TFM Sunrise Update 08-26-2021


Corn futures were down 3 cents overnight to 5.48-3/4 in the December contract as rain makes its way across widespread portions of the U.S. mid-section.  Dec corn continues to coil around the 5.50 price area where congested moving averages have entwined themselves on the chart.  Trade estimates for this morning’s USDA Weekly Export Sales are 500,000 to 1.0 mil tons for 2021-22 marketing year corn.  In South America, Brazilian farmers are starting to plant 2022 1st crop corn in dry weather and Argentina will begin to plant 2022 crops in September.  There is also concern that Brazil’s 2021 corn supplies are tight thus limiting exports.  Record low water levels are also limiting Argentina corn exports.  Outside markets, this morning are showing firmness in the dollar as the currency stabilizes from recent volatility to the upside.  Crude is also settling back into the trading range from the beginning of the month after last week’s sharp break.


Soybean futures were down a nickel overnight to 13.27-3/4 (Nov).  Trade estimates for this morning’s USDA Weekly Export Sales are 1.30 to 2.0 mil tons for 2021-22 marketing year beans.  Chinese Jan bean futures were up 49 yuan; Soymeal up 3; Soyoil up 98; Palm oil up 110;  Malaysian palm oil prices overnight were up 28 ringgit (+0.64%) at 4392 as traders weighed shrinking exports and rising output in Malaysia with tight global edible oil supplies.  Talk of lower sunseed and canola production and higher Asia vegoil demand is helping soyoil rebound from recent lows.  Concern about global meal demand and lower Argentina prices limits the upside in soymeal values.  This despite fact China domestic hog prices are lower suggesting higher hog numbers.  Soybeans continue to try to find value on talk of lower China imports and U.S. crush demand adding to U.S. carryout compared to higher global vegoil prices and the fact world exporters’ stocks-to-use ratio are at 24 year lows.


Winter wheat futures were up 7 cents overnight to 7.32-1/2 in the Dec Chicago contract and 7.22 in Dec KC wheat.  Dec MPLS futures were up 3 to 9.11.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 600,000 tons for 2021-22 marketing year wheat.  The recent optimism stemming from production cuts elsewhere in the globe have seemed to have worn off a bit, and news has remained slow and possibly made wheat look a little expensive given the time of year.  However, technically, prices have found some semblance of support after weakening from new highs established on Aug 13.  Basis bids for HRW wheat delivered on the spot market to rail and truck market terminals held steady across the southern U.S. Plains on Wednesday.


Cattle futures calls are mixed as the market adjusts to a surge to new highs mid-week in live cattle contracts.  Cash market activity in the north approached $130/cwt this week versus Oct cattle futures at 130.300 which finally broke out to the upside after two months of staging.  The seasonal window for higher prices remains open for a few more weeks.  Strength in boxed beef prices may be topping out as retailers satisfy Labor Day needs.  Boxed beef prices are showing signs to lower.  Look for futures to potentially post a third consecutive day of losses as deliveries continue.  Hedged sellers in Texas and Kansas dealing with the large gap between the southern plains cash prices and those in the north.  Smaller show lists in those southern states give sellers some additional leverage in an environment of a wide bid/ask gap earlier this week.  The August feeder cattle contract is set to expire today.  The contract settled at 159.30 yesterday.


Hogs are called mixed to firmer after clawing back from a lower start to the week on Wednesday.  October hogs, at 88.75, are back to the contract’s 100-day moving average resistance area while struggling to maintain traction.  Momentum studies support further price strength, particularly if resistance levels are breached.  The next upside target for Oct is around 90.80.  Carcass values dropped nearly $11/cwt in a week’s time along with weakness in pork cuts.  A further drop in pork values will weigh on futures, though there is a substantial discount seen between futures and the pork price.


Matthew Strelow

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