TFM Sunrise Update 05-18-2022


Corn futures were weaker overnight with nearby July fractionally lower to 8.00 as the market starts to chop around that pivotal price area.  December corn was down a nickel to 7.55-3/4.  Decent planting progress faces potential rain delays as we pass the mid-point of May with growers in North Dakota and northern Minnesota feeling the brunt of the pressure to get their crop seeded.  On Tuesday, Managed funds sold 4,000 corn, and are estimated net long 354,000 corn contracts.  Weekly Ethanol Stats will be out later this morning.  U.S. stocks are down slightly this morning.  Crude is higher and near $114.  The U.S. dollar is higher.  Gold, silver, copper coffee, cocoa, sugar and cotton are lower.


The soybean complex was mixed overnight.  July beans are up 2 cents this morning to 16.80 while testing 17.00 as easing Covid restrictions in China is seen boosting demand.  Nov is down 3 to 15.22-1/2.  July meal is up 2.10 to 413.90 while holding a short-term down-trend with buyers defending the $400/ton level.  Argentina’s soybean crop is more than two thirds harvested, but dry conditions have kept only 10% of the crop good-to-excellent.  July soy oil was down .46 to 83.03 overnight.  On Tuesday, Managed funds were net buyers of 6,000 soybeans and 3,000 soy oil and sold 2,000 soymeal.  They are now estimated to be long 153,000 soybeans, 53,000 soymeal and 89,000 soy oil.  Chinese Sept bean futures overnight were down 3 yuan; Soymeal up 15; Soy oil down 6; Palm oil up 18; Corn up 3;  Malaysian palm oil prices overnight were up 20 ringgit (+0.33%) at 6136.

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Wheat futures traded inside Tuesday’s higher trading ranges overnight while slumping lower on talk of lower global economic growth, mostly due to supply chain challenges and higher inflation especially food and energy.   July Chicago futures back-peddled 30 cents last night to 12.47-1/2 while posting a 46 cent trading range between 12.80 and 12.34.  July KC wheat traded a 43 cent range between 13.68 and 13.25, and is down 33-1/2 cents this morning to 13.34-1/4.  July MPLS wheat is down 26-1/2 cents to 13.67.  All three actively traded contracts have yet to fill their respective gaps on the charts left from Sunday night’s higher start to the week.  The first day of the U.S. annual HRW crop tour yielded 39.5 bpa in norther KS vs 59.2 last year.  Colorado’s wheat crop is estimated near 40 mil bu vs USDA’s estimate of 49 and 69 last year. Nebraska’s estimate is 37 mil bu vs USDA 41 last year.  The agency estimates Oklahoma’s at 60 vs 115 last year.  Texas is estimated near 41 vs 74 last year. U.S. north Plain’s rains could reduce U.S. HRS acres.


Cattle futures are called steady to lower.  Live cattle futures finished with moderate losses as a softer cash tone to start the week weighed on futures prices.  Cash started seeing some action on Tuesday afternoon, and southern deals were being established at $138, down $2 from last week’s levels.  Northern dressed trade was at $226-$227, $2-3 lower than last week.  Feeder prices were led lower, pressured by overall strength in grains.  June live cattle still held support at the 10-day moving average at $133.00 as the market tries to build an uptrend over the past couple of sessions.   The premium of the cash market is still present, but the softer tone help push prices lower.  Retail beef traded firmer on the day with Choice gaining .17 to 260.48 and Select was 2.52 higher to 248.19 Load count was light at 118 loads.  Tuesday’s estimated slaughter totaled 125,000 head, even with last week, but 5,000 more than a year ago, as cattle number stay relatively heavy.  The USDA Cattle on Feed report out on Friday could keep the market choppy for the remainder on the week.  The premium of front month contracts to the feeder cash index looks concerning, with August trading at a $11 premium to the index.   Feeder cash index was .73 lower to 155.27.


The hog market is called steady to higher.  Hog futures saw mixed trade as the market was bull spread and the front-end contracts saw additional price recovery with strong triple digit gains.  The June contract trading back above the 200-day moving average, improves the technical picture on the charts.  Additional money flow may have the hog market looking to recover back to a possible test of the 100-day moving average at $110.00, with short-term resistance at the $107.000 level.  Demand will still be a big concern as retail prices have struggled, pushing under the $100.00 level last week, but have trended higher on good product movement to start the week.  Midday carcass values were 2.28 higher, and values held some gains into the close, gaining .56 to 102.11.  Movement was strong at 366 loads.  The CME pork cutout index has also been trending lower, reflecting last week’s weakness. It lost .50 yesterday to 100.23.  Midday cash markets were higher in morning trade, gaining 3.32 to 104.63 and a 5-day average at 104.59. CME lean hog index was 0.42 lower at 100.07 on the day.  With the price strength in June futures, the premium of June futures to cash has grown back to 5.080, which could limit the market upside.  The front-end of the hog market is seeing some buying strength, being supported by a firmer retail market this week and improving direct cash tone.  The premium of the futures to the cash market may be a limiting factor.


Matt Strelow

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