TFM Sunrise Update 06-04-2021


Corn futures are higher this morning after rebounding overnight from yesterday’s pullback.  Nearby July corn is up 12 cents to 6.74, and up  17 cents for the week.  As the market respects the long-term up trend, volatility has increased.  From Wednesday of last week to Tuesday of this week, July corn moved almost a dollar higher, and in the two days since had given back about a third of that move.  The talk this week continues to be a mix of very good crop ratings offset by worries of a drier forecast.  The cold weather at the end of last week has spurred the need for some replanting, although it is too early to tell how widespread the damage was, but regardless there is little reason to expect volatility to decrease in the short-term.  A steamy forecast looms for the weekend and next week for the northern Corn Belt.  Dec is up 13-1/2 cents to 5.80 and up nearly 35 cents for the week.  Trade estimates for this morning’s USDA Weekly Export Sales 300,000 to 900,000 tons for new crop.  As the trade awaits more Chinese demand and U.S. summer weather, USDA in not expected to make big changes to US/World Supply and Demand numbers on June 10.  Basis bids for corn shipped by barge to the U.S. Gulf Coast were mixed on Thursday as spot values shed some of their steep premium to deferred prices, traders said.


The soybean complex is up this morning in what can be viewed as a technical bounce from yesterday’s disappointing finish after the GFS weather model was enough the drive soybean futures lower from the overnight highs.  Chinese Sep soybeans were down 39 yuan ; Soymeal down 20; Soyoil down 38; Corn down 12.  Malaysian palm oil prices overnight were down 22 ringgit (-0.53%) at 4136 on expectations that stockpiles may hit an eight-month high in No. 2 grower Malaysia, with traders weighing a potential move by Indonesia to cut its export levy.  The American GFS model has rains in the forecast late in the 10 day period.  The Canadian and more reliable EU weather model are dry over the next 2 weeks for U.S. north Plains and upper Midwest.  July beans are up 14 cents to 15.63-1/4 and are up more than 30 cents for the week.  Nov beans are up 15 cents to 14.18-1/2 while advancing 45 cents this week to get back above 10 and 20-day moving averages.  The contract high from May 12 stands at 14.61.  Weekly new crop U.S. soybean export sales are estimated from zero to 400,000 tons versus 248,000 last week.


Wheat futures were firm overnight and up around 20 cents for the week with CBOT and KC July contracts up 6 cents this morning to 6.81-3/4 and 6.30-1/4, respectively, but in the lower half of this week’s choppy trading ranges.  July MPLS, the recent leader of the bullish sentiment, was up 13 cents to 7.90-1/2 while climbing back into the upper half of this week’s sharply higher move.  The contract is flirting with it’s contract high etched up at 8.07-1/4.  Traders pushed the price to 8.03-1/4 yesterday.  A warm and dry U.S. north Plains and Canada prairie weather forecast helped overnight prices rally.  There is also talk of drier Russian spring wheat weather and east China is also dry.  Informa will be out today with an updated World crop outlook and update for U.S. 2021 winter wheat crop.  Beyond that, winter wheat contracts will likely be followers of corn prices for the time being.  Overnight, the Chinese National Grain and Oils Information Center said in a report that the country is likely to continue its robust imports of wheat in the current marketing year that began in June due to strong demand for animal feed and as the grain is used to substitute expensive corn.  Weekly new crop U.S. wheat export sales are estimated from 200,000 to 500,000 tons.


Cattle futures are called mixed after a choppy finish yesterday, as the market reflects the current market situation.  Technically, front month contracts look cautious with a potential to move lower if the fundamentals were to weaken.  Deferred contracts look supported on the prospects of tighter cattle supplies, and are poised to possibly challenge contract highs.  Bear spreads remain very prevalent as the deferred contract finished higher with marginal gains.  The bear spreading action reflects ample supplies of cattle pressuring the cash market and the front months, but optimism over tighter supplies and good demand supporting the back months.  Cash trade was still developing on Thursday, with more trade at $120, steady to $1 higher than last week.  The cash market is still holding a premium to the June futures, limiting the down side.  June live cattle options expire today, and that we also keep the market choppy.  Carcass values stay strong, but faded off midday highs.  Choice carcasses were .39 higher to 340.55, and Select gained 1.28 to 313.16.  The load count was moderate at 138 loads.


Hog calls are mixed to higher as buyers return and push prices higher, and some contracts to new contract highs again.  A continued surge in retail values supports the market as June hogs and deferred December and beyond closed with new contract highs.  Midday pork cutout values surged higher and the market held most of those gains into the close.  Carcasses gained 1.93 to 131.52, as carcass prices have trended higher this week overall.  The load count was light to moderate at 290 loads.  USDA will release weekly export sales this morning, with another week of strong sales and shipments expected.  The market may have been bought into the numbers on Thursday, but the report could set the price tone going into next week.  The reported cash hog market was mostly steady on Thursday, but the Lean Hog Cash index trends higher.  The index gained .21 to 113.75, also bringing buying support to the hog futures market.  Technically, the hog market has not found a top, and the strong close on Thursday will likely usher in additional strength.


Matthew Strelow

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