TFM Sunrise Update 07-25-2022

Provided by Stewart-Peterson Inc.



Corn futures were up overnight.  Sept corn gained as much as 14-3/4 cents to an overnight high of 5.79.  Dec peaked at 5.80, up 15-3/4 cents before trimming gains.  Heading into last night’s trade, Managed funds were net long an estimated 106,000 corn contracts.  The GEFS has advertised a strong ridge of high pressure to develop over the central United States next week and by the end of next week the ridge is over the heart of the Midwest.  The Global Ensemble Forecast System is a weather forecast model made up of 21 separate forecasts, or ensemble members.  The ridge is quite strong producing excessive heat in the Pacific Northwest and many other far western states in the second half of this week with extremes over 110 in the northwestern states.  The ridge progresses to the east this weekend and next week and is over the Plains during mid-week and the heart of the Midwest by August 6-8. The ridge has closed 594 height line encompassing Iowa, Missouri, Illinois eastern Nebraska, eastern Kansas and Indiana at the end of the model run.  Dalian corn futures were higher.  Matif corn futures has been trending higher due to hot and dry EU weather.  Crude is higher.  U.S. dollar is lower.  Gold, copper, coffee, cocoa and cotton are higher.  Sugar is lower.


The soybean complex was higher overnight with Aug beans up 21-1/4 cents to an overnight high of 14.55-3/4.  Nov bean reached 13.36, up 20-1/4 cents.  Aug meal is up 5.20 to 436.70.  Aug bean oil is up .10 to 60.42.  Soybean futures have had mixed news.  Managed funds net long an estimated 71,000 soybeans, 52,000 soymeal and 11,000 soy oil at the end of last week’s trading.  Last week’s U.S. Midwest warm and dry weather could drop weekly U.S. soybean Good-to-Excellent ratings another 2 to 3 percent.  A 1 bushel per acre drop in USDA 51.5 yield would drop U.S. 2022 supply 150 mil bu.  A drop in China buying of U.S. soybeans has offered resistance.  Weekly Export Inspections will be out this morning.  Dalian soybean futures were lower. Soymeal, palm oil and soy oil were higher.

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Wheat futures stayed volatile overnight, moving higher at all three exchanges.  Sept Chicago wheat rallied 27 cents to 7.86.  Sept KC was up as much as 32-3/4 cents to an overnight high of 8.53.  Sept MPLS wheat is up 23 cents to 8.94.  Some of this was due to worries about higher inflation and higher U.S. Dollar lowering demand.  News that Russia bombed Ukraine’s Odessa port had quick negative global reaction after Russia signed an agreement to allow for Ukraine grain exports.  This raises uncertainty if grains will be shipped out of Ukraine.  What would Russia gain if Ukraine begins to export grain again?  Commodity markets continue to find resistance from inflation fears and global Central Banks raising interest rates to slow inflation.


Cattle calls are for steady to lower.  The USDA Cattle Inventory and July Cattle on Feed reports came out on Friday after the markets closed.  The cattle market closed at their highest levels in weeks as the market was looking for confirmation of an overall tighter cattle supply picture.  For Cattle inventory,  all cattle and calves in the United States on July 1, 2022, totaled 98.8 million head or 2% below the 101 million head last year.  All cows and heifers that have calved totaled 39.8 million head, 2% below the 40.6 million head on July 1, 2021.  Beef cows, at 30.4 million head, down 2% from a year ago.  The 2022 calf crop in the United States is expected to be 34.6 million head, down 1% from last year.  Beef cows and calf crop numbers were slightly above expectation, but still reflect on overall lower cattle supply trend.  The Cattle on Feed report showed that cattle and calves in feedlots at 11.3 million head on July 1, was slightly higher than last year’s numbers, and in line with expectations.  Placements in feedlots during June totaled 1.63 million head, 2% below 2021. Net placements were 1.56 million head, slightly above expectations, but within the analyst range.  The large placements are reflective of difficult pasture conditions pulling cattle forward, and by adding heifers into the lot as compared to the cow herd.  Marketings of fed cattle during June totaled 2.06 million head, 2% above 2021 and in line with expectation.  Overall, both reports were close to expectations, and reflective of the current cattle numbers in the industry.  With the strong close on Friday, most of the news may be priced in, which could pressure the market this morning.


Hogs are called steady to higher.  Lean hog futures were mostly higher to end last week led by the August futures, which were sharply higher as the front month contract tries to keep pace with the cash market.  The strong cash market tone helped propel the August futures to its highest close since April, as prices have gapped higher 3 out the past 4 days cashing the premium in the cash market.  The front-end strength has helped lift the October futures through key resistance as the spread between August and October hogs has grown to $22.275.  The fundamentals in the cash and retail market are strong and keeping the buying strength in the hog market.  The current path is still higher as the market is looking for a near-term top.



Matt Strelow

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