighborhood of 370,000 contracts.  U.S. farmer corn sales have slowed, and China could be done buying U.S. old crop corn.


The soybean complex traded higher overnight.  July beans rose 12-1/2 cents to 16.87-3/4.  Nov was up a dime to 15.04-1/4.  July meal gained 4.20 to 229.80.  July soy oil was up .73 to 80.81.  U.S. soybean planting is 3% complete versus the 5% 5-yr average.  Canada’s 2022 canola acres are estimated to be down 3%.  On Monday, Managed funds were net sellers of 7,000 soybeans, 4,000 soymeal and 2,000 soy oil.  They are now estimated to be long 157,000 soybeans, 91,000 soymeal and 104,000 soy oil.  On the export front, China may have eased buying U.S./Brazil soybeans after an active week last week, and their slowing economy is under the trades’ microscope as Covid lockdowns drag demand lower.  China’s fuel demand is down as much as 40%.  Overnight, Chinese Ag Sept bean futures were down 38 yuan; Soymeal down 38; Soy oil down 328; Palm oil down 440; Corn up 10;  Malaysian palm oil prices overnight were up 182 ringgit (+2.92%) at 6411.

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Wheat futures traded sharply higher overnight with July Chicago up 24 cents to 10.96-1/2, July KC up 20 to 11.73 and July MPLS up 17-1/2 to 11.95.  U.S. winter wheat conditions are 27% Good-to-excellent, down from 30% a week ago and 49% last year.  Kansas and Arkansas were pegged at 26% G/E and 77%, respectively.  The U.S. south Plains remain dry, north Plains wet.  U.S. Spring wheat planting is near 13% complete versus the 15% 5-yr average.  North Dakota came in at 4% versus 8%.  Temperatures for the north Plains are forecast to be well below normal through Wednesday, near to below normal Thursday-Friday.  The 6-to-10-day outlook: Scattered showers Saturday-Sunday. Mostly dry Monday.  U.S. wheat exports are seen at 675 mil bu or down 19%.  Australia’s 2023 wheat crop is estimated at 29 mmt vs 36 this year.  Canada’s 2022 wheat acres are estimated at 24.2 vs 23.4 last year.


The cattle market is called mixed to lower.  Live and Feeder cattle futures were under selling pressure from the open on Monday as the market priced in the heavier than expected cattle-on-Feed Report from last Friday.  With the April 1 cattle inventory the highest on record, the market needed to balance the new supply picture.  June cattle closed back under the 200-day moving average, which will likely keep the selling pressure in front of the market going into today.  Cash trade was quiet to start the week as show lists were getting put together.  Expectations will be for firmer trade again this week, but the Cattle on Feed numbers may limit that enthusiasm.  Like last week, the direction of the cash market will have a large impact on futures prices.  The cattle market was building a good trend last week fueled by the cash market, but the heavier than expected cattle on feed numbers quickly turned the charts more negative.  Boxed beef prices were mixed at the close (Choice 266.66 -1.31, Select 256.52 +1.75) on movement of 67 loads.  Choice carcasses were traded $1.69 lower on the week last week, started soft on Monday, and that trend could limit cash bids.   Feeders face follow through selling pressure, triggered by the larger than expected placement numbers on the report from Friday.  A firming tone in corn adds pressure to start the week.


The hog market is called lower.  Futures saw strong selling pressure in the front end of the market fueled by additional long liquidation on a buildup of pork supplies.  June hog futures broke down technically, stopping limit down on top of the next support level of $114 price area.  The limit down close will give the hog complex a $7.000 trading limit for today.  The next downside target for June hogs is the 100-day moving average at $109.  The market could be a value at those levels.  The lean hog index gained 0.42 on the day to 101.67.  The strong cash premium to the cash market is still a concern and will stay as a limiting factor to near-term rallies, especially with the market on the defensive.   May hog futures is still trading at a 6.130 premium to the index, and June is 12.335 over.  Pork retail values were 5.49 lower at the close to 105.79.  Product movement was light at 293 loads.  Estimated hog slaughter to start the week was 465,000, down nearly 15,000 from last year, but growing pork supplies are likely reflection the heavier overall slaughter weights, and the slowing export demand seen for U.S. pork and that is a macro concern that is pressuring the hog market.


Matt Strelow

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