TFM Sunrise Update 05-20-2022


Corn futures are down a nickel this morning to 7.78-1/4 (July) and 7.31 (Dec).  Long liquidation and profit taking continues weigh on the corn market into the weekend after July futures rejected
key price levels.  Managed funds are net long an estimated 334,000 corn contracts.  More U.S. Midwest rains are forecast through this weekend.  The NOAA 90 day forecast is warm and dry for U.S. Plains and Western Corn Belt.  Elsewhere, Argentina’s estimated corn harvest is near 27% complete with the crop rated 17% Good-to-Excellent vs 47% last year.  Argentina continues to estimate their corn crop near 49 mmt vs USDA 53.  The Argentina farmer has sold only 24 mmt to date.  Traders continue to be concerned about Ukraine’s corn exports after Russia rejected a UN effort to open Ukraine exports.   The dollar is consolidating at a fresh two-week low, crude is mixed this morning and stock index futures are firm.  Gold, silver, copper, coffee and sugar are higher.


The soybean complex was mixed overnight.  July beans are up 4 cents cents this morning to 16.94-1/2.  November is up a penny to 15.15-1/2.   July meal is off .20 to 425.10.  July soy oil is up 1.08 to 80.61.  On Thursday, Managed funds were net sellers of 4,000 soy oil and bought 9,000 soybeans and 2,000 soymeal.  The are now estimated long 154,000 soybeans, 56,000 soymeal and 79,000 soy oil.  Soy oil down on talk of Indonesia lifting their palm oil export ban.  However, overnight Indonesia announced domestic market sales requirements and could slow exports.  Consumer buying is helping soymeal and China’s domestic soymeal sales remain high.  Overnight, Chinese Sept bean futures were up 30 yuan; Soymeal up 26; Soy oil up 28; Palm oil down 22; Corn down 5;  Malaysian palm oil prices overnight were up 31 ringgit (+0.51%) at 6103.  There is talk China increased buying June and July soybean cargoes from Brazil and U.S. for August.  The U.S. soybean export commit is near 2.175 bil bu down 3% vs last year vs USDA’s forecast of a 5.5% drop.  The U.S. new crop export commit is record high.  Argentina soybean harvest is near 85% done.  The crop is rated only 10% Good-to-Excellent versus last year’s record low of 8%.

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Wheat futures were down overnight while having completed a full reversal from contract highs posted at the beginning of the week.  July Chicago wheat is down 13-1/2 cents this morning to 11.87 while finding support at the contract’s 10-day moving average near 11.80.  On Thursday, Managed funds were net sellers of 11,000 Chicago wheat and are now estimate to be long 17,000 contracts.  July  KC wheat is down 14 cents to 12.81-1/4.  July MPLS wheat is down 14 to 13.16-1/2.  Wheat futures have weakened despite word that Russia rejected UN’s proposal to open Ukraine grain exports.  There remains concern about Russia escalation of the Ukraine war and attacks on Ukraine port facilities.  Profit taking and long liquidation is also noted in front of U.S. HRW harvest.  The annual crop tour estimated Kansas’s yield near 39.7 vs USDA 39.0 but estimated the crop near 216 mil bu vs USDA 217 and 364 last year.  U.S. wheat export demand remains below the USDA estimate.


Cattle futures are called steady to lower.  Live cattle futures saw mixed trade on Thursday as prices were looking for direction and squaring up positions before this afternoon’s Cattle on Feed Report.  Expectations for the report are showing total cattle on feed at 101.5% of last year, placements at 96.5% of last year, and marketings at 97.9% of last year.  Equity markets are firm this morning, but the lower trend of late keeps cattle under pressure.  The concerns regarding the economy and the consumer have kept the pressure in the cattle market as a possible recession play.   Cash trade was quiet and essentially done for the with trade in the south established at $138, down $2 from last week’s levels.  Northern dressed trade was at $226-$227, $2-3 lower than last week.  Retail beef at midday was mixed, but firmer into the close with Choice gaining 1.23 to 261.70 and Select was .04 higher to 246.09.  The load count was light at 86 loads.  USDA Weekly exports posted new net sales of 23,300 MT for 2022, down 18% from the previous week, but up 35 % from the prior 4-week average.   Top buyers of U.S. beef were Japan, South Korea, and China.  The premium of front month feeder contracts to the feeder cash index is still concerning, with August trading at nearly a $12 premium to the index.  Feeder cash index was 1.59 lower to 153.46.  The cattle market still looks concerning for further downside pressure. The macro picture and concern in the economy keep selling in the market in general.  The market is oversold, but needs some news to change the direction of the money flow.


The hog market is called steady to firmer.  The market is seeing some buying strength, supported by a firmer retail market this week and and improving direct cash tone.  Price strength was reflected across the entire hog complex yesterday, and the market is looking like it has turned the corner higher.  After 4 days higher in a row, June hogs consolidated at the top of this week’s gains, held in check by the 20-day moving average.  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.  Retail prices have trended higher this week on good product movement, helping support prices.  Midday carcass values were 1.00 higher, but closed softer losing .015 to 103.46. Movement was lighter at 220 loads.  The CME Pork Cutout Index has turned higher reflecting the recent strength.  On Thursday, the index gained .70 to 101.36.  USDA Weekly export recorded new sales of 24,100 MT for 2022, down 8% from the previous week, but up 2% from the prior 4-week average.  Mexico, South Korea, and Colombia were the top buyers of U.S. pork last week.  The support in the market has also been from an improved direct cash hog trade.  Midday cash market was higher in morning trade, gaining 1.74 to 110.23 and a 5-day average at 106.52. CME Lean Hog Index was 0.18 higher at 100.08 on the day.


Matt Strelow

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