TFM Sunrise Update 04-27-2022


Corn futures were mixed overnight as price action turns choppy toward the end of the month while clinging to their highest price level since 2012.  July corn is up a penny this morning to 8.02-1/2 just below contract high resistance at 8.10.  Dec corn is fractionally higher to 7.44-1/4 after gaining 60 cents this month alone and 76-1/2 cents in March.   Market pressure from another new highs in the dollar overnight and a decline in open interest is offset by slow U.S. planting progress, dry weather for the Safrinha crop and the continued war in Ukraine.  Russia’s advance on south Ukraine export ports could limit Ukraine corn exports. A bridge in western Ukraine was destroyed, affecting a key rail and truck line for Ukrainian grain exports to EU and military imports to Ukraine.  Russia announced they have stopped shipping gas to Poland and Bulgaria.  Crude futures are seeing some follow-through to the upside after turning higher on the news late Tuesday.  Stock index futures are rebounding, up 400 points this morning.  Gold, coffee and sugar are lower.  Copper, silver, cocoa and cotton are higher.  On Tuesday, Managed funds were net buyers of 2,000 corn and still net long an estimated 373,000.  Weekly Ethanol Stats will be out today, Exports tomorrow.


The soybean complex traded higher overnight as beans continue to add demand premium.  July beans rose 12-1/2 cents to 16.84-1/4.  Nov was up a dime to 15.12-3/4.  July meal gained .60 to 437.60.  July soy oil was up 1.91 to a new contract high of  84.35.  World new crop canola futures are higher on lower estimate of Canada 2022 acres.  Soybean meal futures have been trending lower in recent weeks after a push near their 2014 highs last month with a particularly nasty reversal for the soybean complex on Friday.  Outside markets have been mostly negative with a higher dollar and a break in the energy markets.  Fundamentally, soybean planting was said to be 3% complete this week (compared to the 5-year average of 5%) and StatsCanada announced that canola crushings were down 17.3% in the August-March timeframe vs. that same period last year.  On Tuesday, Managed funds were net buyers of 2,000 soybeans, 5,000 soyoil and sold 4,000 soymeal.  They are now estimated to be long 159,000 soybeans, 86,000 soymeal and 109,000 soyoil.

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Wheat futures were mixed overnight.  July Chicago is down a nickel to 10.90.  July KC is down 4 to 11.60-1/2.  July MPLS is down 3 to 11. 85 while trading mid range of yesterday’s new contract high trading range.  New highs in the dollar overnight is likely creating headwinds for the wheat rallies.  July Chicago wheat has tacked on nearly $1 per bushel in April as concerns grow over the winter wheat crop amounting to anything in parts of SW KS, SE CO and areas in OK and TX due to the relentless drought.  On Tuesday, Managed funds were net buyers of 10,000 Chicago wheat and are long an estimated 5,000 contracts.  In the north, spring wheat planting is at a standstill in many areas areas of the Western portions of spring wheat country due to wet and cold conditions.


The cattle market is called mixed to higher.  Live cattle futures traded higher on Tuesday supported by cash prices, but the strong grain market led selling in the feeder complex.  Even though the market had positive gains, trade on Tuesday was at the lower end of Monday’s trade and was consolidative in nature.  Charts did hold near-term support at the 200-day moving average but are still susceptible to more downside pressure.  The cash trade helped trigger the buying support.  Southern cattle are beginning to trade for $140, full steady with last week, and the North is seeing cattle sell for $232 dressed, $2.00 higher than last week, and $145 to $146 live, steady to $1.00 higher.  Packers were aggressively bidding for cattle, which demonstrates that packers are short bought going into the week.  Boxed beef prices were lower at close (Choice 264.17 -2.43, Select 256.23 -.29) on movement of 183 midday loads.  The feeder market failed to find a bid, despite the stronger tone in the live cattle market.  A firmer tone in the grain market helped pressure feeders, with the strong selling strength in the deferred contracts.  The cattle market may be at a crossroads, as the heavier cattle on feed numbers from last week are a limiting factor in the market, despite a stronger cash tone.  Prices will need to see some further recovery in order to show that a near-term low maybe in place.


The hog market is called lower on additional long liquidation as prices continue to break down technically.  June hog futures saw additional technical selling as the market continues to move premium to the sidelines.  The 100-day moving average is at $109.300, and could be a support point on the charts.  In the bigger picture, June hogs are completing a potential head and shoulders pattern, that if complete could bring a test of trendline support under the market at $97.50 for a potential target.  Cash markets have been softer, adding to the selling pressure.  Midday direct trade on Tuesday was slightly firmer, gaining .14 to 95.74 and the five-day average settled to 100.30.  The lean hog index gained 0.83 on the day to 102.50 as the index has trended higher.  The strong cash premium to the cash market has been removed quickly with the futures selling pressure, but is still a limiting factor to near-term rallies, especially with the market on the defensive.  May hog futures is still trading at a 2.700 premium to the index, and June is 8.6750 over.  Pork retail values were .24 lower at the close to 105.55.  Product movement was moderate to good at 340 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.  Lean hog charts look defensive, and the fundamentals are still lacking in supporting the market.  The path of least resistance at this point still looks to be searching for a low.


Matthew Strelow

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