TFM Sunrise Update 05-26-2022

The CME and Total Farm Marketing offices will be closed Monday, May 30, 2022, in observance of Memorial Day

CORN

Corn futures were down last night again with little weather-related news to support the market and diminishing trade volume ahead of the 3-day holiday weekend.  July corn is down 12 cents this morning to 7.60-1/4.  Dec is down 10 to 7.13-1/4.  For the week, so far, July corn is down 17-1/2 cents.  Dec is down 18.  On Tuesday, Managed funds were net sellers 3,000 corn, shrinking their net long position to an estimated 294,000 contracts.  Trade estimates for this morning’s USDA Weekly Export Sales are 150,000 to 500,000 tons for old crop, 200,000 to 800,000 tons for new crop.   U.S. domestic corn basis remains strong.  Again, news services are reporting unconfirmed accounts of the possibility Russia will open 7 corridors for Ukraine food and sun oil exports, but Russia said opening up exports required lower Russian sanctions.  U.S. stocks are mixed. The dollar is weaker.  Crude stays higher.  Gold, silver, copper, cocoa, sugar and cotton are lower.

SOYBEANS

Soybeans traded with a weak tone overnight.  July futures are down 2 cents to 16.79, and Nov is 1-1/2 cents to15.11-1/4.  On Tuesday, Managed funds were net sellers of 7,000 soybeans, 2,000 soymeal and 4,000 soyoil.  They are now estimated to be net long 133,000 soybeans, 37,000 soymeal and 80,000 soy oil.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 800,000 tons for old crop, 100,000 to 600,000 tons for new crop.  Nearby July meal futures are .90 lower to 423.30.  July soy meal is unchanged at 78.92. For the week, so far, soybeans are down 26-3/4 cents; Soymeal down .51; Soy oil down 2.07.  U.S. cash soybean crush margins remain positive.  Brazil’s soybean fob basis is higher.  Trade chatter includes talk that Argentina could increase their export tax.  Matif rapeseed was lower on talk of increased Ukrainian sun oil exports.  Indonesia palm oil export policy remains uncertain.  Overnight, Chinese Ag futures showed (SEP 22) Soybeans down 15 yuan; Soymeal down 17; Soy oil down 26; Palm oil down 150; Corn down 11;  Malaysian palm oil prices overnight were up 156 ringgit (+2.44%) at 6539.

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WHEAT

Wheat futures were down again overnight as prices deteriorate throughout the week.  July Chicago wheat lost 27 cents to 11.21-1/4.  July KC wheat fell 22 cents to 12.11-1/4.  On Tuesday, Managed funds were net sellers of 4,000 Chicago wheat and, as of last night, were estimated to be net short 5,000 wheat contracts.  July MPLS  was down 6-1/4 cents to 12.74-1/4.  For the week, so far wheat prices are down 48-1/4 in SRW, down 42-1/4 in HRW, down 6 in HRS.  Trade estimates for this morning’s USDA Weekly Export Sales are (50,000) to 100,000 tons for old crop, 100,000 to 400,000 tons for new crop.  The U.S. North Plains and Canada will see more rains which could slow final spring wheat plantings and increase prevent plant acres.  The U.S. South Plains forecast is drier.

CATTLE

Cattle futures are called mixed to lower.  June cattle futures saw difficult price action on Wednesday as prices dropped off early session highs.  Prices failed to hold above the 20-day moving average and finished on support of the 10-day moving average.  This posted a bearish reversal on the session, which could open the door for additional technical selling pressure this morning.  Cash trade started to develop late on Tuesday with light southern trade starting at $137, down $1 from last week’s totals.  Trade on Wednesday stayed light was additional business at Tuesday’s $137 level.  Northern trade was very scattered with light business developing at $224, with bids at $224-227.   Retail beef prices had a mixed at midday, but prices softened into the close at tend of the day with Choice losing .72 to 262.93 and Select was 1.29 lower to 244.06.  The load count was light at 102 loads.  Wednesday’s estimated cattle slaughter is 125,000 head equal with last week and 4,000 head greater than last year. Weekly slaughter stands at 375,000 head vs. 374,000 head last week and 360,000 head last year.   Feeders saw mixed trade, looking for direction, supported by weakness in the corn and wheat markets, but pressured by the softer tone in the Live cattle market.  The May feeder contract expires today, and the premium of front month contracts to the Feeder Cash Index was a limiting factor.  The Feeder Cash Index was 0.18 higher to 153.35.

HOGS

The hog market is called steady to lower.  The front-month hogs , June July, and Aug contracts, failed to push through the 100-day moving average over top the market.  This was the third test of this barrier in the past three session, and prices faded off that resistance and closed at the bottom of Wednesday’s trading range.  The weak price action could lead to additional technical selling to start the day.  The midday cash market stayed firm, supporting the June contract.  Midday direct trade was .57 higher with the weighted average at 111.96 on Wednesday, and the 5-day average moved higher to 111.48.  The CME Lean Hog Index started to reflect the higher cash trend gaining 0.95 to 103.03.  Estimated hog slaughter is running under last week’s numbers helping support the cash markets.  On Wednesday, slaughter is estimated at 466,000 head, down 13,000 from last week, and 21,000 head from year ago level.  Retail values trended softer at midday with carcass values 1.06 lower ,and stayed soft into the close losing 1.17 to 107.18. Movement was moderate at 244 loads. The CME Pork Cutout Index added 1.55 to 105.97 reflecting the recent strength seen in pork carcass values.  Overall, the rally has stalled out at a key level of resistance and may be susceptible for some pull back to test support. The slaughter pace and cash market will likely be the leading indicators in one direction or another.

Author

Matt Strelow

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