TFM Sunrise Update 05-11-2021


Corn futures were mixed overnight with a weaker tone.  July is fractionally lower this morning at 7.11.  Dec is down a nickel to 6.04-3/4 with an overnight low in place at 5.99.  Going into tomorrow’s Monthly Supply/Demand report, a combination of pre-report profit-taking, sparked by good U.S. weather and disappointing Weekly Export Inspections is weighing on the long-lived price rally to multi-year highs.  Trade estimates for U.S. 2020/21 corn carryout is near 1.275 bil bu vs USDA’s last estimate of 1.352.  Monday afternoon’s USDA Weekly Crop Progress report stated U.S. planted acreage was 67% complete (trade estimate was 67%) versus 46% a week ago, 65% last year, and 52% average.  U.S. Corn emerged was 20% versus 8% a week ago, 22% last year, and 19% average.  U.S. Oats planted were 85% versus 72% a week ago, 76% last year, and 73% average.  Brazilian agribusiness consultancy AgRural on Monday said it cut its production estimate for Brazil’s second corn crop in the Center South region due to a prolonged drought that worsened in the first week of May.  Farmers there are now expected to reap 65.1 mil ton of second-crop corn, down from 73 mil ton estimated on April 19.  At the same time AgRural said average yields are now seen at 84.1 60-kilo bags per hectare, the lowest in three years.  In the whole of Brazil, AgRural said second corn crop production will be an estimated 69.6 mil ton, compared with 75.1 mil in 2020.


Beans are mostly unchanged this morning after a rather quiet overnight session.   The market softened substantially to begin the week as weather for the next two weeks appears non-threatening. November futures, at 14.12 eased below Monday’s ‘inside day’ trading range while having quickly declined more than 30 cents from Friday’s contract high of 14.43-1/4.  Chinese Ag futures for (September) settled unchanged in soybeans (at U.S. $26.00), down 7 yuan in Corn (at $11.17), down 12 in Soymeal (at $518), down 122 in Soyoil (at 62.15 cents), and down 46 in Palm Oil.  Malaysian palm oil prices were down 2 ringgit at 4,366 (basis July) at midsession with rising inventories weighing over prices.  U.S. Soybeans planted was 42% (trade estimate was 40%) versus 24% a week ago, 36% last year, and 22% average.  Soybeans emerged were 10% versus NA% a week ago, 6% last year, and 4% average.  Trade estimates for tomorrow’s US 2020/21 soybean carryout is near 118 mil bu vs 120. In the news, U.S. agricultural commodities trader ADM said it planned to build a soy-crushing facility and refinery in North Dakota to meet increasing demand for food and renewable fuel.  Companies are counting on rising demand for food as restaurants and the travel sector emerge from the COVID-19 pandemic, and for feedstocks to produce biofuels, including renewable diesel.  A renewable diesel boom could also have a profound impact on the agricultural sector by increasing demand for oilseeds such as soybeans and canola.


Wheat futures traded two-sided overnight after losing traction to begin the week.  The July Chicago wheat contract is finding support at it’s 10-day moving average located near 7.35.  July KC is also at it’s 10-day MA at 7.04.  U.S. winter wheat headed was 38% versus 27% last week, 42% a year ago, 46% average.  The crop was rated 49% good-to-excellent (trade estimate was 48%) versus 48% a week ago and 53% a year ago; 33% fair (33% last week, 31% a year ago); 18% poor-to-very poor (19% last week, 16% a year ago).  July MPLS spring wheat futures are up a nickel to 7.58-1/4 after falling back to late April price levels to start the week.  U.S. spring wheat planted was 70% (trade estimate was 69%) versus 49% last week, 40% a year ago, 51% average.  The emerged spring wheat crop was 29% versus 14% last week, 15% a year ago, 20% average.  Last evening’s GFS model run was notably drier in the Hard Red Winter wheat region in the second week of the outlook compared to the midday GFS model.  There was a decrease in the Northern Plains region May 20 – 22 but then an increase May 23 – 25.  Some shower activity is expected that will promote some more improvement in planting and establishment conditions; though, more rain will still be needed.  Trade estimates for U.S. 2020/21 wheat carryout is near 850 mil bu, down from 852 last month.


Cattle futures calls are for higher following a round of strong buying and short covering to start the week featuring triple-digit gains in some live and feeder contracts.  The strength in Live cattle is fueled by a strong move in feeder markets as a sharp break in corn prices triggers buying interest.  Beef carcass values maintained their upward trajectory with Choice gaining 3.23 to 309.11, and Select was 3.49 higher to 293.76.  The load count was light at 71 loads.  The strong beef values should build some cash market optimism this week.  After mostly steady trade last week, Monday stayed typically quiet with bids and asking prices undeveloped.  In feeders, the market was oversold, and the strong break in grains fueled the rebound.  In lives, charts were dramatically improved, technically, but the key will be follow through going later into the week to determine overall price direction.


Hog calls are for steady to higher.  Futures finished mixed yesterday amid additional bear spreading.  The longer-term deferred contracts, December and later were slightly higher.  June hogs saw additional selling pressure, but held support above the May 3rd price gap on the charts and the 10-day moving average. Cash and the lean hog index stayed firm and are trending higher.  The Cash Index was up .67 to 109.22, starting the path for a 15th consecutive week higher.  Pork carcasses gained 1.98 to 115.77 at midday, but faded into the close, losing .63 to 113.16 on moderate demand of 259 loads. The softer tone at the close could limit the market’s open today.  The front-end of the hog market is consolidating and taking some profits, but the fundamentals and the longer-term trends still look friendly as the market seeks a top.


Matthew Strelow

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