TFM Sunrise Update 06-23-2021


Corn futures were narrowly mixed overnight in rather quiet trade.  Nearby July corn is up 3-1/4 cents to 6.63 and Dec is up a penny to 5.40.  New crop prices tumbled and closed at session lows on Tuesday, but managed to avoided pressing lower overnight.  Elsewhere, corn prices in China, the world’s second-largest consumer and producer, have dropped to around the lowest level since December because of record imports and a government clampdown on hoarding and speculation.  The most active, rolling contract on the Dalian Commodity Exchange has fallen about 12% from its record in January.  Basis bids for U.S. soybeans and corn shipped by barge to the Gulf Coast and loaded for export were mostly steady on Tuesday, while FOB offers fell.  Weekly Ethanol Stats will be out later this morning, Exports tomorrow.  Look for futures to continue to level off, or rise slightly as the trade reacts to the recent pullback in price leaving the market technically oversold.  In addition, a glance at the drought map/monitor is supportive, but rain events will dictate long-liquidation.


Soybean futures traded two-sided overnight and are firm this morning with July up 6-1/2 cents to 14.01.  Nov beans are up 2 to 13.04-1/4.  There were rumors Tuesday afternoon of China buying 8 to 10 cargoes of U.S.  However, moisture in the near-term forecast for IA and surrounding areas and the Eastern Corn Belt is helping put a halt to a 70 cent price bounce off of last Thursday’s low that elevated the new crop contract back above 100-day moving average support.  The 6 to 10 day forecast is for cooler conditions, but dry in NE and the Dakotas.  Above normal temps return in the 8 to 14 day forecast for Western Corn Belt, keeping drought conditions alive in the Dakotas, NE, IA and MN.  Chinese September bean futures were up 38 yuan ; Soymeal down 7; Soyoil up 112; Corn down 3.  Malaysian palm oil prices overnight were up 48 ringgit (+1.42%) at 3438 on worries over prospects for tighter global oilseed supplies with dry weather threatening canola production in Canada, the world’s biggest producer. Gains in soybean oil and a weaker Malaysian currency contributed to the advance.


Winter wheat futures are firm this morning while consolidating on the charts above 200-day moving average support.  Sept Chicago was up 8-1/2 cents to 6.63-1/2 where the 100-day moving average is drawn.  Sept KC is up 12 to 6.18.  Sept MPLS Spring wheat futures are up 15-1/4 cents to 7.98 as dry, damaging conditions prevail in the northern spring wheat territory.  Weekly crop ratings showed a further collapse as producers in the region stare down the harsh reality of losing their crop.  Winter wheat is entering a period of seasonal harvest price pressure that has stymied market support.


Cattle futures are called steady to higher on follow-through from strong buying on Tuesday as contracts posted triple digit gains.  A potential move higher in the cash market helped fuel the rally in live cattle futures during the session.  Wire services reported stronger bids of 126-126.50 for cattle in Nebraska. This would be $2 higher than last week.  Finalized trade was not yet established at the time of the market close, but some will likely begin developing today.  The futures market was at a discount to the potential cash, which fueled the strength.  Beyond the cash market, technical buying was evident.  August cattle held key support levels, and began to work higher off the open, triggering the rally.  Retail carcass values were mixed at midday, and closed weaker with Choice carcasses still trending lower, losing 5.45 to 315.75, and Select lost 1.71 to 279.75.  Concerns about waning demand are still in front of the market, and cash strength could be hitting a seasonal top.  Feeder cattle closed higher as well with triple digit gains.  The weakness in the grain markets combined with the live cattle strength helped build gains in feeders.  Technically, charts got a boost.  The next few days will be key, especially with the Cattle on Feed report on Friday, in establishing the trend into next week.


Hog futures are called lower.  The market staged a recovery on Tuesday, but fell off session highs before the close.  The weak close was disappointing, as prices tried to move higher with triple digit gains, but the tone in the hog market is softer at this time.  Fundamentals have weakened, and concerns regarding Chinese demand and the possible slowing of the slaughter pace in July keep the sellers active.  There is no progress on reversing the court ruling to slow the slaughter pace at some major packing plant, which should kick in on July 1.  This would remove about 2% of the slaughter capacity and weigh on the cash market.  The Lean Hog Index has fallen off recent highs.  Tuesday’s index gained back .25 to 120.68 while trading at a premium to the July futures, supporting that contract.  A choppy to lower trend in retails will weigh heavily on today’s open.  Values tumbled on the close, dropping 12.93 to 107.83 on 445 loads.  Cold storage was viewed as neutral.  Frozen pork supplies. were up 1% from the previous month but down 1% from last year.  Stocks of pork bellies were up 3% from last month but down 40% from last year reflecting good product movement.



Matthew Strelow

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