TFM Sunrise Update 06-07-2021


Corn futures gapped higher overnight along with the wheat and beans.  July corn rose 23-1/2 cents to a 3-week high of 7.06-1/4.  The contract highs stands at 7.35-1/4.  Dec corn got to 6.17-1/4 versus that contract’s high at 6.28 from one month ago.  The week is off to another volatile start on concerns that the next 2 to 3 weeks of warm and dry weather over parts of the U.S. upper Midwest and north plains are stressing crops.  Record, or near-record temperatures hit parts of the Corn Belt over the weekend, and 27 percent of U.S. corn acres are under severe drought with nearly a third of that area in the Dakotas.  There is also strong indication that China could take more U.S. corn in 2021/22 than this year.  Brazil’s drought continues to worsen, keeping the funds steadfast with their long positions.  Weekly Export Inspections will be out this morning, then Crop Ratings after the close this afternoon.


The soybean complex is up this morning amid new highs in bean oil and new crop beans.  Nov jumped 34-1/2 cents to a put in a new high at 14.80.  July rallied 39-3/4 cents to 16.23-1/2.  Price have since tapered off.  Soybean meal futures snapped a streak of three down weeks in a row last week.  Chinese September bean futures  were up 50 yuan ; Soymeal up 49; Soyoil up 62; Palm oil up 14; Corn down 2.  Malaysian markets are closed for holiday.  The trade does not expect many changes in the USDA June 10 US/World Supply and Demand tables, however, China may import more U.S. soybeans in 2021/22 than this year.  For now, dry U.S. upper Midwest and north plains weather is ushering in buying to begin the week.  Extreme heat in the Dakotas and the northwestern is noted, and Brazil continues to capture almost all of the global soy export demand.  Although, it is believed that Brazil could be out of soybeans by August – which would then lead the U.S. to take over at that point.  China’s soybean imports rose in May from the previous month, customs data showed on Monday, as more cargoes from top supplier Brazil cleared customs.


Wheat futures gapped up overnight on the charts led by new highs in Spring wheat.  July MPLS futures rallied 21-3/4 to etch a new contract high at 8.43-1/2.   July Chicago was up as much as 16-1/4 cents to 7.04, and July KC reached 6.54-1/2 on gains of 18 cents.  Wheat is finding a bid from a weaker dollar and strength in corn as drought in the norther Plains continue to support prices.  Favorable conditions are seen for filling wheat in the Central and Southern Plains.  Up in the northern Plains, heat and drought is stressing developing spring wheat.  Showers this week will be isolated until a system moves through Thursday night into Friday.  Still, temperatures will remain above normal and areas that do not see adequate rains will continue to suffer.  Conditions for spring wheat in the Canadian Prairies have improved recently.  Temperatures near normal and periods of scattered showers will continue this week.  Favorable conditions are noted in southern Europe for winter wheat and spring wheat in northern Europe.  An upper-level low in the Black Sea region will continue to produce showers through the week in Ukraine and southwest Russia, being favorable for developing wheat. Favorable conditions are seen for planting winter wheat and early growth in Australia.  Soil moisture is favorable for winter wheat planting and early growth in Argentina and southern Brazil.


Cattle futures are called mixed.  We’d expect bullish momentum to keep prices from falling apart, particularly with higher beef prices offering support.  Slaughter is back to normal after the cyber attack a week ago, and the cash market is showing a firm tone.  Live prices this past week ranged from $119 to mostly $120 while dressed sales were $190 to mostly $191.  Tight corn stocks will keep cattle traders sensitive to price swings.  The basis for old crop corn is trading at a large premium to the basis offered to new crop corn next fall, so cattle placed in August and later will market into periods where the live cattle futures prices are premium to earlier contracts.


Hog calls are expected to see a choppy start to the week as traders digest contract high momentum in the marketplace.  Futures hold a big premium over cash.  Last week marked the third week in a row with a higher close, and the lean hog index closed higher for the 18th consecutive week after gaining 97 cents to the highest point since July of 2014.  Cutouts gained in impressive $6.07 on Friday to 137.50.  Look for more upside probing on the heels of strong pork cutouts supporting the cash market.  Bullish traders may be reluctant to exert more buying in nearby July futures as that contract approaches 121.000 and holds a big premium to cash.


Matthew Strelow

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