TFM Sunrise Update 07-13-2021


Corn futures were mixed overnight, consolidating after trading higher to begin the week.  Weekly Crop Ratings rose a percentage point in the Good-to-Excellent category to 65% versus 59% a year ago. 26% of the crop is silking, up from 10% last week and compared to the 30% average.  A surprise in yesterday’s USDA estimate of the U.S. HRS wheat crop and concern over Canada and ND crops triggered new buying in wheat and corn followed.  September corn is back to the 100-day moving average resistance.  Key resistance is the 5.70 gap.  Dec corn, down 3 overnight to 5.30 is sitting atop it’s 100-day MA and yesterday’s trading range.  The Government made very few changes to the balance sheet for corn.  2021-22 Production and Ending Stocks increased slightly.  USDA failed to lower Brazil’s corn crop enough and raise U.S. 2021/22 corn demand.  Due to higher 2021 corn acres, U.S. 2021-22 corn carryout was 1.432 bil bu vs 1.402 expected and 1.357 in June.  USDA left Chinese 2020-21 corn imports at 26.0 mmt and 2021-22 at 26.0 mmt, but U.S. Exports were increased 50 mil bu.  Basis bids for corn shipped by barge to exporters at the U.S. Gulf Coast firmed on Monday after the U.S. government boosted its forecast for exports in the coming year.


Soybean futures are trading near yesterday’s settlement prices this morning.  Aug beans are fractionally higher to 14.05, and Nov is steady at 13.50-1/4.  Weekly Crop Ratings stayed the same as the previous week at 59% G/E versus 68% last year.  46% of the crop is blooming, which is the average for this time of year and up from 29% a week ago.  10% of the crop is setting pods versus 3% a week ago.  Chinese Sept beans were up 12 yuan ; Soymeal up 24; Soyoil up 56.  Malaysian palm oil prices overnight were up 109 ringgit (+2.82%) at 3972 advancing to its highest close in five weeks, with tight global supplies of edible oils and a lower production outlook from Malaysia, the second-largest grower, supporting the market.  Drought in the Canadian Prairies continue to support vegetable oils.  In addition, the forecast for the northern Plains into next week is hot and dry.  Bean oil is up sharply this morning on the heels of a strong move Monday.  Weather-wise, the 6 to 10 day outlook for the U.S. Midwest holds scattered showers south Saturday through Monday, then mostly dry Tuesday-Wednesday. Temperatures are seen near to above normal Saturday through Wednesday.


Winter wheat futures are in the red this morning with Sept Chicago off 9 cents to 6.31-3/4 and Sept KC down a dime to 6.04-3/4.  Prices failed to push higher overnight, but instead saw some profit-taking after such a big move to start the week.  Sept MPLS is down 3 to 8.53-3/4 after making a new high at 8.64 overnight.  NASS estimated U.S. 2021 spring wheat and durum crops lower than expected.  Continued dry summer conditions in Canada and ND could drop crops there even more.   For Spring Wheat, 83% percent of the crop is headed versus 69% a week ago, 78% last year and 81% average.  16% is rated Good-to-Excellent, same as last week and far below the 68% average.  USDA said 59% of the winter wheat crop is harvested, up from 45% a week ago, and down from 66% last year and the 65% average.


Cattle futures are called mixed following gains to start the week as prices consolidated off recent lows.  With the USDA report on Monday, markets were choppy overall in anticipation of the numbers.  The August contract, at 119.82 is aligned with $120 Cash.  Yesterday was a typical Monday in cash trade with bids and asks undefined.  A majority of trade will occur in the second half of the week.  At the close, boxed beef values were mixed.  Choice carcasses were 3.59 lower to 275.00, but Select gained a bid and was 1.36 higher to 258.77 on light demand of 123loads.  The direction of carcass values could have a direct impact on the cash market this week.  Packers seem comfortable running kill near 120,000 head daily, which could also limit cash upside.  Feeders saw selling pressure on Monday amid a strong move in the grain markets, led by the wheat market put selling pressure on feeders to start the week.  Despite the weakness, feeder contracts consolidated, trading within Friday’s trading range.


Hog calls are mixed to higher.  Lean hog futures saw follow through buying from Friday’s strength as contracts posted triple digit gains.  July hogs may be limited to the upside with expiration this week, and the strong move against the index.  The lean hog index slipped .03 to 109.74, but is running at a 2.735 discount to the July contract.  August hogs, at 104.07, are the most actively traded futures, and are still under the index, which helps support prices.  Demand fundamentals support the market overall.  Carcass values have found some stability, and traded 1.29 higher to 117.73 on moderate demand of 279 loads.  Technically, the price action to start the week is very encouraging as August futures moved to the top of the latest trading range.  Price follow through today will be key going into the rest of the week.



Matthew Strelow

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