TFM Sunrise Update 06-08-2022


Corn futures were up overnight with nearby July gaining 6 cents to 7.63 and Dec up 2-1/2 cents to 7.16-1/2.  The corn market has found renewed buying interest in the first full week of June on strong domestic basis and talk of higher export demand.  This following three weeks of lower trade.  Nearby July fell to a daily low of 7.20-1/2 last Wednesday, but has since rebounded more than 45 cents putting the contract back to just below its 50-day moving average situated at 7.73-1/2.  Dec corn is back above $7.00 after slumping to the low 6.80’s last week as weather keeps price movement choppy.  Possible ridging in the U.S. west Midwest starting mid June also supports higher corn futures, and good gains in beans overnight is noted.  On Tuesday, Managed funds 10,000 corn, pushing their net long position to an estimated 266,000 contracts.


The soy complex was higher overnight, continuing Tuesday’s rally.  July beans popped nearly 25 cents (July) to an overnight high of 17.52-1/2.  Nov peaked at 15.69 on gains of 19-1/4 cents.  July meal was up 3.90 to 421.20, and July soy oil gained 1.34 to 82.78.  On Tuesday, Managed funds were net sellers 2,000 soy oil and 10,000 soybeans and 5,000 soymeal.  The are now estimated to be net 185,000 soybeans, 50,000 soymeal and 69,000 soy oil.  Soymeal futures have rallied on talk U.S. crushers may be taking downtime in part for maintenance, lower margins and drop in soybean supplies.  Soy oil has been on the defensive versus soymeal on the steep drop in Brazil soy oil premiums.  Indonesia also lowered their palm oil export tax.  Chinese Sept bean futures were down 3 yuan overnight; Soymeal up 25; Soy oil up 196; Palm oil up 104; Corn up 10.  Malaysian palm oil prices overnight were down 41 ringgit (-0.63%) at 6464.

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Wheat futures were mixed overnight.  July Chicago and KC wheat contracts are up 4 cents this morning to 10.75-3/4 and 11.53-1/4, respectively.  On Tuesday, Managed funds were net sellers of 10,000 Chicago wheat.  This puts them back to net short an estimated 5,000 wheat.  July MPLS wheat is up 4 to 12.31-1/4 this morning.  Wheat has dropped on headlines of progress in talks to allow for Ukraine food exports.  There is talk that Russia and Turkey talks are all about Russia sending warships through Bosphorus and Turkey attack on Turks not Ukraine export corridor.  On Friday, USDA will have their hands full with the World wheat export matrix with India banning exports and fears of lower Canada, EU and U.S. 2022 supplies for export.  World wheat buyers and US bakers remain short and uncovered for wheat needs.


Cattle futures are called steady to higher.  We’re still cautious of the bearish turn on the chart from Monday in the front end of the market, but money flow is staying supportive.  Cattle weights are down nearly 25 pounds over the past handful of weeks, while slaughter numbers stay consistently heavy.  Cash markets remained quiet on Tuesday with asking prices at $137-138, bids are still not defined. Cash is targeting steady trade, and will likely develop later in the week.  Choice demand is supportive, and Closing Choice carcasses gained 1.84 to 271.42, but Select was 1.53 softer to 249.56.  The load count was moderate at 137 loads.  The choice/select spread has begun to widen, trading at 21.86.  The lower carcass weights have lowered the quality levels and retailers are paying up for Choice beef product to meet demand.  Feeder cattle are consolidating and held recent gains with the strength in the corn markets on Tuesday.


Hog futures are called steady to higher.  Futures saw mixed trade on Tuesday with the premium of the June market to the cash being a limiting factor, but the overall cash market tone helped support the front of the market.  July hogs are trading into a sideways trading range, watching the direction of June, as its expiration is just around the corner.  July hogs are holding support at the 20-day moving average the past two session while held in check by the 100-day moving average over top.  July has traded in this range for the past 9 sessions.  Cash markets were strong with direct trade up 4.76 on the morning report to 116.34.  The Lean hog index has reflected the strong cash tone, gaining 1.29 to 107.34, closing the gap between the index and the June futures.  The focus will stay on the retail market, and pork carcasses were softer at midday, after a disappointing close on Monday.  Closing carcass values slipped .96 to 107.83, but load movement was good at 346 loads.  Hogs slaughter pace remain strong, and weight are steady, which still bring ample supplies into the cooler. The demand tone in product movement has picked up recently, keeping the market supported.  Deferred contracts still look supportive as the longer-term view of the market will reflect a tighter supply picture.


Matt Strelow

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