TFM Sunrise Update 06-10-2022


Corn futures eased again overnight with nearby July down 6 cents to 7.67.   Dec was down 4-3/4 to 7.12 as both contracts struggle with resistance at their respective 50-day moving averages.  It’s USDA report day.  We’re expecting little changes despite talk of higher U.S. corn export demand as a lower South America corn supply and reduced Ukrainian exports increase demand for U.S. supply.  USDA may not change US/World wheat numbers today but there is talk of lower Black Sea exports and potential for lower US, Canada, Argentina and EU 2022 crops.  Rains are forecast for the next day, or two across much of U.S. Midwest with temps cooler than normal.  Next week looks warmer and drier.  Heading into today’s trade, Managed Money was net long an estimated 273,000 corn contracts.  Year-To-Date nearby futures are up 30%.


The soy complex was weaker overnight.  July beans were down 11-1/2 cents to 17.57-1/2.  Nov was down 13 to 15.69-1/4.  July Soymeal fell 1.40 to 426.10.; and, nearby soy oil was .85 to 81.78.  Nearby soybeans prices tested 17.84 this week on strong U.S. domestic basis and next week’s warm and dry weather.  Spot basis bids for soybeans shipped by barge to the U.S. Gulf Coast did fall on Thursday, while corn barge bids remained firm, supported by tight supplies and competition from Midwest grain processors, traders said.  China remains the biggest short in the soybean market.  Supply challenges and the war in Ukraine continues to add to inflation worries.  Dalian soybeans, palm oil and soy oil were lower.  Soymeal was higher.  The trade is expecting few, if any changes it today’s WASDE report.  Heading into today, Managed funds were estimated net long 198,000 soybeans, 49,000 soymeal and 69,000 soy oil.  Year-To-Date nearby futures are up 33% in soybeans, Soymeal up 4%; And, soy oil up 46%.

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Winter wheat futures were down last night.  July Chicago wheat were down 4-1/2 cents to 10.66-3/4 while sticking to a narrow range for the week.  For the week, the nearby contract is up 26 cents.  July KC wheat fell 3-1/2 cents to 11.50-1/4, up 29 cents for the week.  July MPLS wheat was up 3 to 12.27 and is up 35 cents for the week.  All three contracts are forming pennants on the daily charts which could lead to a break out one way, or the other today, depending on trade reaction to today’s WASDE report, to be released at 11:00 AM central.  Look for a few fine adjustments to U.S./World wheat numbers, such as a lowering of Black Sea exports and the potential for lower US, Canada, Argentina and EU 2022 crops.


Cattle futures are called mixed.  Both live and feeder cattle closed modestly higher in the front months while deferred contracts slipped a bit on Thursday.  Cash trade was likely developed for the week with $136 catching most southern business, and Northern dress trade was at $225-226.  Both numbers were firmer than last weeks values.  Some light clean up trade is possible to end the week.  The cattle market may be looking at a basis flip as shorts get squeezed and the packer is put under more pressure to pay up for cattle, lifting the futures market over the cash market.  Retail values finished the day mixed with Choice closing .64 lower to 271.10 and Select .20 higher to 249.61.  The load count was soft at 108 loads.  With cash trade mostly done for the week, cattle will likely be choppy, watching the direction of grain markets after the USDA WASDE report today.


Hog futures are called steady to lower as prices break down technically, driven by a weak retail close on Wednesday, and follow through selling through support levels.  July hogs are retesting the $105 level from Wednesday, and support at the 200-day moving average.  The contract closed at its lowest point since May 16th.   A break below the 200-day moving average would have the market looking to retest the May lows at 97.350 on July Futures.   All in all, the hog market is having a difficult week on long liquidation as the retail market and hog slaughter numbers pressure the market.  Futures are testing support and may be at a point where the sellers may start to slow, especially given the cash market strength.  Retail markets have been soft the past couple sessions and the weak afternoon close on Wednesday helped trigger the weaker tone on Thursday.  Pork carcasses recovered on Thursday afternoon, gaining 4.62 on the close to 109.09.   The Lean Hog Index lost .32 to 107.48.  The Index is now trading at a discount to the front-end futures, which could limit additional selling pressure.


Matt Strelow

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