TFM Sunrise Update 09-16-2021


Corn futures were up overnight on follow-through from Thursday’s higher breakout.  Dec corn, up 2 cents to 5.35-1/4 reached a two-week high of 5.37-1/4 last night and is now targeting technical resistance area at the 50-day moving average situated at 5.44-1/4 after holding support last week and forming an outside day reversal higher on USDA report day.  A dry two-week Midwest forecast is conducive to harvest progress.  Early corn yields are near or below farmers’ estimates as some diseases take a toll in some fields.  Additional support stems from trade chatter about how USDA uses a 5-year average of ear weight, which may be too high, in the agency’s September forecast that could lead to a reduction final U.S. yield closer to, or below 170 BPA.  Trade estimates for this morning’s USDA Weekly Export Sales are  500,000 to 1.0 mil tons.


November soybeans were back above 13.00 last night to 13.02-3/4 on gains of 8-1/4 cents.  Managed funds may be back buying soybeans amid talk of lower U.S. bean yield, higher Brazilian soybean prices and lower Chinese supplies.  Bean meal futures were up 2.50 per ton, and soyoil is mixed to lower this morning. U.S. August NOPA soybean crush was 158.8 mil bu vs 154.1 expected and 165.0 last year.  Trade estimates for this morning’s USDA Weekly Export Sales are 600,000 to 1.40 mil tons vs 1.472 mil last week.  This week the USDS confirmed cancellations of 132,000 tons of U.S. soybeans sold to China and another 196,000 tons sold to unknown destinations, all for delivery in the 2021/22 marketing year that began Sept. 1.  Chinese Jan bean futures up 30 yuan overnight; Soymeal down 4; Soyoil up 124; Palm oil up 186; Corn down 18.  Malaysian markets are closed for holiday.


The wheat complex was mostly unchanged overnight, consolidating from a price rebound for much of the week, so far.  Dec Chicago wheat is down 2 this morning to 7.10-1/4 after first taking out yesterday’s 1-/2 week high to get to 7.16-13/4.  Next level of resistance is 7.19 and then key resistance near 7.49.  Dec KC wheat is flat at 7.16.  Dec MPLS futures are fractionally lower to 9.04.  Technically, prices look to settle into a choppy pattern after forcing their way back into a convergence of moving averages.  An overnight jump in the dollar is weighing on sentiment ahead of weekly exports.  Trade estimates for this morning’s USDA Weekly Export Sales are 300,000 to 700,000 tons.  Fundamentally, traders will continue to react to weather issues around the world.


Cattle futures are called steady to weaker after seeing mixed to mostly lower trade on Wednesday with prices consolidating near the top of Tuesday’s gains.  Technically, the picture still looks weak as prices search for a fall low.  Cash trade began yesterday with light trade at $124 in the South, mostly steady with last week.  In addition, dressed trade was also reported in Nebraska at $200, about a $1 lower than last week.  The Cash trade helped support the October futures, but the steady to softer tone kept the selling pressure intact.  Carcass values stayed soft.  At the close, Choice carcasses dropped an additional 3.07 to 319.82 and Select was 6.73 lower to 283.89.  Load counts were light with 191 loads.  The on-going pressure in the retail trade will keep it difficult for futures to push higher.  Feeders added to the weakness in the live cattle market as well on Wednesday as the majority of the feeder market experienced triple digit losses amid an uptick in grain prices.  September feeders stayed tied to the Cash Feeder Cattle Index, which was .19 lower to 154.20.


Hogs are called steady to lower.  The market is still oversold and could be due for a bounce, especially with the premium in the cash index to the front-month futures.  Deferred contracts were softer on the day, as the market is concerned about growing slaughter numbers going into the end of the year and 2022.  Adding to the selling pressure, Chinese pork prices are trending lower, and that brings a more negative tone to the U.S. hog market.  Lower Chinese pork prices will have an ability to cut into U.S. exports sales, which are published this morning.  The cash hog market stays soft, with National Direct Sale closing .57 lower to $83.50 on a carcass base price, and Live pricing was not reported due to confidentiality.  The quiet tone will be neutral to negative the market.  The weak overall cash trend is reflected in the Lean Hog Cash Index, which was 0.63 lower to 96.77.   The spread between the cash index and futures stays wide, trading at 14.495, which could set the hog market up for a further bounce, as we saw in the October futures yesterday.  The pork carcass cutout at the close was trading .50 higher to 105.70.  Load count was moderate at 402 loads.  The second consecutive day carcass values traded higher.  Hog slaughter has been trending higher, with estimated slaughter at 481,000 head, up 7.000 head from last week.  This helped weigh on deferred futures prices on Wednesday.


Matthew Strelow

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