TFM Sunrise Update 05-04-2022


Corn futures were narrowly mixed overnight as the trade evens up positions before the Fed meeting.  The trade is looking for a 50 point hike in the interest rate.  India and Australia have raised their rates.  July corn is up a penny this morning to 7.94.  Dec is fractionally lower at 7.35.  Warmer and drier forecasts are weighing on sentiment, as well as strength in the dollar as nearby corn prices struggle near $8.00.  Corn planting is falling behind last year and the previous 5 year average.  Only Texas is running ahead of last year.  Weekly Ethanol Stats will be out later this morning.  Crude is higher this morning.  On Tuesday, Managed funds were net sellers 12,000 corn bringing their net long position down to an estimated 338,000.


The soybean complex was mixed overnight.  July and Nov beans are unchanged at 16.30-1/2 and 14.78-1/4, respectively while slumping to a 4-week low on declining open interest.  July meal is up .70 to 424.60 while slumping toward $400/ton.  July bean oil is up .25 to 80.53.  Economists remain concerned about China’s economy due to Covid lockdowns.  On Tuesday, Managed funds were net sellers of 7,000 soybeans, 3,000 soymeal and bought 1,000 soy oil.  They are now estimated to be long 134,000 soybeans, 76,000 soymeal and 91,000 soy oil.  Looking ahead to next Thursday, the trade is looking for USDA to lower South America soybean supply and raise U.S. soybean demand and lower US 2021/22 and 2022/23 carryout.

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Wheat futures were firm overnight as the U.S. wheat trade starts to reverse lower.  July Chicago wheat was up 7-1/2 cents to 10.53.  July KC gained 10-1/2 cents to 11.03-1/4.  July MPLS was up 6-1/4 cents to 11.61-3/4.  Strength in the U.S. dollar keeps the pressure on wheat while the lowest winter wheat crop ratings since 1996 and spring wheat planting progress slowed by weather underpins prices.  Year-To-Date nearby futures are up 34% in SRW, up 35% in HRW and up 17% in HRS.  Next week, USDA will have to deal with the impact the war in Ukraine will have on 2022/23 trade.  Ukraine crop acres could be down 33% with 30% of the crops planted to date.  Ukraine’s grain exports fell to around 923,000 tons in April due to the Russian invasion from 2.8 million tons in the same month in 2021.


Cattle calls are steady to lower after closing well of their highs on Tuesday after starting higher due to an oversold market.  Cash has been quiet so far this week within a firming trend recently.  Light trading began in the north at mostly steady prices of $145-146 live and $232 dressed.  Lower corn prices have supported feeders, thus helping live cattle. Tuesday’s slaughter was estimated at 126,000 head, 1,000 head more than week ago and 4,000 head more than a year ago.  Monday’s slaughter was revised to 111,000 head, 4,000 head less than what was originally stated, according to DTN.


The hog market is called steady to lower as June futures test 200-day Moving Average support.  A classic head and shoulders topping formation highlights the lean hog chart from a technical perspective and sets up a downside target area at 98.70.  On the upside, the next area of resistance is 104.45.  The contract settled at 102.20 on Tuesday.  Weaker pork cutout values may help keep futures in search of a low.  Tuesday’s slaughter was estimated at 480,000 head, steady with a week ago and 6,000 head less than a year ago.


Matthew Strelow

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