TFM Sunrise Update 08-25-2021


Corn futures were down 4 cents overnight in a pull-back from Tuesday’s higher settlements.  Dec is at 5.41-3/4, mid-range of yesterday’s 11 cent range for the day.  The latest retreat in the dollar and jump in crude has helped the price of corn climb off of Friday’s drop and close below 100-day moving average support that now stands as resistance at 5.54.  Technically, Dec managed to stay above the up-trend line drawn at the lows from March 31 and July 9, which can be viewed as supportive.  Corn weekly crop ratings this week saw a decline in IL, IN, MN, MO, ND, NE and WI with the best crops noted in KY, MI, OH and WI.  Pro Farmer’s recent U.S. corn yield is viewed as too high in trading circles and should be closer to 173 bushels per acre than 177 if their state data was used to calculate U.S. yield.  Meanwhile, USDA may be using the sharp drop in Brazil’s exports in their latest estimate of export demand.   The U.S. Midwest 6 to 10 day outlook holds scattered showers Sunday through Thursday with temps above normal Sunday, to near to above normal Monday through Thursday.  Weekly Ethanol Stats will be out today, Exports tomorrow morning.  Ethanol production is seen slightly higher than the previous week at 975 barrels per day.  Stockpiles are seen averaging 21.519 mil barrels versus 21.558 a week prior.


Soybean futures eased overnight after posting a relatively big rally on Tuesday.  Nov beans are down 7 cents this morning to 13.24-3/4 after challenging the contract’s 100-day moving average at 13.50-3/4 yesterday and failing.  The contract’s 10 and 20 day MAs near 13.35 and 13.37, respectively are also providing headwinds to the recent price recovery.  All in all, the bean market is forging a sideways pattern as the trade awaits final production results from the U.S. 2021 crop.  USDA trimmed weekly soybean crop ratings from 57% Good-to-Excellent Monday afternoon to 56% versus 69% last year. Crops dropped in IL, IN, MI, MO, NE, ND and TN.  Pro Farmer’s recent U.S. soybean yield is said by some, that it should be closer to 48 bushels per acre than 51 if their state data was used to calculate U.S. yield.  Brazil and especially Argentina is starting 2022 crop season drier than normal.  Dryness in Argentina may continue into December.  Argentine growers have sold 27.9 mil tons of soybeans from the 2020/21 season, the Agriculture Ministry said on Tuesday in a report including data updated through Aug. 18.  The pace of sales was behind that of the previous season, when 29.9 mil tons of the oilseed had been sold by this time in the year, according to government data.  The 2020/21 soybean harvest in Argentina ended in June with a harvest of 43.5 mil tons, according to the Buenos Aires Grains Exchange.  Dry conditions hurt the 2020/21 soy crop, which had come in at 49 mil tons in the previous season, according to the exchange.  World canola prices continue to trend higher on talk of lower Canada and EU supplies.  Overnight, Chinese Jan bean futures were up 121 yuan ; Soymeal up 21; Soyoil up 140; Palm oil up 134;  Malaysian palm oil prices overnight were up 47 ringgit (+1.09%) at 4350.


Winter wheat futures softened overnight with Dec Chicago down as much as 11-1/2 cents to a fresh 3-week low of 7.20-3/4 and KC down a nickel to 7.12-1/2.  Dec MPLS futures are down a penny to 9.09-3/4.  Spring wheat harvest is still offering resistance to basis despite the lower crop as the quality of the crop is better than expected.  On Monday, Canada will update their 2021 crop estimates.  Trade estimates are near 22.6 mmt with a range from 18.9 to 25.4 and versus 35.2 last year.  Lower Canada and Russia supplies could help trigger a rally in wheat futures.  Dec Chicago wheat is near 7.20 support with key resistance near 7.49 and will need to get back over that upper price level to avoid a negative head and shoulder technical formation.  Dec KC futures paint a similar technical picture with 7.30 key resistance.  Dec MPLS wheat has been trading near 9.00 all month.


Cattle futures are called steady to lower.  Live cattle futures have stabilized from Monday’s rally.  The front month futures look technically challenged after posting reversals on the daily charts as quiet cash market activity to begin the week influences the front months.  Early-week asking prices are around $125/cwt.  In the south, some light, unconfirmed trade was steady to $1.00/cwt lower.  Steady cash trade would be viewed as disappointing, given the strength in futures on Monday.  Deferred cattle contracts were higher, with December and later futures posting new contract highs again yesterday.  After a strong run higher, the retail carcasses might be hitting the top.  At the close, Choice carcass were .45 lower at 347.58, and Select carcass softened 2.50 to 316.90.  The load count was light at 106 loads.  The retail market may be moving through the Labor Day buying strength, and could be seasonally start turning lower.  This could put a halt on the buying enthusiasm in the cattle market if the retail market starts to trend lower.  Feeder cattle futures rolled over off session highs, but still traded within the trading range of Monday, so technically a consolidation day.  The softening in the Live cattle market and the strong move higher in grains added selling pressure.


Hogs are called mixed to lower.  The hog market is still struggling to find footing, as prices traded lower on Tuesday.  Deferred contracts felt the biggest push lower with triple digit loses through the hog futures complex, fueled by demand concerns.  Even though the front end contract fought off lows for the day, the technical price action was not friendly, as the October contract broke support and closed below the nearby moving averages, opening the door for more long liquidation.  Closing pork values were quiet on Tuesday, gaining .09 to 112.31, slightly lower than the midday values.  Demand was light at 236 loads.  The cash is also trending softer, closing Monday at 92.68 down $3.72, with a range from $91-101 on the National Direct prices.  The lean hog index was higher Tuesday, gaining .34 to 107.90, and is still holding a $20 premium to the hogs futures, which will keep the front month supported.


Matthew Strelow

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