TFM Sunrise Update 04-29-2022

CORN

Corn futures were firm overnight with the December contract eclipsing this week’s new contract high to a new peak at 7.55-3/4.  For the week, the new crop contract advanced 31-/14 cents.  July was up 4-1/4 to 8.17-3/4 overnight, gaining nearly 30 cents this week.  Year-To-Date nearby futures are up 38%. The U.S. dollar is seeing a pull-back this morning.  Crude, precious metals, copper, coffee, cocoa, sugar and cotton are higher.  On Thursday, Managed funds bought 3,000 corn contracts and are going into the weekend and end of the month net long an estimated 384,000 contracts.  Wall Street Journal headlines state that corn and soybean prices are near record levels adding to food inflation.  The UN estimated World 2022 food prices up 23%.  2021 was up 31% as Global food prices were up before Russia invaded Ukraine.  China bought 1.1 mmt U.S. corn this week and could buy more to replace unshipped Ukrainian corn.  Lower South America crops, increased U.S. biofuel demand and now U.S. weather is slowing early planting progress, thus continuing to support higher prices at their highest levels since the U.S. 2012 drought.

SOYBEANS

The soybean complex was up overnight led by another round of new contract highs in soy oil and a slow start to the U.S. planting season.  The U.S. Midwest April 29 to May 6 forecast is wet.  July beans are up 16 cents this morning to 17.00-3/4, and up 13 cents this week.  Nov beans are up 15 cents to 15.36 and up 30 cents for the week.  July meal is up 4.30 to 430.40.  July soy oil hit a new high at 87.65.  Year-To-Date nearby bean futures are up 30%; Soymeal up 7%; Soy oil up 62%.  On Thursday, Managed funds were net sellers of 6,000 soybeans and 6,000 soymeal and bought 7,000 soy oil.  They are estimated to be going into the end of the month net long 163,000 soybeans, 83,000 soymeal and 125,000 soy oil.  Overnight, Chinese September soybean futures were up 56 yuan; Soymeal up 19; Soy oil up 100; Palm oil up 244; Corn up 18;  Malaysian palm oil prices overnight were up 189 ringgit (+2.73%) at 7103.

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WHEAT

Wheat futures were mixed overnight.  July Chicago wheat is up 9 cents to 10.83.  For the week, the contract is 18 cents higher.  On Thursday, Managed funds were net sellers of 2,000 Chicago wheat and are now estimated long 2,000 contracts.  July KC is up 8 cents to 11.49-1/4 and unchanged for the week.  World wheat demand is expected to increase, and the U.S. HRW crop could be lower.  New crop Matif is making new highs as lower Black Sea exports could shift demand to EU.   India and Pakistan is hot and India’s wheat crop is in decline.  July MPLS wheat gained 10-1/2 cents overnight to 12.02 versus yesterday’s new high at 12.06.  For the week, the spring wheat contract has gained 36 cents underpinned by slow spring wheat planting progress.  The U.S. north Plains April 29 to May 6 forecast continues to remain wet.   Year-To-Date nearby futures are up 41% in SRW, up 42% in HRW, up 21% in HRS.

CATTLE

Cattle calls are mixed for today.  Prices tested and held key support levels on Thursday, and could be looking to form a low, but the technical picture is still weak.  June cattle may be under the influence of today’s April expiration at trendline around $134.  This will be a key support line to keep the uptrend still intact.  Cash trade was quiet and likely done for the week with the early activity this week. Throughout the week, Southern live cattle have traded for $140 and Northern dressed cattle have sold for $232.   Boxed beef prices were firmer at midday, but closed mixed (Choice 262.60 +.69, Select 251.06 -1.26) trying to find some support into the end of the week.  Movement was light at 96 loads. Weekly export sales reported new beef net export sales of 11,400 metric tons for 2022 were down 24% from the previous week and 34% from the prior four-week average. The three largest buyers were Japan, China and South Korea of U.S. Beef last week.  Feeder cattle futures may be looking to carve out a near-term low.   Buying support stepped into the market after Wednesday’s strong sell off, possibly signaling some value buying in the market.  A firm close on Friday may be needed to truly show a low could be in place at this level.  April feeder futures and options expired on Thursday and will stay tied to the index.  The Feeder cash index gained .15 to 156.36.

HOGS

The hog market is called steady to lower.  Lean hog charts look defensive, but the price action was improved on Thursday.  The path of least resistance at this point still looks to be searching for a low, and one day of firmer trade may be the beginning of the process.  June hog futures held the 100-day moving average at $109.600 ushering in support to the charts.  The Lean hog cash index has been trending higher but was .55 lower to 102.34 on Thursday.  The premium of the futures to cash has quickly evaporated during this price sell off.  May is still holding a 1.6350 premium, and June is 8.635 over the index.  Cash markets were unreported due to confidentiality at midday on Thursday.  Closing afternoon direct trade was lower, losing 2.16, to 102.57 and the five-day average settled to 102.58.  Pork retail values closed 1.02 lower to 104.49. Product movement was light at 248 loads.  The softer retail close will pressure this morning’s futures open.  Weekly export sales added new pork sales total of 31,500 MT for 2022 were up noticeably from the previous week and up 19% from the prior 4-week average.  Mexico, Japan, and Canada were the top buyers of U.S. pork last week.

Author

Matt Strelow

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