TFM Sunrise Update 06-29-2021


Corn futures were mixed overnight as the trade prepares for tomorrow’s key USDA Grain Stocks and Acreage report.  Analysts are estimating 2021 corn acres to come in at 93.8 million acres, up from the 91.1 million estimated in the March Planting Intentions report.  Quarterly grain stock estimates are at 4.144 billion bushels as of June 1st, this would be below last year’s 5.003 billion bushels if realized.  Nearby July is unchanged at 6.75-1/2 as the delivery period approaches and participants roll into September, which is down 3 cents to 5.55-1/4.  Upside resistance is seen at 5.86 and support at 5.28-3/4 for the contracts.  Dec corn is down 3 to 5.44-1/4 this morning after surging higher to start the week on a hot and dry two week forecast.  Technically, the 100-day moving average at 5.20 is holding support for the new crop contract.  Weekly crop ratings held fairly steady with Good-to-Excellent categories adding up to 64% versus 65% last week.  This is down from the 73% rating a year ago.  Minnesota and South Dakota saw the largest week-over-week rating reductions as rains have continued to disappoint in those areas.  Iowa, Illinois and Indiana all saw improvements to their good to excellent ratings this week.


Soybean futures are narrowly mixed this morning with July up 4-3/4 cents to 13.51-1/2, Sept up 1-1/2 to 13.38-1/4 and Nov down 2-1/2 cents to 13.10.  Weekly crop ratings were unchanged at 60% Good-to-Excellent.  Slight improvements in the I-states were offset by declines in Minnesota, South Dakota and Ohio keeping the national average steady this week.  Rains across the heart of the Midwest were beneficial over the last 72 hours with the heaviest rain totals coming from central Illinois.  Weekend rain totals were most disappointing for the northwest Corn Belt and Dakotas.  Soybean acres are expected to increase in tomorrow’s acreage report according to pre-report estimates.  Planted acres were pegged at 87.6 million in March, analysts estimate that number will climb to 88.95 million.  If realized, this would be nearly 6 million acres larger than the soybean area planted in 2020.  Those surveyed also expect tighter US soybean stocks than what was reported March 1st.  The average pre-report estimate is 787 million bushels down from 1.38 billion last year.  Overnight, Chinese bean futures were down 88 yuan ; Soymeal up 48; Soyoil up 28.  Malaysian palm oil pricest were up 53 ringgit (+1.51%) at 3559.  Soybean barge bids were mixed following a flurry of U.S. soy sales to China last week, traders said.


Winter wheat futures were choppy overnight underpinned by new highs in MPLS spring wheat.  Sept Chicago is down 2 cents to 6.50.  The KC wheat contract is up 2 to 6.28-3/4.  Sept MPLS gained as much as 23 cents to a new high of 8.57 before trimming gains by a dime as record-breaking heat in the PNW moves east threatening the Dakotas this week.  Nearly half (48%) of the spring wheat crop was headed this week, a 21% increase from last week.  However, only 20% of the crop is deemed Good-to-excellent after shedding another 7 percentage points from the previous week.  Winter wheat ratings fell 1 percent in the G/E category to 48% with 33% of the crop harvested as of Sunday versus a five year average of 40%.  In tender activity, Turkey’s state grain board issued an international tender to purchase a total of about 395,000 tons of red milling wheat;  Jordan’s state grain buyer issued a tender to buy 120,000 tons of wheat, with a bidding deadline of July 6;  And, the Ethiopian government issued an international tender to buy about 400,000 tons of optional-origin milling wheat.


Cattle futures are called steady to lower.  Bear spreading was noted Monday as Friday’s cattle on feed report kept front month cattle supplies heavy, while a lower placement number was supportive on the deferred end, and the market traded that accordingly to start the week.  Cash trade is not established to start the week, as expected, but the trend in cash this week will be key for cattle prices overall.  After trading higher last week, this week may be more unclear given the drop in retail prices last week.  The retail trend stayed soft to start the week.  Choice carcasses were sharply lower, losing 7.13 to 297.43 and Select was down 2.22 to 273.96 at the close.  The load count was light at 119 loads.  Technically, August live cattle closed at the bottom of the trading range and on trend-line support.  Another drop today could signal more long liquidation.   Meanwhile, a sharp advance in the grain markets helped usher in some long liquidation in feeders, creating a concerning scenario on the charts.


Hog futures are called steady to higher.  Lean hogs saw strong follow through buying support to start the week as front month contract traded the 3.000 limit higher.  With the strong close hogs will have expanded 4.500 limits today.  Technically, the market is building a bottom, and is poised for some upside recovery.  The August chart has gaps to fill above the current price levels, and those could be targets.  A 50% retracement of the move lower for August futures would target the $108 area.  The announcement of the Chinese government looking to buy pork to fill state reserves helped support pork prices.  This action was aimed at bolstering the Chinese hog prices for the producer, and that strength carried to the oversold U.S. market.  Chinese hog prices have traded at the lows for the year recently, and that has helped weigh on U.S. hog prices.  The lean hog index dropped sharply on Monday, after the first down week of the year.  The index was 2.19 lower to 115.43 and is still holding a strong premium to the July futures, which should help support the front month.  Carcass values were choppy last week, but ended the week firmer.  At the close, that trend stayed firmer, gaining 5.09 to 115.13 on moderate demand of 299 loads.



Matthew Strelow

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