TFM Sunrise Update 05-17-2022


Corn futures were down last night amid a pull-back in wheat and a strong push in planting progress.  USDA said 49% of the corn crop was in, more than double last week’s 22% progress number.  The 5-year average is 67% for this time of year.  July and December corn fell 8 cents to 8.00 and 7.57, respectively.  Year-to-date, nearby corn futures are up 35%.  Basis bids for corn shipped by barge to the U.S. Gulf Coast were mostly steady to lower on Monday as futures prices surged.  In outside markets, the dollar is down hard (70 basis points), crude is up .50, and stock index futures are up 500 points.


The soybean complex was mixed to lower overnight.  July and November beans are down 5-1/2 cents to 16.51 and 15.06-1/2, respectively.  July meal is off 80 cents to 412.80 and July soy oil is 26 cents weaker to 82.73.  30% of the U.S. bean crop is planted, up from 12% last week and behind the 5-year average of 39%.  Year to date, nearby soybean futures are up 24% and soy oil is up 47%.  U.S. April NOPA soybean crush of 169.8 mil bu fell short of the trade estimated 173.4 mil on Monday.  Soybean processing rose in April from 160.3 mil in the same period a year earlier, and soybean-oil inventories at the end of April rose to 1.814 bil lbs vs trade estimates of 1.866 bil lbs and compared to 1.702 bil lbs a year ago.  Chinese September soybeans were down 29 yuan overnight; Soymeal up 22; Soy oil down 40; Palm oil down 136; Corn up 16;  Malaysian palm oil prices overnight were down 21 ringgit (-0.33%) at 6348.

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Wheat futures traded two–sided overnight after front month contracts finished limit-up to start the week on news that India will indeed be banning wheat exports.  Expanded limits are in play to day pushing SRW and HRW contracts to 1.05 per bushel.  July Chicago is down 25 cents this morning to 12.25-1/2.  The contract traded a high of 12.75 and low 12.00-3/4 last night falling just short of the contract high from March 8 at 12.78-1/4 and coming close to filling the gap from yesterday’s price jump from Friday’s intra-day high of 11.98-1/2.   July KC wheat is down 36 cents to 13.16 with an overnight trading range between a new contract high of 13.79-1/4 and session low of 12.98-1/2 versus Friday’s high of 12.92.  On Monday afternoon, USDA eroded the winter wheat crop Good-to-Excellent rating to 27% versus last week’s 29%.  The agency pegged 48% of the crop headed versus 33% last week and the 53% 5-year average.  July MPLS spring wheat futures are down 25 cents to 13.60 after also posting an overnight ‘outside’ session including a new high of 14.12-3/4 on the upside and low at 13.40.  Friday’s session high came in at 13.35-1/2 on the chart.  U.S. spring wheat planting is 39% complete versus 27% last week and the 67% 5-year average; 16% is emerged vs 9% last week and the 30% 5-year average.  Year-To-Date nearby futures are up 59% in SRW, up 64% in HRW, up 39% in HRS.


Cattle futures are called steady to higher.  Live cattle futures finished with strong to moderate gains Monday as short covering and some value buying showed up.  The discount of the futures to the cash market helped support prices before cash trade develops this week.  Feeder prices were lower, but resilient given the strength in grain markets on Monday.  June live cattle still held above the most recent lows, holding support at $131.000, as the market saw strong price action, closing at the top of the trading range, corralled by resistance at the 10-day moving average of 133.20.  If prices can push through this barrier, a further correction to the $135.500 resistance is likely.  The expectation is for cash market to remain mostly steady comparable to last week.  The premium of the cash market supported the front-end of the futures market to start the week.  Retail beef closing prices were higher with Choice gaining 1.36 to 260.31 and Select adding 1.77 to 245.67. Load count was light movement at 95 loads.  Feeder prices did break to a new low on the session, before some buyers stepped in.  The premium of front month contracts to the feeder cash index looks concerning, with August trading at a $10 premium to the index.  The feeder cash index was .36 lower to 156.00.  The cash market and the retail markets will be key to price direction ahead of Friday’s Cattle on Feed report.


The hog market is called higher.  June hogs closing back above the 200-day moving average improves the technical picture and likely led to some short covering during Monday’s session.  This may bring some optimism for additional short covering to going into Tuesday.  The market will need to see the fundamental of cash and retail demand to improve to help lift the market.  The new lead month, June has added over $6.00 in the last two session, signaling another possible short-term low.  The June market gapped higher on the session open and closed back above the 200-day moving average as additional money flow points to a possible recovery back to the 100-day moving average at $110.00.   Demand will still a big concern as retail prices struggled, pushing under the $100.00 level last week, only to see a firm Friday close.  Closing carcass values were .38 higher to 101.55, softer than midday trade.  Movement was good at 356 loads.  The CME pork cutout index has also been trending lower, reflecting last week’s weakness. it lost .68 today to 100.73.  Midday cash market was firm in morning trade, gaining .04 to 101.31 and a 5-day average at 104.96.  CME lean hog index was 0.55 lower at 100.49 on the day.  With the price strength in June futures, the premium of June futures to cash has grown back to 3.335, which could limit the market upside.


Matt Strelow

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