TFM Sunrise Update 09-03-2021

The CME and Total Farm Marketing offices will be closed Monday, September 6, 2021, in observance of Labor Day.


Corn futures were off a nickel overnight to 5.20-1/2 (Dec).  The contract is down 34 cents since last Friday’s close heading into a 3-day holiday weekend.  The contract’s 200-day moving average down at 5.03 is a bearish harvest-time target.  Row crops in areas of moderate to intense drought eased in the U.S., according to USDA, dropping 6 percentage points to 32% for corn; Soybean area fell 4 points to 28%.  U.S. corn yields are estimated at 177.5 bu/acre and production at 14.998b bu, according to a September survey released Thursday from brokerage StoneX, up from their previous month’s forecast.  That’s above USDA’s Aug. 12 forecast for a corn yield of 174.6 bu/acre and output of 14.75b bu.

For now, prices have fallen into an oversold territory, technically, which could reinforce a recovery if U.S. corn exports continue to run ahead of the pace to reach the USDA projection.  Sept 1 marked the beginning of the new marketing year.  Cumulative sales have reached 33.5% of the USDA forecast for the 2021/22 marketing year versus the 5yr average of 17.8%.  Sales need to reach 767,000 tons per week.  Dec 2022 corn is off 2-1/2 cents to 5.00-1/4 this morning.  Basis bids for corn shipped by barge to the U.S. Gulf Coast were steady to lower on Thursday on a lack of demand from exporters for nearby shipments as Gulf terminals remain closed after Hurricane Ida came ashore on Sunday, traders said.  Spot basis bids for corn and soybeans also fell on Thursday at river terminals in U.S. Midwest.


Soybean futures were mixed overnight and are up 1 to 2 cents this morning amid an uptick in soyoil futures and a price decline into oversold territory.  Nov beans are up a penny to 12.84-1/2 this morning and down about 40 cents for the week.  Nov 22 futures are unchanged at 12.53-1/2.  Overnight, Chinese Jan bean futures were up 69 yuan ; Soymeal up 11; Soyoil up 136; Palm oil up 156;  Malaysian palm oil prices overnight were up 81 ringgit (+1.91%) at 4322 climbing the most in three weeks tracking a rise in soybean oil prices, and as traders weigh expectations that demand from top buyer India will increase.  StoneX raised its yield and production projections for beans on Thursday to 50.8 bu/acre and 4.409 billion bu versus the USDA outlook for 50 bu/acre, and output of 4.339 bil bu.

Grain and oilseed shippers on the U.S. Gulf Coast reported more damage from Hurricane Ida to their terminals on Wednesday as Cargill Inc confirmed damage to a second facility, while power outages across southern Louisiana kept all others shuttered.  Shippers, including Bunge Ltd BG.N and Archer-Daniels-Midland Co ADM.N, are still assessing damage to their locations, although all are still without power, the companies said.  Power may not be restored for weeks.


Wheat futures were under mostly steady overnight.  Buyers emerged at yesterday’s lows ahead of the 3-day holiday weekend after seeing prices follow row crops lower.  Dec Chicago wheat is down 2 cents this morning to 7.15 while bouncing off of 50 and 100-day moving average support and settling into the upper half of Thursday’s trading range.  The contract is down 17 cents for the week.  Dec KC wheat traded a 7-1/4 cent range overnight (7.11-3/4 to 7.04-12) and is off 3 cents this morning at 7.06 and down about 30 cents for the week.   Dec MPLS wheat is steady at 8.99-1/2 and down 17-1/2 cents on the week.  Rainfall in the Canadian Prairies is delaying harvest.  Meanwhile, dry conditions in the Pacific Northwest is delaying winter wheat planting.  Mixed conditions are seen in the Central and Southern Plains for early winter wheat planting.  Increased showers with a front this weekend will be a benefit.


Cattle futures are called steady to lower.  The market faced strong selling pressure as long liquidation and profit taking pushed prices to triple digit losses on Thursday.  We view live cattle as poised for a further correction.  The technical selling was driven by the softer retail market and possible seasonal demand concerns.  December futures closed at 132.20, below trendline support, opening the downside to challenge the $130 level.  Carcass values were lower, following Wednesday’s weak close.  Choice carcass dropped .53 to337.92, and Select carcasses were 2.60 lower to 304.97.  The load count stays light at 81 loads.  Choice carcasses have now dropped more than $12.00 since peaking just over the 350.00 level a week ago.  Estimated daily slaughter for yesterday was 119,000 head, up 6,000 from last week.  Seasonally, carcass weights are starting to climb, and with slaughter numbers on the rise, packers have plenty of beef supply in a window when demand usually starts to slow.  The cash market remains a disappointment, despite the strong packer margins.  The market saw some $123 Kansas trade Thursday, steady to weak with Wednesday’s totals.  The weaker tone added to the selling pressure.  Producers may have hedges in place, securing them with the surge last week, and are willing to take a softer cash bids.  After a difficult week, October, at 128.05 is trading 3.075 lower for the week and could see some profit taking and squaring going into the 3-day weekend.


Hogs are called mixed.  Hog futures saw choppy, mixed trade on Thursday as prices stay in consolidation mode.  Deferred contracts were firmer on Thursday, but those gains were modest.  October hogs, at 89.85 are range bound this past week, with 90.00 being acting as a magnet.  Prices are consolidating near the top of the trading range, and with some friendly news, could push higher. The fundamentals are still softer, though, with the cash market trending mostly lower.  The Lean hog Cash index was .94 lower to 102.67, and is starting to narrow the premium over the futures.  That spread historically wide at 12.820.  National Direct Daily Hogs prices were softer, trading range of $87.00-$94.00, with weighted average at $88.91, $.62 lower.  Carcass values are trading sideways to lower, in a typical seasonal window for softness.  The pork carcass cutout index was down .55 to 111,66, reflecting the overall weakness of the retail market, but carcass values were firmer at the close, gaining 2.73 to 109.27 on a load count of 302 loads.  This could support hogs futures on the open today.


Matthew Strelow

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