TFM Sunrise Update 06-03-2021


Corn futures traded on a positive note overnight while upward momentum stalls into a neutral zone for the week.  Weekly Export Sales, normally released on Thursday mornings, are delayed until tomorrow due to the markets being closed on Monday for Memorial Day.  Today, we’ll get the EIA Weekly Energy Report providing ethanol stats.  Overnight, July corn traded a 10 cent range between 6.75 and 6.85.  Dec had an overnight low of 5.79-3/4 and high of 5.87-1/4.  Both contracts are near their respective highs this morning, up 7 to 8 cents.  The Midwest 6 to 10 day weather outlook features bouts of scattered showers with temperatures above normal.  Elsewhere, Brazil’s drought is the worse in 91 years.  One private crop watcher lowered their estimate of Brazil corn crop to 89 mmt from their May estimate of 100 and USDA 102., in its initial 2021 estimates, pegs the US corn yield at 173.2 bu/acre.  That would result in production of 14.4 billion bu.  The USDA was at 179.5 bu/acre and 15 billion bu in its May 12 WASDE report.


The soybean complex is up this morning led by new contract highs in soyoil futures on talk of higher Asian and U.S. biofuel demand.  July beans are up 20-1/2 cents to 15.83 while pushing through 15.78 resistance on further weather concerns and lower Brazilian supplies.  China, the world’s biggest buyer of soybeans, has slowed purchases of the oilseed due to negative crush margins, the China National Grain and Oils Information Center said in a report overnight.  The nation has not purchased soybeans from the U.S. in the past 2 months; imports from Brazil have also slowed down.  Nov is up 18-1/4 cents to 14.32 and within 29 cents of the contract high of 14.61 from May 12.  The overnight high came in at 14.38-3/4.  Chinese Sep bean futures were up 51 yuan ; Soymeal down 2; Soyoil up 298; And Corn up 21.  Malaysian palm oil prices overnight were up 74 ringgit (+1.81%) at 4166 with a weather-driven rally in Chicago soybean oil and signs of higher imports by second-biggest buyer China boosting sentiment., in its initial 2021 estimates, pegs the US bean yield at 49.5 bu/acre.  That would result in production of 4.3 billion bu.  The USDA was at 50.8 bu/acre and 4.4 billion bu in its May 12 WASDE report.


Winter wheat futures were up 7 to to 9 cents while taking cues from strength in row crops and spring wheat.  MPLS July was up as much as 13-1/2 cents to 7.96-1/2 while staying inside yesterday’s trading range and below the contract high from May 7 at 8.07-1/4.  Poor spring wheat crop ratings and weather conditions for the Dakotas is providing the lift.  Nearby CBOT and KC contracts peaked at 6.96-1/4 and 6.44, respectively.  Those contracts are facing some short-term struggles on the charts amid seasonal price resistance.  In the big picture, prices are settling into a consolidation pattern on the charts after having retreated from contract highs, then recovering some of that move lower.


Cattle futures are called mixed to higher after recovering from Tuesday’s losses on Wednesday.  Strong move in retail prices and the discount of the futures to developing cash trade is helping support prices.  In addition, the meat processor, JBS is recovering from the weekend cyber attack that led the market lower to begin this holiday-shortened week of trading.  The long term impact is unknown, but for now, the plants are up and running.  The cash market saw some light development, with most trade at $120 level, which was steady to – $1/cwt higher.  Weakness yesterday allowed June futures to trade at a significant discount to the cash market, which aided in the buying strength seen across the market.  Beef carcass values had a strong trade on Wednesday, following up a positive close on Tuesday afternoon.  Choice carcasses gained 5.60 to 340.16, and Select was 5.43 higher to 311.88, on moderate demand of 138 loads.  Choice carcasses have gained nearly $9.00 since Friday’s close.  Technically, prices failed to push above resistant levels in the June and August contracts, but the strong close could spur additional buying support this morning.  Deferred contracts look stronger on the charts, keeping the stage set for a bear spread market, with the deferred holding the premium over the front month futures.


Hog calls are mixed.  The front month contracts paused yesterday, as those contracts saw some selling pressure.  Despite the front month weakness, deferred contracts still pushed higher and closed either near or at new contract highs.  The front month hogs may have been subject to some spread trade, and unwinding of bull spread and buy hog-sell cattle spreads.  The lean hog cash index stays in its upward trend, gaining .10 to 113.54.  The index is trading at a discount to the futures, which may have aided some of the selling pressure.  Midday carcass values were firmer, and that strength held into the close.  Pork carcasses were 2.47 higher to 129.59, with load count moderate at 344 loads.  The market will still be closely watching pork export demand.  Chinese pork prices are continuing to see pressure, and that could curb some of the strong demand tones.  Weekly export sales reports will be key in the near future.  That data will be released tomorrow due to the Memorial Day holiday.


Matthew Strelow

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