TFM Sunrise Update 09-30-2021


Corn futures were mixed overnight. December corn, at 5.40, is up against 50-day Moving average resistance heading into today’s USDA Grains Stocks report.  The daily highs for the contract this week have been 5.40, 5.41-3/4, and 5.41, respectively.  The average trade estimate for Ending Stocks is 1.155 billion bushels as of September 1, down from 4.112 bil in June and down from 1.919 bil on September 1st, 2020.  The report will be released at 11 AM CST.  Fundamentally, the market is at a time of seasonal pressure and overall yield reports have been impressive, but the sideways range has persisted due to concerns of the already tighter stocks, worries of higher inputs for the 2022 crop, and possible increased demand to China.  South American weather has also been less than ideal as planting begins.  Trade estimates for this morning’s USDA Weekly Export Sales are 400,000 to 900,000 tons.  Looking ahead, the USDA is scheduled to release its Aug. Fats and Oils report along with the Grain Crushings report on Oct. 1 at 3pm.  Corn used in ethanol production is estimated to be up 2.7% year-over-year to 422 mil bu.


Soybeans are narrowly mixed this morning, trading at yesterday’s settlement price of 12.83-3/4 (Nov), and tightly knit into a sideways trading pattern at 200-day Moving Average support.  Meal is down $2 per ton.  Soyoil is up 50 cents.  Chinese Jan beans were up 7 yuan ; Soymeal down 8; Soyoil up 144; Palm oil up 178; Corn up 22.  Malaysian palm oil prices overnight were up 128 ringgit (+2.87%) at 4583 ending the quarter on a high, with prices surging to a record amid concern about tight vegetable oil supplies while demand booms.  The better-than-expected US soybean yield numbers coming in and the breakout higher in the dollar leave a bearish tone to the soybean complex, but the market has avoided any notable seasonal pressure.  Warm and dry conditions in the Midwest favor harvest progress before periods of showers moving in late week that could produce delays.  Quarterly Stocks hold an average estimate of 174 million bushels of soybeans as of September 1st, down from 767 mil in June and down from 525 mil on September 1st, 2020.  Trade estimates for this morning’s USDA Weekly Export Sales are 700,000 to 1.20 mil tons.


Wheat futures were firm again overnight, a theme so far this week.  Dec Chicago wheat is up 3 cents this morning to 7.13-1/4.  Dec KC is up 4 to 7.15-3/4; And, Dec MPLS is up 5-3/4 to 9.09-1/4. The front month contracts are 40-60 cents off their continuous chart highs and hanging at solid levels historically.  This week’s breakout higher in the US dollar will likely cause some caution, however.  Today’s Quarterly Stocks report is expected to show 1.852 billion bushels as of September 1st, up from 844 million bushels in June and down from 2.158 bil on September 1st, 2020.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 550,000 tons.


Cattle futures are called steady to weaker.  September Feeder cattle futures and options expire today.   As selling pressure continues in the cattle market, cash trade is lackluster and retail values remain soft.  Oct futures hit their lowest close since the end of April/early May time window.  The Dec live cattle contract also closed in that lower time frame window, and underneath the 200-day moving average, setting up an even softer technical picture.  Carcass values stayed soft as choice carcasses lost 2.54 at midday , and closed lower.  Choice carcasses lost 4.23 to 297.33, pushing under the $300 level but Select lost 2.57 to 271.78 Load count was light at 158 loads.  The cash market started to develop on Wednesday, and trade was disappointing with light to moderate trade in the south at $122-$124, about steady with last week’s weighted averages.  Northern dressed cattle are at mostly $196, fully steady with last week’s weighted average.  Overall, charts look technically weak, as live cattle are building a wedge pattern that could break to the downside.


Hogs are called mixed.  The technical picture is strong after Dec hogs pushed through resistance and saw strong follow-through buying before consolidating at the top of that range on Wednesday.  We believe prices are poised to work higher, chasing the premium in the front end of the market, supported by tighter supplies. Dec hogs point to a test of $90.  The market is bull spread, with Oct at a premium to Dec.  Cash prices closed softer on Tuesday, and that pressured the market on Wednesday Afternoon to $74.51, and Live prices were unreported due to confidentiality in quiet trade.  The Lean Hog Index gained .64 to 92.15.  The gap with the Oct futures has basically close, with the cash index futures are holding a 1.350 premium to the October contract.  The discount to futures in Dec is still at $8.550, which supports the market.  Retail values surged higher at midday, and held the majority of those gains into the close.  Pork carcasses were 6.99 higher to 115.11.  The load count was moderate at 19329 loads.  Weekly export sales will be closely watched this Thursday morning, as the demand will still be the key for maintaining this rally.



Matthew Strelow

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