TFM Sunrise Update 05-03-2022


Corn futures were firm overnight with July up a nickel to 8.08-1/2 and Dec up 4 to 7.46-1/4.  Weekly Crop Progress data showed the U.S. corn crop 14% planted versus 7% last week and the 5 yr average of 33%.  3% of the crop is emerged.  On Monday, Managed funds were net sellers of 17,000 corn and are now estimated to be long 350,000 contracts.  Talk of higher U.S. corn and ethanol demand should keep a bid under prices.  Meanwhile, the U.S. Fed increasing U.S. interest rates offers resistance to commodity prices.  U.S. stock index futures are mixed.  Crude and the U.S. dollar are lower.


The soybean complex was mixed overnight as the major trend softens at overbought levels.  July beans are down a penny this morning to 16.44-1/4.  Nov is down 2 to 14.88-1/2.  July meal is up 2.20 to 433.10.  July soy oil is down .44 to 79.65 after reversing lower from an all-time high sparked by China’s economic concerns highlighted by severe lockdowns.  China and Malaysia markets are closed through Thursday due to holiday.   Weekly Crop Progress data showed the U.S. soybean crop 8% planted versus 3% last week and the 5 yr average of 13%.  On Monday, Managed funds were net sellers of 21,000 soybeans, 1,000 soymeal and 9,000 soy oil.  They’re net long an estimated 141,000 soybeans, 79,000 soymeal and 90,000 soy oil.

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Wheat futures were firm overnight.  July Chicago wheat was up 2-1/2 to 10.58.  July KC gained 7 cents to 11.05.  The contract has given up $1.50 per bushel since the putting in the March 7 high at 12.59 with U.S exports taking a hit.  USDA kept the U.S. winter wheat crop rating at 27% Good-to-Excellent and the lowest since 1996.  The crop was 48% G/E a year ago. 5% of the U.S.  July MPLS was up 4-1/2 cents to 11.72-1/4.  The spring wheat crop is 19% planted versus the 5 year average of 28%, 13% last week and 46% last year.  The 7-day weather forecast for the north Plains remains wet before some expected warmer and drier conditions.


Cattle calls are steady to higher.  A strong start to the week supports the market from an oversold condition.  The key will be follow-through as the market moves along this week.  Cash trade and improved demand will be key for that support.  We’re not calling Monday’s move a low, but a possible good sign.  June cattle used the weakness in grains and the expiration of April cattle to start “May beef month” with a strong price recovery.   June Live cattle’s close on Friday, trading $8.00 under the final trades in April looks under-valued.  Prices moved quickly off the trend line support from Friday’s close.   June cattle challenged the 200-day moving average as overhead resistance, and this mark may be a key swing point for the June Market.  Last week’s cash market was supportive of prices, and that help bring some buying support into the June contract.  Expectations are for packers to stay supportive of cash bids again this week.  The trend in cash markets will be a key for price stability this week.  Beef demand has been a concern, as colder, wet weather has pushed some of the spring demand back but an improving forecast may have helped prices on Monday.  Boxed beef prices were higher at midday, and held gains into the close (Choice 262.55, +1.77, Select 248.23 +.26), on light movement at 79 loads.   A weak tone in the grain markets was the fuel for an uptick in feeders, triggering a short covering rally in an oversold market.  The charts turned more friendly, posting chart reversals, and closing above nearby moving averages.


The hog market is called steady to lower.  Lean hog charts are still on the defensive, and the trend is still lower as the market searches for a bottom.  Demand concerns on the export front and the retail consumer are the fundamental concerns pressuring the market amid a cold spring.   June hogs posted their lowest close since January.  Prices did try to work off session lows, but the mid-range close still keeps the trend intact, as prices are looking to challenge the 100-day support level at 101.700.   The cash hog midday direct trade was 3.50 lower to 96.08.  The lean hog cash index was .04 lower to 101.77.   May hogs are at a 1.895 discount to the index, but June is still 3.2050 higher.  The tightening spread between the cash and futures could help slow the selling pressure on the front end of the market.  Pork retail values were sharply higher at midday, and held gains into the close, gaining 2.00 to 106.58.  Product movement was moderated at 290 loads.


Matthew Strelow

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