TFM Sunrise Update 07-19-2021


Corn futures were higher overnight led by beans and wheat and only spotty rain in the forecast.  Sept corn traded up to 5.71-1/2 on gains of 15-1/2 cents before easing.  Dec peaked at 5.67-1/2 and is at 5.61-1/2 this morning, up 9-1/2 cents.  Midwest weather forecasts are mostly dry west with temps near to below normal, though some isolated showers may occur far north tomorrow and Wednesday.  In the eastern portion, scattered showers are expected south and east with temperatures near to below normal.  The 6 to 10 day outlook holds scattered showers for the weekend, then mostly dry Monday followed by another round of scattered showers west Tuesday-Wednesday.  Temperatures are to be near to above normal Saturday through Wednesday.  Though the corn crop looks tough in certain areas, many of our clients report good looking stands as we pass the mid-point of the month, saved for the moment by a recent shower, or two.  Weekly Export Inspections and Crop Ratings are on tap for today.  Spot basis bids for corn fell early on Friday across the U.S. Midwest.


Soybeans, meal and oil were all up overnight.  Aug beans traded up to a one month high of 14.80 initially, on a 25 cent rally.  The contract gave up most of the move by this morning and is up 7 cents to 14.61-3/4.  Nov is up 9-1/2 cents to 14.01 versus the overnight high of 14.18.  Chinese Ag Sept bean futures were up 87 yuan ; Soymeal up 66; Soyoil up 102; Palm oil up 150.  Malaysian palm oil prices overnight were up 16 ringgit (+0.39%) at 4153 on an extended rally in rival soybean oil prices and as expectations of lower output from Malaysia, the second largest grower, underpinned optimism.  Spot basis bids for corn and soybeans loaded onto barges and shipped down Midwest rivers to the U.S. Gulf were weak on Friday, dealers said.  Look for the bean complex to remain buoyant as the market exhibits sensitivity to the tight carry out and a weather concerns.


Wheat futures are higher this morning as MPLS Spring wheat continues to rally in search of a top amid harsh conditions that are sure to be reflected in this afternoon’s Weekly Crop Ratings.  Sept MPLS got to a fresh contract high of 9.44-1/2 on gains of 27-1/4 cents.  Winter wheat contracts were carried higher with Sept Chicago wheat hitting a two-month peak at 7.09-1/2 on gains of 17 cents, and Dec KC wheat reached a two-month high at 6.78-1/4 on gains of 16-1/4 cents.  Private exporters reported the sale of 134,000 tons of soft red winter wheat to China for delivery in the 2021/22 marketing year, according to USDA.  The Taiwan Flour Millers’ Association purchased an estimated 50,000 tons of milling wheat to be sourced from the United States in a tender.  Bangladesh, Ethiopia, Iran and Pakistan all have pending tenders on the newswires.

Ukrainian milling wheat export bid prices rose by $3 to $6 a ton over the past week on uncertainty over the harvest in the Black Sea region because of bad weather, the APK-Inform agriculture consultancy said today.  Strategie Grains further increased its monthly production forecasts for all three major cereals in the European Union in the current 2021/22 season, which it said will help the bloc to meet higher projected demand on the global market.  However, the consultancy also echoed mounting concerns over the potential impact on grain quality from recent wet weather in southeastern and western areas of the EU.  The consultancy forecast that the 27-country bloc would harvest 133.0 million tons of soft wheat in 2021, up from 131.1 million projected in June and more than 14 million tons above last year’s crop.


Cattle futures are called mixed to lower after prices faded from Friday’s early session highs to end the day at the low end of the trading range.  The soft afternoon closes on Friday may lead to some additional long liquidation to start the week.  On the close, some technical damage was done to the charts as the overall trend is working sideways to lower.  Higher grain market activity may limit initial down-side pressure in cattle, though.  August cattle are bouncing around in anticipation cash market activity.  Last week’s premium failed to get the futures more aligned with cash.  Cash trade was quiet on Friday, as most trade was complete.  For the week, light to moderate trade occurred in the North at $122 to $126 live, and $196 to $201 dressed, which ranges between $1 softer and $1 firmer than the previous week.  Light to moderate volumes traded in the South at $117 to $120 – steady to $1 lower than last week.  On the week, prices continue to drop as consumers seemed to only be buying for immediate needs in hopes of a continued downward price trend.  Choice boxes decreased $12.10 lasts week and Selects moved $7.58 lower.


Hogs are called steady to higher after a strong finish last week.  Additional buying support to end the week may have stemmed from the announcement of a case of ASF being found in Germany’s hog herd.  This was the first case that was not found in only wild hogs.  Germany has been very limited on the global pork market already because of the wild cases of ASF, so the price impact of the disease in an isolated domestic herd was likely limited.  The lean hog index has trended lower for the past 3 weeks, but did turn back higher last week, gaining 1.57 including a .34 appreciation to the index on Friday, settling at 111.34.  The discount of the August contract to the index helped the buying support.  Pork cutout values jumped 3.58 at midday and held some gains into the close, finishing .42 higher to 119.94.  Friday’s close was $2.20 over Monday’s close as prices firmed on the week.  Friday’s demand was moderate at 230 loads.  The hog market may be bringing some value back into the market, with the thought process that prices may have come down too far, and improving fundamentals will only help support the hog market. Technically, charts are improved and the price action has been strong.




Matthew Strelow

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