TFM Sunrise Update 08-03-2021


Corn futures were down overnight with Dec slipping as much as 12 cents to 5.53-1/4 before recovering.  The contract is down 3-1/2 cents to 5.55-3/4 this morning.  The USDA said in their Crop Progress report that the U.S. corn crop is rated just 62% good-to-excellent.  This compares to 64% G/E a week ago and 72% for the same period last year.  The market had been looking for a 1% decline to 63%.  91% of the crop was estimated to be silking, same as last year and above the five-year average; 38% of the crop is in the dough phase of production, 1% ahead of last year and 5% ahead of the five-year average.  Technically, prices are backing off from Monday’s strong performance and higher closes to maintain a consolidative pattern as traders refrain from pushing the market out of its comfort zone at this juncture in time.


Soybean futures are down a dime in the November contract to 13.43-1/4 this morning within an overnight trading range from 13.48 to 13.37-1/2.  Market participants expected the soybean crop conditions to fall 1% to 57% good-to-excellent, but the USDA surprised and said ratings improved 2% to 60%.  This is causing some back-peddling of prices in the complex.  Soybeans blooming are at 86% G/E vs 76% last week, and 84% a year ago.  There have also been recent rains in much of the Midwest, but the forecast will shift to being drier this week.  Technically, beans continue to chug along in a sideways fashion just above 100-day moving average support, but below the 10, 20 and 50-day in the Nov contract.  Chinese Sept bean futures were up 66 yuan overnight ; Soymeal up 9; Soyoil down 142;  Malaysian palm oil prices overnight were up 26 ringgit (+0.63%) at 4146 after posting its biggest loss in seven weeks, with expectations about a recovery in demand from top buyer India and tight supplies from Malaysia improving sentiment.


Wheat futures were flat to weaker overnight in light trade.  Sept Chicago is down 2 cents to 7.27-1/2 after buy stops were triggered above 7.18 yesterday.  The front month KC contract is a fraction lower to 7.03; And, Sept MPLs is down 3-3/4 to 9.19.  Although, there have been favorable growing conditions for northern and eastern Europe in recent days, Russian ag analysts lowered their wheat production forecast to 78.50m tonnes, and hot and dry conditions continue to deteriorate Canadian crops in Alberta.  Any rains taking place in the U.S. right now are falling too late and could do little to improve the crop.  Spring wheat was pegged yesterday at 10% G/E vs 9% last week, and 73% a year ago.  Globally, this could suggest record low World ending stocks-to-use ratios.  U.S wheat export prices are holding a premium to EU and Black Sea supplies right now.  U.S. winter wheat harvest is 91% complete vs 84% last week, and 84% a year ago.  Overall, wheat prices are stabilizing after adding more than 3% on all three front month wheat contracts.


Cattle futures are called mixed after holding on to mild gains to start the week, as support under the front end contracts held an early test.  Despite holding support to start the week, front month cattle futures will likely stay under pressure, as the cash market still works through a burdensome front end supply picture.  It was a typical Monday in the cash market as things remained quiet and undeveloped.  Estimated slaughter was 119,000 head, as packers keep kill close to the 120,000 per day level.  This keeps ample supplies in front of the market, and the cash market will likely remain steady.  However, the influence of retail values could help support.  Choice carcass values closed higher gaining 2.54 to 281.00, and Select added 4.19to 263.38.  The load count was light to moderate at 127 loads.  Retailers have pushed prices higher on demand for the labor day holiday window, and the market will have a cautious tone if this demand window starts to close.  Deferred contracts still hold the premium in the market on optimism of tighter cattle supplies and a more active cash market into 2022.  Technically, cattle markets are testing support levels, but held to start the week.  The trend over the next couple days will be a key to see if there is potential for more long liquidation.


Hogs are called steady to higher following solid gains to start the week as prices recovered off last week’s weak closes.  The discount of futures to the cash index is aiding the overall market.  The cash index is trading at 112.08, gaining .06 on the day and maintaining a 4.58 premium to the August futures, and a historically wide 22.58 premium over the October contract.  Front month futures are above their 100-day moving averages.  After trending higher last week, retail carcass value was stronger on the close Monday.  Pork carcasses gained 4.82 to 128.71 on light demand of 238 loads.  A firming trend in retail values will help support the cash market and should support the hog futures market in general.  The hog market is closely watching pork production and slaughter. Last week’s average kill was 2.327 million head, down 5,000 from the prior week.  Carcass weights were steady last week at 210 lbs/head, but with the lighter numbers, production was 487.3 million pounds, down 1.4 million pounds from the previous week.  With demand staying very active, the lower production week will likely keep a bid present.



Matthew Strelow

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