TFM Sunrise Update 09-20-2021


Corn futures eroded overnight on follow-through from Friday’s weak finish.  Strong harvest progress is seen weighing on last week’s rally and forcing prices back into choppy, sideways trading ranges.  Outside markets are also pressuring corn this morning with the dollar up 20 points and crude down 1.64.  Dec corn shed 8-3/4 cents to 5.18-1/2 last night where the contract’s 10-day Moving Average is.  Technically, the contract’s 200-day moving average at 5.08-1/2 is serving as a support area.  Meanwhile, trendline resistance is capping rally attempts.  For now, Dec corn is hanging around the $5.00 area with a Stocks-to-Use ratio of 9.5%.  Weekly Export Inspections, this morning will precede afternoon Weekly Crop Progress updates.  Cumulative sales for the 2021-22 marketing year have reached 38.7 % of the current USDA forecast compared to the five-year average of 24.9%.  Looking ahead, the trade is beginning to anticipate the Sept 30 Quarterly Stocks report.


The soy complex was lower overnight.  Nov beans fell 15-1/2 cents to 12.68-1/2.  Soymeal was down 3.20 per ton; And, soyoil lost 77 cents.  Demand for U.S. beans from China will continue to be a frontline issue moving forward.  Many are looking for the pace to increase as issues surrounding Hurricane Ida in the Gulf are resolved.  Basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast were steady to firmer on Friday, supported by the slow resumption of exporter activity at the Gulf this week along with rising costs for barge freight, traders said.  With the price of Chinese soybean futures trading to new highs, it appears that there should be demand there.  China’s markets are close for holiday.  Malaysian palm oil prices overnight were down 85 ringgit (-1.99%) at 4176 as investors weighed an extended drop in soybean oil, though prospects of stronger imports by India could stem declines.  Early Soybean plantings began in Brazil but the weather remains too dry for many areas.


Wheat futures were also under pressure overnight, falling 6 cents across the board.  Dec Chicago is at 7.02-3/4; Dec KC at 7.07;  And, Dec MPLS at 8.94-1/2.  A 20 point basis point jump in the dollar combined with weaker row crops is leaning on the wheat complex this morning.  Uncertainty surrounding Russia was confirmed by recent forecasts.  The Russian Ag minister is currently estimating their crop at 69.6 mmt vs USDA’s 72.5 mmt.  However, some Russian Ag groups estimate the crop as high as 74 to 76 mmt.  With harvest currently 71% complete, final projections will soon be in.


Cattle futures are called steady to weaker.  Last Thursday’s weak technical close kept the selling pressure going on Friday, as price saw moderate to strong losses.  The close for October cattle on Friday afternoon, was the lowest weekly close since early March.  The tone of the market is still negative, and the long liquidation and technical selling seem to be driving the market, as well as concerns regarding demand and the erosion in retail prices.  A retest of the low from last Monday looks to be the next downside target.  Last week’s cash trade saw light to moderate trade occurred in the North at $123 to $126 live, and a range of $196 to $200 dressed. mostly steady to $1 softer than last week.  Light volumes were traded in the South at mainly $123 to $125, steady relative to the prior week.  The Choice cutout ended the week $14.58 softer and Selects decreased $16.18/cwt. While prices did see a significant decline, the spread between Choice and Select remains wide at nearly $35 as higher quality beef items are still seeing very strong demand.


Hogs are called steady to higher.  Last week’s upturn on the weekly charts should bode well for the start of this week, technically.  The biggest item supporting the hog market is the historically large discount of the futures market to the cash market.  Even with Friday’s strength, October futures are trading 8.725 under the lean hog index.  The cash index traded .90 lower on Friday to 94.45, and was down 3.51 on the week, narrowing the gap.  National Direct cash hog prices have trended lower, limiting gains in the hogs market.  On Friday’s close, Carcass based cash prices were .16 lower to $81.48. Live prices were no reported due to confidentiality.  Pork Carcass cutout values have been choppy, and closed Friday slightly lower, losing .56 to 105.41 on a light to moderate load count at 325 loads.


Matthew Strelow

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