TFM Sunrise Update 06-22-2022


Corn futures were narrowly mixed last night while left in limbo between a steep rise in wheat futures and drop in bean prices.  USDA estimated The U.S. corn crop at 70% Good-to-Excellent versus 72% last week.  Iowa and South Dakota are the highest rated states.  Illinois, Indiana, and Missouri are near trend.  Minnesota, North Dakota, Nebraska and Ohio are below trend.  Normal temperatures this week should offset a lack of rain.  Long range maps suggest a warm and drier July.   EU rains has Matif corn at its lowest since April.  Meanwhile, talk of the U.S. Fed becoming more aggressive in raising rates may be triggering long liquidation.  Higher inflation is raising concern about a global recession that may also cause a drop in commodity demand.  U.S. stocks are lower.  The dollar is near unchanged.  Crude is sharply lower and near a 4 week low.  Gold, silver, copper, cocoa, sugar and cotton are lower.


Soybean futures were down overnight with July beans losing as much as 20 cents to 16.61 and Nov as much as 27-1/2 cents to 14.83.  USDA estimated the U.S. soybean crop at 68% G/E versus 70% last week.  Iowa, Arkansas and South Dakota are the highest rated states.  Indiana and Tennessee are rated near trend.  Minnesota, North Dakota, Nebraska, Illinois, Missouri and Ohio are below trend.  Dalian soybean, soymeal, soy oil and palm oil futures are all lower amid ongoing concern about Asian demand and higher Indonesia palm oil exports.  China Oct-May soybean imports are near 60.6 mmt vs 64.0 last year.  Total China veg oil imports are 5.2 mmt vs 9.8 last year with palm oil 2.8 vs 4.7.  U.S. soybean export inspections are down 11% from last year.  U.S. domestic soybean basis
remains strong on lower futures and increase need for soybeans from crusher and exporters.

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Wheat futures traded sharply higher overnight, correcting from recent declines.  Sept Chicago wheat made a new low for the move on follow-through from Tuesday’s technical breakout to the downside, and then rallied back toward the contract’s 100-day Moving Average.  The contract is up 31-1/4 cents this morning to 10.18-1/2.  Sept KC wheat gained 24-1/2 cents to 10. 72-3/4.  Sept MPLS wheat is up 12 cents to 11.30.  USDA estimated the U.S. winter wheat crop 30% Good-to-Excellent versus 31% last week.  23% of the crop is harvested.  Early yields in Kansas are below expectation, but quality is good.  The market will be watching test weights.  USDA rated the U.S spring wheat crop 59% G/E vs 54% last week.  U.S. wheat export inspections are starting out 22% below last year.  Algeria and Tunisia are buying wheat with talk Egypt will tender soon.  There is new talk that a Ukraine export corridor could be open soon.


Cattle futures are called mixed to higher.  Both live and feeder cattle markets have some buying strength, and favorable fundamental news to push the market higher.  Technically, each market has a key challenge of resistance over top, which if broken, could lead to some strong buying support.   The 100-day is key swing point in the cattle charts and prices have been consolidating on this point the past four sessions.  The cash market will be the likely driver of the potential push higher.  The expectation is for cash trade to develop later in the week at steady to higher than last week supported by the forecasts for hot weather, and the drop in carcass weights.  Packers may have to be forced to bid up to secure supplies.  At midday, beef carcass cutout values were firmer, and held most of those gains into the close, with Choice values adding 1.06 to 267.56 and Select was .31 higher to 246.70.  The load count was moderate at 143 loads.  Feeder cattle saw strong buying support with triple-digit gains.  The Feeder Cash Index was firmer, gaining 2.86 to 165.03.  Talk of a strong countryside cash market for feeders is helping support the overall feeder market.  Adding to the buying strength was a sharp selloff in grain prices, triggering buyer into the feeder market.


Hog futures are called steady to higher as the market looks strong in the near-term, being led by a healthy cash market tone.  Hog futures track the cash market higher with July closing at its highest close since April 29 while challenging the 100-day moving average, which has been a swing point in the market.  If July futures can break through this barrier, the next resistance at 114.000 will be a spot the market needs to clear to break to the upside.  Direct cash hog markets were quiet on Tuesday, as prices drifted .13 lower to a weight average price of 114.81, but the 5-day average moved firmer to 115.78, still holding a premium to the futures.  The Cash hog index was .41 higher to 109.61, reflecting the cash tone.  Pork carcass values closed 1.01 lower at midday to 110.86.  The load count was decent at 335 loads.  The retail demand is in a soft period in the window between Father’s Day and the 4th of July, but that may be improving with the strong load count on Tuesday.  Hog Slaughter was estimated at 468,000 head on Tuesday, steady with last week, but 6,000 behind last year.  Next week, June 30, will bring the USDA Quarterly Hogs and Pigs Report, which should help clear the picture on hog supplies going into the fall and next year.


Matthew Strelow

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