TFM Sunrise Update 05-25-2022


Corn futures were down last night along with wheat and the bean complex, as well as pressure from an overnight rebound in the dollar.  A lack of threatening weather preventing the final planting of the U.S. 2022 corn crop is silencing buying interest into the end of the month.  July corn is down 8 cents this morning to 7.63-3/4.  Dec is down 8-1/4 cents to 7.17 and is bouncing off 50-Day Moving Average support. drawn at 7.15.  The new crop contract posted a contract high just last week at 7.66-1/4, but then closed lower five out of six trading days.  The downward reversal turns the short-term trend down as many states have caught up on planting in recent weeks and the current two-week forecast is mostly favorable.  The most extreme outlier to that statement is North Dakota who is battling constant rain and flooding, sitting at just 20% planted, while the U.S. overall has pushed to 72% complete.  Look for possible support to come from continued dryness in Brazil and expected strength in ethanol demand.  Weekly Ethanol Stats will be out later this morning, Exports tomorrow.


Soybeans traded with a weak tone overnight in lighter volume.  July futures shed a nickel to 16.88, and Nov was down 1-1/2 to 15.16.  July Meal fell 2.660 to 424.80.  The nearby soy oil contract slipped .32 to 79.80.  After dropping from 8-year highs, front month bean meal futures have managed to push off their lows from earlier this month to retest the 430 mark.  Bean and bean meal demand to China remains supportive and may limit downside moves in the market.  However, the market will need to prove this bounce isn’t a temporary retracement amid a larger correction lower.  India announced duty free imports of 2 mmt of soy oil and sun oil, and domestic Chinese feeders continue to be active buyers of soymeal.  Dalian soybean, palmoil and soyoil futures traded higher overnight, corn and soymeal were lower.

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Wheat futures were lower overnight on follow-through from Tuesday’s down day.  July Chicago wheat fell 27-3/4 cents to 2-week low of 11..58.  After breaking out it’s 2-month sideways trading range to the upside, wheat prices are falling back into the old pattern after the nearby SRW wheat contract failed to maintain the 12.50 price level.  July KC wheat also lost 28 cents last night to 12.09-3/4.  The Southern Plains caught some needed rains in many areas, but it may be too late to positively affect the crop ahead of harvest.  July MPLS was down 28 cent to 12.49-1/4 overnight.   Spring wheat planting at 43% complete, continues to lag the 5-year average (83%) by a lot as insurance deadlines approach.  Overnight headlines highlight Interfax reporting that Russia will now allow humanitarian food vessels to be shipped from Ukraine.  Later, Russia said that approval of a corridor for exports will need to see lifting of some Russian sanctions.  Russia deputy Defense Minister also said Mariupol port is now open, but many doubt this. US composite May Purchasing Managers index fell to 53.8 vs April 56.5 and lowest in 4


Cattle futures are called mixed.  The past couple sessions have been encouraging to bullish traders.  However, the front-end supply picture and concerns regarding demand and the outside markets can limit the move higher in cattle.  The keys will be how much money can flow into the market cash market activity.  Cash trade started to develop late on Tuesday with light southern trade starting at $137, down $1 from last week’s totals.  Northern trade was undeveloped, and overall trade was light.  At $137, the cash market is still holding a premium to the futures, but the softer trend will limit gains in the front month overall.   Retail prices closed mixed with Choice losing .63 to 263.65 but Select closed 1.12 higher to 245.35.  The load count was light at 165 loads.  Feeders saw strong gains as prices recovered from recent losses and followed through to the upside supported by weakness in the corn and wheat markets.  The May feeder contract expires tomorrow, and the premium of front month contracts to the Feeder Cash Index is a limiting factor.  The Feeder Cash Index was 0.33 lower to 152.72.


The hog market is called steady to firmer.  Hog futures saw some profit taking triggered by a buildup of pork supplies seen on the USDA cold storage report released on Monday afternoon.   June hogs market failed the 100-day moving average at 111.00, which is a key short-term barrier, and with USDA cold storage report on Monday afternoon reflected a slower demand pace and those larger slaughter numbers as frozen pork supplies were up 9% from the previous month and up 16% from last year.  Stocks of pork bellies were up 3% from last month and up 67% from last year.   With ample supplies of hogs seeming readily available in the near-term,  the market was primed a some set back.  The midday cash market rolling average was firmer at 111.39 on Tuesday, and the 5-day average moved higher to 110.27.  The CME Lean Hog Index started to reflect the higher trend gaining 0.91 to 102.08.  Retail values trended higher at midday with carcass values .81 higher to 107.86, and closed firmer gaining 1.19 overall to 108.24.  Movement was very good at 304 loads.  The CME Pork Cutout Index added 1.20 to 104.42 reflected the recent strength.  The trend to watch most closely is the hog slaughter numbers.  On Tuesday, estimated slaughter was 473,000 head, down 4,000 from last week and 9,000 from last year.  If the hog market is working through the current supply picture, the market may be poised for more recovery.


Matt Strelow

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