TFM Sunrise Update 09-29-2021


Corn futures were mixed overnight and are up 3 cents this morning, taking back some of Tuesday’s loss. The dollar is higher again this morning, and crude oil is showing signs of stability after pushing higher to begin the week.  December corn futures, at 5.35-1/2 are respecting the trading range between 50-day moving average resistance that was touched yesterday at 5.41-3/4 and 200-day moving average support currently trending upward at 5.13.  Weekly Ethanol Stats will be out today.  Output and stockpile projections for the week ending Sept. 24 are seen higher than last week at 939,000 barrels per day, and Stockpiles estimated at 20.195 mil barrels vs 20.111m a week ago.  Weekly Export Sales will be released early tomorrow morning followed by the Sept Quarterly Grain Stocks report at 11 AM CST.  Weather-wise, warm and dry conditions are providing good harvest weather in the Midwest before showers move in late in the week.  Isolated showers in central and northeast China are delaying harvest of corn.  Drier conditions in Ukraine and southwest Russia are benefiting harvest of corn.  Favorable conditions for corn planting is seen in Brazil.  More showers are needed for corn planting and establishment in Argentina.


Soybeans are narrowly mixed this morning with a firm tone, trading at 12.78 (Nov).  Meal and soyoil are also firm as the trade awaits tomorrow’s Quarterly Stocks report.  Chinese Jan bean futures were up 34 yuan; Soymeal down 37; Soyoil up 88; Palm oil up 44; Corn down 5.  Malaysian palm oil prices overnight were up 24 ringgit (+0.54%) at 4471.  Soybean futures remain stuck in a pretty tight trading range as the market consolidates after falling from the summer highs.  Outside market movement and news on energy shortages which could have an impact on crushing plants in China, combined with a steady flow of U.S. harvest results look to keep the bean market choppy and sideways.


Winter wheat futures were firm overnight.  Dec Chicago and KC contracts are up 3 and 4-1/2 cents, respectively to 7.09-1/2.  Dec MPLS is up a penny to 9.08-1/4.  We’re seeing a bounce after closing 15-3/4 cents lower in Dec CBOT wheat yesterday which led the grain complex to the downside.  The US dollar index was more than 30 points higher yesterday and is firm again this morning, thus creating headwinds for commodity prices like wheat.  Outside markets and position squaring ahead of tomorrow’s Grain Stocks report will keep the wheat complex on a slippery slope.  Elsewhere, dry summer weather delayed plantings in some areas of Russia, according to SovEcon.  In addition, Russia’s export tax may also deter farmers from planting more.


Cattle futures are called steady to weaker.  Overall, charts look technically weak, as live cattle are building a wedge pattern, that could break to the down side.  Feeder cattle supported deferred futures, but front month contracts are concerned about near-term fundamentals.   September feeders, which expire tomorrow, stayed in line with the index.  The feeder cash index lost .06 to 154.81.  October live cattle futures placed their lowest close since the end of April/early May time window.  Carcass values are looking to find some footing, or at least slowing their descent.  At midday, prices were mixed, but turned negative to end the day.  Choice carcasses lost 1.14 to 301.56 and Select lost .03 to 274.35.  The load count was light at 155 loads.  The cash market was quiet, and still undeveloped.  Bids are lacking, as the cattle on feed report validated fairly comfortable cattle supplies and with daily kill holding around the 120,000 head/day level, packers are comfortable waiting for the cash market to come to them.  Asking prices were at $125, but most likely trade will wait until late in the week to develop.  The feeder cattle market rebounded with firm gains. 


Hogs are called mixed to higher, chasing the premium in the front end of the market, supported by tighter supplies.  Dec hogs pushed through resistance yesterday making a test of $90 seem likely.  The technical picture stays strong with the market bull spread, October at a premium to December.  After last week’s supportive USDA report, the tighter hog supplies could limit slaughter by 6% in the months ahead, and give support to the nearbys.  Cash prices have slowed their decline, but are still trading choppy.  On closing Direct Cash prices, carcass based cash values were softer, but Live base prices were firmer.  The Lean Hog Index lost 0.42 to 91.47, closing the gap with the Oct futures.  The spread between the two has turned around as October futures are holding a .205 premium to the index, which could limit strength for the front month.  The discount to futures in Dec is still over $7.00, which supports the market.  Retail values have gained some value and were trading 1.63 higher at midday, but prices turned lower into the close.  Pork carcasses were 13.83 lower to 108.12.  The load count was moderate at 351 midday loads.


Matthew Strelow

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