TFM Sunrise Update 06-28-2021


Corn futures were firm overnight.  Nearby July corn was the leader, up 7-1/2 cents to 6.44.  Dec was up 5-3/4 to 5.25, where the contract’s 100-day moving average is holding support.  USDA will release its Acreage and Grain stocks report at 11 AM CT on Wednesday.  Look for choppy, rangebound trade until then.  Scattered rainfall fell over the weekend, but probably not widespread enough to guide the overall crop conditions much higher in this afternoon’s Weekly Crop Ratings update.  The Midwest weather outlook looks to feature scattered showers in the West through Tuesday and South Wednesday.  Then mostly dry Thursday-Friday.  Temperatures are forecast near to below normal through Friday.  In the Eastern portion, scattered showers through Thursday, isolated showers Friday with temps near to above normal through Wednesday, near normal Thursday, near to below normal Friday.  The 6 to 10 day outlook holds isolated showers East Saturday. . . mostly dry Sunday.  Isolated showers Monday-Wednesday. Temperatures near to below Saturday, near to below normal South and above normal North Sunday-Monday, near to above normal Tuesday-Wednesday.  Informa projects corn yield in IA for 2021 near 199 bpa versus 192 last year.  Minnesota is 190 vs 192, NE 190 vs 181, SD 157 vs 162, IL 202 vs 187, IN 188 vs 187 and OH 186 vs 171 last year.  The drought year of 1988 yielded 55 bpa in SD, 84 in IA; And, 74 in MN.


Soybean futures are 15 cents higher this morning while finding support at last week’s lows.  July beans rose as much as 18-3/4 cents to 13.48-1/2.  Nov got to 12.88-1/4 on gains of 18-1/2 cents as traders view current price levels as adequate heading into Wednesday’s June 30 USDA Acreage and Grain stocks data.  The player sheet for 6/25 had funds: net sellers of 16,000 soybeans, buyers of 2,000 soymeal, and  sellers of 15,000 soyoil.  Chinese bean futures (SEP 21) were down 43 yuan ; Soymeal up 30; Soyoil down 36.  Malaysian palm oil prices overnight were down 12 ringgit (-0.34%) at 3508 swinging between gains and losses as investors weighed the tropical oil’s supply-demand outlook and fluctuations in rival soybean oil prices.  Soybean prices have dropped to the lowest nominal level of the year in Brazil, largely pressed by the dollar depreciation and the lack of compensation through export premiums.  The recent price swings abroad also influenced devaluations in the Brazilian market.  Weather reports show scattered rains over the this week in the Midwest benefitting developing soybeans for most areas, but some flooding may occur.  Favorable conditions are seen in the Delta for developing soybeans.  Scattered showers will favor developing soybeans in China.  Informa estimates Iowa’s 2021 soybean yield near 56 bpa vs 53 last year, Minnesota at 51 vs 49, Nebraska: 58 VS 57, ND: 35 vs 34, IL: 61 vs 59, IN: 58 vs 54, OH: 52 vs 54 last year; and, AR 50 vs 50.  In the 1988 drought year, IA soybean yield was 31, MN 26 and ND 18.


Winter wheat futures posted decent gains overnight led by Spring Wheat.  The September wheat contracts hold the majority of the open interest in the complex at this time of year.  Sept MPLS advanced 18 cents to 8.26 as weekend rains fell short of helping the suffering spring wheat crop up north.  Furthermore, the 6-10 day outlook calls for above normal temperatures and below normal precipitation for much of the region.  The next upside objective is the June 7 contract high at 8.45-3/4.  Growers in North Dakota could harvest only 75% of planted acres and final yield could drop as low as the 1988 15 bpa.  Sept Chicago was up 10-1/2 cents to 6.47-1/2, and Sept KC gained 12-3/4 cents to 6.21-3/4.  Significant rainfall for much of SRW country for the next several days will delay harvest, and concerns of high vomitoxin levels are increasing.  Statistics Canada in Ottawa is scheduled to release its latest estimates on June 29 at 7:30am CT.


Cattle futures are called mixed.  The Cattle on Feed report was fairly in-line with expectations.  Total cattle on feed was steady to slightly above last year at 100.2% or 11.699 million head, up 28,000 head from last year.  This was in line with expectations.  Placements were 93% of last year, with a market expectation of 95%, and marketings were 123%, just slightly under market expectations.  The lighter placement number may help support the market, and the deferred contracts vs the heavier supply on the front end.  Cash trade was firmer for the week. Light trade occurred in the North at mostly $125 to $126/cwt live and $197 dressed – $1 to $2 higher than the previous week.  Very light volumes traded in the South at mostly $122 which is steady relative to prior week’s trade.  Cash direction will likely lead the market this week.  Carcass values were lower on the week, as high production, buyer push-back, and seasonally slower demand contributed to drive prices lower.  Choice boxes lost $21.75/cwt and Select decreased by $13.82 on the week. This could build some pressure on the cash market.  Demand will be a concern this week.  Feeder cattle saw buying support last week. Price may be tied to the movement of grains this week with key USDA Acreage and Grain stocks report on Wednesday.


Hog futures are called steady to higher.  The market saw some buying support and short covering to end the week, as the oversold market likely saw some value buying and position squaring after the quarterly Hogs and Pigs report.  Still oversold, we may see some additional value buying, but softer fundamentals will make the market cautious.  The Lean Hog Cash index dropped 1.97 to 117.62 on Friday.  This was reflective of a cooler cash market, and the large discount of the futures to the index.  For the week, the index posted its first lower close for the year, dropping 4.06 on the week.  Pork carcasses finished softer on Friday, losing 2.95 to 110.04.  Demand was light at 254 loads.  Pork carcasses did firm into the end of the week, but were down $10+ from Monday’s close.  The weak carcasses could pressure prices on the open.  Technically, the hog market has broken down aggressively over the past couple weeks, and may be trying to start the bottoming process.  Prices may be due for a bounce and look to fill the gaps on the charts overhead.  Fundamentals have softened, but are still historically strong.



Matthew Strelow

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates