TFM Sunrise Update 08-24-2021


Corn futures were firm overnight inside yesterday’s trading ranges.  Dec corn is up 3 cents this morning to 5.38-1/2.  The 6 to 10 day weather outlook for the Midwest holds scattered showers Saturday through Wednesday with temperatures above normal Saturday & Sunday, then near to above normal Monday through Wednesday.  This week’s USDA Crop Progress showed the corn crop at 60% Good-to-excellent vs 62% a week ago and 64% a year ago.  Illinois saw the biggest change at -7% G/E from last week.  Corn dented is 41% vs 22% last week and 41% a year ago.  The dough stage is 85% vs 73% last week and 86% a year ago.  Maturity is at 4% vs 5% a week a year ago.  In South America, consulting firm AgRural reports South-Central Brazil is 4.1% complete with corn planting vs 5.7% a year ago.  Overall price action looks negative after the failure to see any follow-through higher after the August WASDE reports bullish surprise on a yield cut.  The fact that the market hasn’t seen any additional corn purchases from China as we are starting to head into harvest is hanging over the market.


Soybean futures were up as much as 18 cents in the November contract to 13.10-3/4 overnight.  Meal and soyoil contracts are also trading in positive territory.  Jan 22 Chinese bean futures were up 88 yuan ; Soymeal down 14; Soyoil up 38; Palm oil up 78;  Malaysian palm oil prices overnight were down 16 ringgit (-0.37%) at 4300 amid signs of increasing production in Malaysia and concern that a stronger currency will curb exports from the world’s second-biggest grower.  The U.S. soybean crop is rated 56% Good-to-Excellent vs 57% a week ago, and 69% a year ago.  Soybeans blooming is 97% vs 94% last week, and 99% a year ago.  Leaf drop is 3% complete vs 4% a year ago.  Bean futures appear to be building a near-term base of support in a technically weakened state after plunging through support last week.  November beans have a support level targeted in the form of the contract’s 200-day moving average drawn at 12.48.


Wheat futures softened overnight with Dec Chicago down 6 cents to 7.27-1/2, KC down a nickel to 7.12-1/2; And, Dec MPLS off 3-1/2 cents to 9.02-1/4.  Spring wheat harvest was pegged at 77% vs 58% last week, and 46% a year ago.  Stats Canada will soon release 2021 crop updates.  In Russia, harvest yields are below average and last year.  After a slight price recovery to start the week helped by a retreat in the dollar and bounce in energies, the U.S. wheat market is still holding a premium to Black Sea and EU supplies.  Jordan’s state grain buyer issued a tender to buy 120,000 tons of milling wheat that can be sourced from optional origins.  Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tons of milling wheat.  Futures are underpinned by talk of a warm and dry U.S. fall forecast for the Southern Plains.  Technically, wheat has both a bearish and bullish argument, and much will depend on price direction in row crops and sustained strength in the greenback, which is firm this morning.


Cattle futures are called higher after surging through to the upside and establishing new contract highs in the front-end of the market yesterday.  The Cattle on Feed report on Friday last week confirmed what the market was anticipating, a tighter cattle supply.  With placements also staying under last year, the trend will continue into 2022.  The retail trend stayed strong at midday, as Choice carcasses closed an additional 2.97 higher to 348.03, and Select was .87 higher to 319.40, holding midday strength.  The load count was light at 83 loads.  The cash market will still be the key to supporting this rally, and typical for a Monday, the market was quiet with trade undeveloped.  The expectations will be for higher trade, supported by the strong carcass value.  Packers will still hold strong margins, and are using the slaughter capacity as the leverage to keep cash prices mostly steady.  Monthly cold storage showed good product movement, but will likely drive the market as total pounds of beef in freezers were down slightly from last month, and down 9% from last year.  Feeder cattle followed the live cattle market higher with good upside movement.  Like Live cattle, the September and later contracts all closed with new contract highs to start the week.  The front month August Feeder cattle contract has expiration on 8/26.


Hogs are called mixed to lower.  Despite some support from the strong cattle market, the hog market failed to hold on to early session strength to finish mostly lower.  In October hogs, prices are still consolidating around the $88 area, trading that price point for the past 6 sessions.  The cash market has stayed soft and disappointing.  The lean hog index traded .62 lower to 107.56. National Direct cash hogs prices closed last week averaging $96.40, with a range of $92.00 to $108.00, down $2.40.  The trend stayed soft to start the week.  Last week, pork values felt like they trended higher, but weak closes at the end of the day, kept prices steady at best over the week.  Midday on Monday was soft with pork carcass value trading 4.53 lower, and fell into the close trading $6.00 lower to 113.25. Load count was moderate at 365 loads.  The USDA cold storage report was released on Monday afternoon, and frozen pork supplies were up slightly from the previous month but down 4% from last year.  Stocks of pork bellies were down 24% from last month and down 35% from last year.  The report overall stays supportive showing good product movement, but weak retail prices will pressure the market overall.


Matthew Strelow

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates