TFM Sunrise Update 09-17-2021


Corn futures traded narrowly mixed overnight atop this week’s higher trading ranges.  Dec corn is down a penny to 5.28-1/2, having traded a 4-1/2 cent range overnight from 5.26 to 5.30-1/2.  For the week, the contract is up 11-1/2 cents.  Talk of smaller-than-expected yield results in Illinois this week amid firm demand has helped elevate prices off of last Friday’s fresh 5-month low.  The weaker trend since the contract highs were established on June 10 may continue through harvest, highlighted by moderate volatility as yields trickle in during what may be a relatively quick harvest window, barring any weather disruptions.  Showers will move through the Midwest at times but be isolated.  Conditions will be good for maturation and early harvest.  Basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast were steady to firmer on Thursday, reflecting rising costs for barge freight as an early harvest progressed and hurricane damage continued to hobble un-loadings at the Gulf, traders said.  With the Sept WASDE report in the rear-view, the trade will begin to focus on the Sept 30 Quarterly Grain Stocks report.  With the Sept WASDE report in the rear-view, the trade will begin to focus on the Sept 30 Quarterly Grain Stocks report.


Soybeans futures are lower this morning.  Nov beans slid a dime overnight to 12.86 and are unchanged from last Friday’s settlement.  Much of this week’s choppy action was tied to dialogue surrounding China’s bean purchases.  China’s crush margins are strong and many trade participants view increased potential for more buying of U.S. beans.  Several cancelations were posted this week, in part due to hurricane damage at the Gulf.  Chinese Jan bean futures overnight were up 53 yuan ; Soymeal up 37; Soyoil down 124; Palm oil down 172; Corn down 7.  Malaysian palm oil prices overnight were down 66 ringgit (-1.49%) at 4374 amid concern that falling soybean oil prices will diminish the tropical oil’s appeal and boost competition between the two rival fuels.


Wheat futures were mostly unchanged overnight.  Dec Chicago futures are up 2 cents to 7.15.   The contract has steadily risen off a 1-1/2 month low while gaining 27 cents throughout the week.  Dec KC wheat is up a penny to 7.21-1/2 and up 39 cents for the week.  Dec MPLS wheat is fractionally lower at 9.06 and up 27 cents for the week.  Fundamentally, traders will continue to react to weather issues around the world while garnering near-term support from issues in France, Canada, and Russia.  Choppy to higher action in the dollar this week is capping upside potential.


Cattle futures are called steady to weaker.  The market weakened yesterday as the selling pressure keeps the market on the defensive, driven by long liquidation and technical selling.  The concerns regarding demand and the eroding on retail prices will keep the sellers active in the near term as the market searches for a fall low.  Country cash trade stayed relatively quiet on Thursday.  So far, most trade at $124 in the South, was mostly steady with last week.  In addition, dressed trade was also reported in Nebraska at $200, about a $1 lower than last week.  Carcass values remain soft.  Choice carcasses dropped an additional 1.82 to 318.00 and Select was 3.62 lower to 280.27.  Load counts were light at 141 midday loads.  The feeder market was mixed on Thursday, with some buying support on the front-end of the market. A pause in the strength of the grain markets helped support the front-end feeder cattle.


Hogs are called steady to higher on follow-through from bottoming action yesterday highlighted by short covering.  October hogs started the turn on Wednesday, and followed through to the upside yesterday, lifting the entire complex.  December hogs posted a strong bullish reversal at the bottom of the charts, and the key will be follow-through into the end of the week.  The turn is more likely technically driven, as the hog market moved quickly to an oversold condition and was due for some price recovery.  The fundamental picture remains soft, overall, but may be showing some glimpses of improving.  Cash markets stay soft with National Direct Carcass Base price trading $1.86 lower to $81.64, and Live Pricing at $64.49.  The softer tone may limit buying in the futures market.  The Lean Hog Cash Index was 1.47 lower to 95.35, but still hold s a large premium to the futures market, which helped fuel the turn in prices on Thursday.  October hogs are trading at nearly a $10 discount to the index, and December is pushing $21.


Matthew Strelow

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