TFM Sunrise Update 09-15-2021


Corn futures were up a nickel overnight with Dec at 5.14-1/4.  Crude oil is making a new multi-week high this morning, and with weakness in the dollar, this is providing some outside-market support.  Weekly Ethanol Stats will be out today.  Production is seen slightly higher than last week at 926,000 barrels per day.  Stockpiles average an estimated 20.164 mil bbl vs 20.39 mil a week ago.  This would mark the seventh straight weekly decline in stocks.  A mostly conducive weather forecast should allow harvest to kick into full steam in the days and weeks ahead.  For now, the market may be catching a bid from rumors of lower-than-expected early yield results in some areas.  This includes reports of Tar Spot disease that can have a negative impact on final yield.  Basis bids for corn shipped by barge to the U.S. Gulf Coast strengthened on Tuesday as another grain export terminal near Louisiana’s Gulf Coast returned to operation this week, bolstering demand, traders said.


Soybean futures were up a dime overnight to 12.92-1/2 (Nov).  Chinese purchases of U.S. soybeans continue to be slow as the current pace is not enough to meet USDA.  Some of this is likely due to the recent issues in the Gulf.  The monthly NOPA report is scheduled for release at 11 a.m. CDT Today.  Estimates for the August 2021 crush ranged from 146 million to 158.6 million bushels, with a median of 155 mil.  If realized, it would be down 0.6% from the 155.105 mil processed in July and down 6.6% from August 2020, when crushers processed 165.055 mil.  It would also be the smallest August crush since 2017 and the second smallest crush for any month in almost two years.  The crush has fallen short of market expectations for the past six months as several processors have idled plants seasonally for needed maintenance amid lofty soybean prices and thinning supplies, analysts said.  Last Friday, USDA lowered its 2020/21 marketing year U.S. crush forecast by 15 mil bu to reflect the recent slowdown and also trimmed its 2021/22 season crush outlook by 25 mil bu.  Soyoil supplies at the end of August were projected at 1.555 bil pounds, based on estimates from seven analysts.  If realized, that would be down 3.8% from 1.617 billion the prior month.


The wheat complex was firm overnight amid positive trade in row crops and weakness in the dollar.  Dec Chicago and KC wheat contracts were up 4 cents to the 7.05 area.  Dec MPLS was up 3 to 8.90-1/4.  The nearby September futures contract expired yesterday with gains.  Support also stems from a recovery after slumping to oversold territory, and the fact that Canada, France, and possibly Russia are downgrading their supplies.  Russian wheat prices continue to climb, along with higher export taxes that may bode well for U.S. export potential.  The trade appears to be looking for a higher price trend into 2022 to buy U.S. acres and reflect tight old crop supply versus projected demand.


Cattle futures are called mixed after some price recovery on Tuesday as futures finished with strong triple-digit closes.  The cattle market opened sharply higher to start the session, as the JBS plant in Grand Island, NE, which was damaged by fire on Sunday night, state that the production floor was undamaged, and they resumed slaughter operations.  This mews caused a strong open, and some short covering in an extremely oversold market.  On yesterday’s lows, the December contract was trading nearly $13.00 off the high established on August 24.  The key will be follow through going into the end of the week, to establish if this is a turn.  The demand concerns and the trend in retail values are the real driving force to the move lower in the price.  Midday beef carcass values were mixed, but close lower, as Choice carcasses were down 3.04 to 322.89, and Select lost 1.54 to 290.62.  The load count was light at 136 loads.  The feeder cattle market followed the cattle market higher as the market posted strong triple digit gains, but failed at overhead resistance.  The technical picture still looks weak as prices as still in search of a fall low, but additional price follow through could be a signal that the fall low could be near.


Hogs are called steady to lower.  Additional follow through selling pressure pushed hog prices lower on Tuesday as most futures posted triple digit losses.  In addition, the cattle market has staged price recovery, and the Hog market may have been the back end of “buy cattle-Sell Hogs” spread trade.  Prices have dropped quickly as October hogs are trading to price levels last seen in early March.  Managed Money Funds are still holding a large, long position in the hog market, which could mean that the long liquidation will continue and possibly accelerate.  The cash trend has been softer, pressuring the market.  National Direct Cash trade closed .41 lower on a Carcass Basis to $84.07, and Live prices were “not reported due to confidentiality”.  The weak overall cash trend keeps the pressure on the hog market and is reflected in the Lean Hog Cash index, which was 0.33 lower to 97.40.  The spread between cash index and futures remains wide, pushing to 17.025 yesterday, which could set the hog market up for a bounce.  Carcass values are trending softer, but closed with a move higher.  The pork carcass cutout traded 4.08 higher to 105.20.  Load count was moderate at 409 loads.  The hog market is oversold and due for a bounce, especially with the premium in the cash index to the Front-month futures.


Matthew Strelow

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