TFM Sunrise Update 06-09-2022


Corn futures eased overnight with nearby July down 3 cents to 7.61-1/2.  Dec was down 4-1/2 to 7.13-1/4 as both contracts face resistance at their respective 50-day moving averages.  Rains are forecast for the rest of this week across much of US Midwest with temps cooler than normal. Next week looks warmer and drier.  US cash corn basis remains strong as old crop supplies decline.  Meanwhile, the trade is disappointed in the lack of reaction to the fact there is no agreed plan to open Ukraine food exports.  Trade estimates for this morning’s USDA Weekly Export Sales are estimated to be 125,000 to 500,000 tons for old crop and 50,000 to 600,000 tons for new crop.   Tomorrow, USDA is not expected to make many changes in the Supply and Demand report.


The soy complex was weaker overnight.  July beans were down 5-1/2 cents to 17.34-1/2.  Nov was down 9 to 15.59  July Soymeal slipped .70 to 414.90; and, nearby soy oil was down 1.20 to 81.74.  Trade estimates for this morning’s USDA Weekly Export Sales are estimated to be 100,000 to 500,000 tons for old crop and 200,000 to 700,000 tons for new crop.  There were no new Chinese soybean sales announced yesterday, but demand for U.S. soybeans are on the rise and should keep futures supported.  China’s May soybean imports were 9.7 mmt and down 5% from last year.  The season-to-date export pace suggests final exports near 96 mmt vs USDA 92.  Word that Indonesia will allow for 1.0 mmt palm oil exports weighed on Dalian palm oil and soy oil prices.  Chinese Ag futures posted a 41 yuan gain in Sept beans; Soymeal was up 55; Soy oil down 120; Palm oil down 336; Corn down 19.  Malaysian palm oil prices overnight were down 259 ringgit (-4.00%) at 6208.

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Wheat futures were down last night.  July Chicago wheat gave up 11-1/2 cents to 10.64-1/4 while sticking to a narrow range for the week as the trade shuns talk of lower Russia and Export news.  Russia announced they will restrict grain exports until sanctions are lifted.  July KC wheat fell 9 cents to 11.46.  Trade estimates for this morning’s USDA Weekly Export Sales are estimated to be 250,000 to 500,000 tons.  U.S. HRW harvest should increase especially next week when weather looks warmer and drier.  So far, protein is high and quality is good, but rains could drop test weight.  July MPLS wheat futures were down 8 cents last night to 12.26-1/2.


Cattle futures are called steady to higher after a strong move on Wednesday fueled by a higher tone in cash trade and short covering pushed futures to their highest close since the end of April.   Packers are bidding up for higher quality beef.  Southern deals happened at $136, $1 higher, and Northern dress trade at $225, up $4 over last week.  The Choice/Select spread has widened to $22 between the two as lower carcass weights have reduced the quality of beef available.  Retail beef trade was mixed on the close with Choice .32 higher to 271.74, but Select was .15 lower to 249.41.  the load count was light at 121 loads on the day.  Technical buying and the overall cattle market strength lifted the Feeder cattle futures as well.  Speculators have been caught in a short positions in feeders and are covering those positions.  Cattle supplies are still relatively heavy in the front end, and that could limit gains, but the strong technical close will keep the buyers active in the cattle markets.


Hog futures are called steady to lower.  The rally has hit a pause, and now correcting to support.  July saw a strong price break early in the session as a weaker retail tone brought some follow through selling to start the session, but the sellers dried up at the $105 level, and prices rallied back above support at the 20-day moving average.  July has traded in this range of $105-$113 for the past ten sessions.  Retail markets have been soft the past couple sessions, and that helped trigger the weaker tone.  On Wednesday, pork carcasses were 3.36 lower to 104.47.  The load count was light at 268 loads.  The weak retail close will pressure the Thursday open.  Cash markets have been strong, but the morning direct trade was softer on Wednesday, losing 2.22 on the morning report to 114.12.  The Lean Hog Index has reflected the overall strong cash tone, gaining .46 to 107.80, closing the gap between the index and the June futures.  Hog slaughter remains strong with estimated slaughter at 477,000 head on Wednesday, steady with last week, down 7,000 from last year.  Weights are still heavy compared to last year, keeping plenty of product available to the market.


Matthew Strelow

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