TFM Sunrise Update 08-05-2021


Corn futures traded narrowly mixed overnight within about a nickel range as the market remains uneventful.  Dec corn continues to adhere to the 5.50 price area with last night’s trading range between 5.50-1/2 and 5.46-3/4.  The contract is up 1-3/4 cents this morning to 5.48-1/2 ahead of this morning’s USDA Weekly Export Sales.  Trade estimates for this morning’s USDA Weekly Export Sales for new crop range between 200,000 and 600,000 tons.  Old crop sales could see another round of cancelations with trade estimates ranging between minus 100,000 tons to plus 100,000.   Last week the agency reported a negative 115,231 tons for the week.  In South America, the arrival of freshly harvested soybeans and corn has been halted at the Argentine port of Bahia Blanca at the height of export season due to a protest by truckers who have blocked roads to press their demands for better pay, local officials said.   “There are 40 ships waiting at Bahia Blanca to load 1.2 million tonnes of corn, wheat and soymeal,” said Gustavo Idigoras, head of the CIARA-CEC chamber of export companies amid unusually low water levels of the Parana River at the Rosario ports hub in Santa Fe province that has cut the amount of cargo that can be loaded onto each ship by 25%.


Soybean futures were weaker overnight.  Nearby Aug beans are down 6 cents to 13.97-1/2, and Nov is off 8 to 13.17-3/4 as both contracts trade an ‘inside session’ since Monday’s lower move. Choppy action is expected to continue as the trade determines if areas that have gotten timely rains will outweigh the areas that are still struggling with heat and dryness.  The European and GFS weather models are somewhat at odds as to what areas will get rains over the next 10 days.  Technically, prices look to remain rangebound until more is know about final crop size and conditions.  Trade estimates for this morning’s USDA Weekly Export Sales for new crop range between 200,000 and 550,000 tons versus 529,256 tons last week.  Old crop sales could see another round of cancelations with trade estimates ranging between minus 100,000 tons to plus 100,000.   Last week the agency reported a negative 79,276 tons for the week.  Soymeal sales are seen at 25,000 to 125,000 tons for 2021/22, and 50,000 to 300,000 tons for 2020/21.   Overnight, Chinese Sept bean futures were up 34 yuan ; Soymeal down 10; Soyoil up 170; Palm oil up 166;  Malaysian palm oil prices were down 79 ringgit (-1.84%) at 4212 after two days of gains, with inventories in second-biggest grower Malaysia estimated to have increased for a fifth month to the highest level since September even as production weakens.


Wheat futures are firm this morning.  Sept Chicago and KC contracts are up 3 cents to 7.20-1/4 and 6.97-1/4, respectively, awaiting Weekly Export numbers.  Trade estimates range between 250,000 and 700,000 tons versus 515,168 tons last week.  Sept MPLS wheat is up 7 this morning to 9.10 in a bid to stay within a 29 cent trading range between 8.99 and 9.28 since July 29.  As global weather underpins the wheat complex, corn may be a leading factor for near-term price action.  Most growers have already sold the vast majority of the wheat crop they harvested earlier this summer and were unwilling to make new deals on supplies they will harvest next year.  Spot basis bids for HRW wheat were flat at truck market terminals in Oklahoma and Kansas on Wednesday, according to grain dealers.  CME Group data showed protein premiums for HRW wheat delivered by rail to or through Kansas City rose by 6 cents per bushel for wheat with protein content of 11.6% and by 2 cents per bushel for wheat with protein content of 11.8%. Premiums were unchanged for all other grades.


Cattle futures are called steady to higher as prices challenge the top of the most recent range.  Strong retail values and some spillover strength into the cash markets, have help push live cattle futures firmer this week.  Beginning late Tuesday, a few cattle were traded in the cash markets in the North at $123 to $125 live, steady to $2 higher than last week.  Some traded in the South at $120, which is fully steady with last week.  Additional trade on Wednesday saw $125 in Nebraska, and southern deals at $122.  This was steady to $1 higher than last week.  The majority of cash trade will be wrapping up today.  Choice carcasses gained 3.50 to 289.34 and Select was 3.66 higher to 271.15, on moderate demand of 146 loads.  Trading at $289, Choice are a full $10+ higher than last Friday’s close.  This will support cash and futures.


Hogs are called steady to lower after closing mostly lower on Wednesday, as prices may be reaching a short-term top.  Retail carcass prices started to soften on Tuesday afternoon close, and that started the pressure in the market.  Technically, the price action in October hogs was softer yesterday, but held on to support levels into the afternoon.  Holding above key moving averages and the key $90.00 price level, will be key in the short-term.  Midday carcass values stayed softer, and closed weaker in the afternoon, losing 4.68 to 122.99, on moderate demand of 340 loads.  After a strong start to th week, carcasses have been trending lower, but the demand in load counts has been picking up on value buying.  Weekly export sales this morning could help set the tone for the end of the week.  The market will closely watch the amount of sales as well who is buying.  China has been very quiet in the export market recently, and some renewed buying by them could help support futures into the end of the week.  The Lean Hog Cash index was .45 softer to 111.59 yesterday as August moves closer to expiration.  The gap between the two is coming together with futures holding a 2.110 discount to the index, which should help support the front month.  Daily hog slaughter is firmer this week, estimated at 472,000 head yesterday, 7,000 more than last week.  The stronger slaughter pace will also help limit cash markets as packer don’t have the need to bid up for additional hogs.



Matthew Strelow

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