TFM Sunrise Update 06-15-2022


Corn futures were down overnight in light volume.  Nearby July fell a nickel to an overnight low of 7.63-1/4.  Dec was down 4 to 7.17-1/4.  With the corn crop nearly all seeded and condition ratings relatively high, prices have turned choppy.  The dollar, though down this morning is trading at 20-year highs, and economic concerns are leaving a wake in outside markets that are creating a ripple effect on grains.  U.S. stocks are higher for now.  Crude is lower this morning.  Gold, silver, copper are higher. Coffee, cocoa, sugar and cotton are lower.  The U.S. Fed will increase rates today.  The EU has called for an emergency meeting on economy.  The U.S. Midwest will be hot and dry the next 2 weeks, a constructive recipe for good crops in many areas.  Reduced Ukraine and South America corn exports should increase demand for U.S. corn.  There is also talk that Ukraine may use storage bags to store the 2022 crop.  The Weekly U.S. ethanol production and stocks report will come out today.


Soybean futures were mixed overnight.  July beans were down 8 cents to 16.90-1/2.  Nov beans were down a penny to 15.24-1/4.  On Tuesday, Managed funds were net sellers of 4,000 soybean contracts, 3,000 soy oil and 2,000 soymeal.  They are now estimated to be net long 153,000 soybeans, 41,000 soymeal and 71,000 soy oil.  Malaysian palm oil futures are lower on talk if higher Indonesia palm oil exports.  Dalian soybean, soymeal, soy oil and palm oil futures were lower.  There is also talk that Biden could lower China import tariffs.  We’ll get NOPA May crush data today.  The nearby board crush margin has dropped to 71 cents.  In South America, Brazil and Argentine soybean export basis continues to drop on slow demand.

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Wheat futures continued to erode overnight on follow-through from Tuesday’s down day and pressured by a 20-year high in the greenback.  Sept Chicago wheat fell to a 2-week low of 10.59-1/4 before trimming losses.  On Tuesday, Managed funds were net sellers of 4,000 Chicago wheat and are said to be net long 9,000 contracts.  Sept KC wheat was down as much as 16-1/2 cents to 11.32-3/4.  Sept MPLS wheat fell below $12 to 11.92 while losing 16-1/2 cents and slipping below the contract’s 50-day moving average for the first time in 4 months.  Markets are concerned about demand for food and fuel.  Nearby US wheat futures are in a carry.  This suggest lower demand offsets talk of lower supply.  World wheat buyers are looking at few export options and near record high prices.  Biden announced a plan that would build temporary silos near west Ukraine border to help increase Ukraine food exports to the west.  Matif wheat futures dropped along with U.S. despite dry and warmer weather.


Cattle futures are called steady to higher.  Live cattle futures finished higher on Tuesday as the prospect of a firmer cash tone helped support the market overall.    June live cattle are running at a potential discount to the cash market, and that helped support prices.  Overall, June cattle still traded within Monday’s trading range, but closed at the base of the price gap established on Monday and the 200-day moving average.  The 200-day has acted as a swing point for cattle prices.  Cash trade is starting to develop with light Southern trade triggered at $136, steady with last week.  The market saw some regional trade at $139 in Kansas.  The retail demand was softer to start the week and closed lower on Tuesday with Choice values down 1.10 to 269.44 and Select was 0.63 lower to 246.82. The load count was moderate at 135 loads.  Cattle slaughter is still running strong with ample animals available.   Estimated slaughter on Tuesday was 122,000 head, down slightly from last week, but steady with last year.  Feeder cattle were mixed to mostly lower in a quiet trading session, consolidating within Monday’s trading range, looking for direction.  Like most markets, the cattle market is watching the outside markets very closely and the actions of the Fed with interest rates on Wednesday afternoon.


Hog futures are called steady.  Cash is still trending higher while the cutout values were softer.  June hog futures expired on Tuesday, going off the board at 108.450.  The premium of the cash market to the July contract has the hog market looking like a value.  Direct cash hog trade is trending higher this week, and was stronger on Tuesday morning direct trade, gaining 4.88 to 117.70, and the 5-day average increased to 116.41.  The index trended to a premium to the futures market last week, reflecting cash.  On Tuesday, the Cash Index slipped .21 to 107.40.  The retail market was softer at midday, finished weak into the close finishing 2.71 lower to 108.67.  The load count was moderate at 356 loads.


Matt Strelow

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