TFM Sunrise Update 08-06-2021


Corn futures remained stuck in neutral overnight with Dec right at 5.50, down 3 cents.  For the week, the contract is down 6 cents, mid range of this week’s 24-1/2 cent trading range between 5.65-1/4 and 5.40-3/4.  Early estimates for next week’s WASDE report have been released with StoneX looking for 176.9 bushels per acre (BPA).  Private analytics firm IHS Markit Agribusiness (Informa) on Thursday forecast U.S. corn production at 14.911 billion bushels, with an average yield of 176.5 BPA, according to traders and portions of an IHS client note seen by Reuters.  This is down from the trendline estimate of 179.5 BPA.  US weather forecasts for the general Midwest hold scattered, isolated rains as far out as the 6 to 10 day forecasts.  In Argentina, Truckers lifted sea port blockade for talks with the government.  However, the disruptions could resume on the night of Aug. 7 if there’s no agreement, according to shipping agency Nabsa.


Soybean futures are firm this morning with contracts up 4 cents to 13.32-1/2 (Nov).  The actively traded November contract is down 16-3/4 cents for the week after slipping beneath the 100-day moving average on Tuesday.  However, export sales to ‘unknown destinations’ yesterday offer lingering support into the weekend as prices continue to form a flag/pennant on the daily chart.  Some pre-report estimates for the August WASDE report early next week show yield estimates for soybeans at 50 BPA (StoneX). IHS Markit Agribusiness (Informa) on Thursday forecast U.S. bean production at 4.464 billion bushels, with an average yield of 51.5 BPA.  Chinese Sept bean futures were up 10 yuan overnight; Soymeal unchanged; Soyoil up 34;  Malaysian palm oil prices overnight were up 63 ringgit (+1.49%) at 4280 with investors weighing prospects for production in second-biggest grower Malaysia with weaker prices of soybean oil.


Wheat futures are up 4 to 5-3/4 cents this morning led by MPLS futures as the spring wheat crop suffers one the worst production years on record.  Meanwhile, the domestic supply/demand balance sheet for winter wheat is not nearly as supportive for the markets, but expectations for lower Canadian and Russian wheat crops is helping to serve as a buoy for prices amid fears that the spread of Delta variant virus will slow a global economic recovery.  The Canadian Prairie province has combined 3% of its crops as the heat rapidly dries plants, Saskatchewan government said on Thursday.  Sept MPLW is up 5-3/4 cents to 9.09-1/2 and a nickel higher on the week.  Chicago and KC Sept contracts are up 4 to 7.16-3/4 and 6.95-1/2, respectively.   For the week, the Chicago wheat contract is up 12 cents, KC up 22.


Cattle futures are called lower after experiencing selling pressure on Thursday when prices failed to break through resistance at the top of the trading range, and fell back posting triple digit losses.  The lack of strong follow through in the cash market weighed on Futures prices, as the charts broke apart technically.  October closed the day under near-term support at the 10-day moving average.  The break technically could open the door for additional long liquidation.  The cash market was trying to trend higher this week, but trade was very slow on Thursday, which may signal most business is done for the week.  This week Northern dressed deals have had a range of $195 to $202, mostly $197 to $198, steady to $1 higher than last week’s weighted average, basis Nebraska.  Southern live trade has had a full range of $117 to $122, mostly $121 to $122, generally $1 to $2 higher than last week.  Japan and South Korea were the top purchasers of U.S. beef last week, according to this week’s Weekly Export Sales.  Retail carcasses have had a strong run higher recently, and prices stayed firm at closing with Choice carcasses gaining 3.24 to 292.58, and Select was 2.62 higher to 273.77 on moderate demand of 107 loads, but that strength failed to move the market.  Unless the retail market stays strong on the close, more liquidation and selling pressure is likely.


Hogs are called steady to lower on follow-through from limit down limit down in the front months.  With the limit down close in the October contract, hog futures will have expanded limits of 4.500 today.  The weakness in retail values helped trigger the selling pressure, as prices have slid quickly off the strong start to the week.  Pork values did firm on Thursday gaining .13 to 123.12 with a load count a light to moderate 257 loads.  At $123, pork carcasses are trading $5-6 off Monday’s close.  Weekly export sales were supportive as new sales totaled 38,800 MT, up 1% from last week.  China returned to the market picking up 18,300MT, but that failed to move prices higher.  The cash market stayed quiet and the lean hog index gained .19 to 111.78.  The premium of the index to the August market helped support the front end price, but the technical selling weighed on the October, setting up a wide premium between the October and August contracts.



Matthew Strelow

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