TFM Sunrise Update 08-04-2021


Corn futures were unchanged overnight and could take on a defensive posture following yesterday’s negative reversal action.  Dec corn is staying close to the pivotal 5.50 price level as U.S. producers dig their heels in on further selling until more is known about their actual yields.  Last year, USDA’s farmer survey in August for corn yield was 181 BPA.  This week, USDA dropped the weekly crop rating from 64% Good-to-Excellent to 62% based on slippage in IA, MI, MN, MO, ND and NE.  Weekly Ethanol Stats will be out today for the week ending July 30.  Production is expected to be lower than last week at 1.007 mil bu per day.  The average estimate for the stockpile is 22.655 mil barrel compared to 22.733 mil a week ago.  Weekly Export Sales will be out tomorrow morning.  China may be waiting for a harvest low to step up buying.  Commodity brokerage StoneX Tuesday projected U.S. 2021 corn production at 14.945 billion bushels yesterday, with an average yield of 176.9 bushels per acre.  The estimates, based on customer surveys and other factors, are what the company predicts will be final production, not what it expects the USDA to say in a monthly supply and demand report due Aug. 12.


Soybean futures were choppy overnight with the Nov contract firm this morning, up 2 to 13.21-3/4.  Prices tumbled through 100-day moving average support in Tuesday’s session.  The move has helped paint a sideways pennant formation on the daily chart.  So far, futures are respecting yesterday’s fresh multi-week lows as prices enter oversold territory for the near-term.  Chinese Sept bean futures were up 54 yuan ; Soymeal down 32; Soyoil up 56;  Malaysian palm oil prices overnight were up 157 ringgit (+3.79%) at 4300 advancing for a second day on concerns about weaker production in second-biggest grower Malaysia and expectations of a pickup in purchases by India.  Commodity brokerage StoneX on Tuesday projected this year’s U.S. soybean harvest at 4.332 billion bushels, with an average yield of 50.0 bpa.


Wheat futures are narrowly mixed this morning with a modest gain of 3 to 4 cents occurring in the Chicago market, and fractional changes in KC and MPLS.  There is still concern that a lower Canadian and Russian wheat crop could drop World exports stocks by 20 mmt which would conceivably support higher prices and encourage increased US/World wheat acres and production in 2022.  However, higher corn and soybean prices will also compete for acres.  Sept Chicago wheat, at 7.28 this morning, is approaching overbought territory, so technically, prices are subject to some two-sided action.  A near-term upside target lies at 7.42-1/4 with support down at 7.16.  Sept Spring Wheat futures, at 9.19-1/2 appear pointed higher within a strong uptrend amid an increased probability for record low world ending stocks-to-use ratios.


Cattle futures are called steady to higher as strong retail markets attract buying optimism into the cattle complex.  Front month futures may be looking to push higher and challenge the recent contract highs. Choice carcasses gained 4.84 to 285.84, and Select was 4.11 higher to 267.49.  Movement was light at 130 loads.  The Choice/Select spread is beginning to widen at 18.35 between the two, reflecting the strong bids for Choice beef and the limited supply.  The cash market will need to reflect this strength in order to support the gain in futures.  The boxed beef traded has been strong recently, as demand for beef has stayed consistent.  With the Labor Day holiday around the corner, retails have been bidding up for tight supplies.  Cash markets are still quiet to start the week, with asking prices at $122, without established bids.  We look for cash to set the tone into the end of the week for futures prices.


Hogs are called steady to higher on follow-through from Tuesday’s triple digit gains.  The discount of October to the cash market, and a strong retail price move has helped bring additional short cover and buying strength into the market.  The lean hog index, at nearly a $3.00 premium over the August contract is trading at 112.04, down .04 from Tuesday.  The index is at a distant $20.66 premium to the October contract.  The retail market has stayed strong with a good demand tone, and that has brought buying support to the hog market.  At midday, pork carcasses were 3.05 higher but lost those gains at the close, dropping 1.04 to 127.67.  Load count was moderate at 308 loads.  This weak close may offer some resistance on the open today.  Technically, front end hog prices look strong with October pushing back above the 10 day moving average on the close.



Matthew Strelow

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