TFM Sunrise Update 1-26-2022


Nearby corn futures were down 2 to 3 cents overnight after slumping into yesterday’s close following a new high for the move to 6.31.  March corn is at 6.17-3/4 this morning.  Yesterday’s pullback into the close ended a streak of six days of gains.  Some rains have fallen in Argentina, but an estimated 42% of the country is in drought.  Dec is unchanged this morning at 5.69-3/4.  Multiple news headlines promise to keep market volatility relatively strong for this time of year when, typically, only South American weather is the main issue.  The Russia/Ukraine situation remains a concern amid reports of Russia conducting military drills.  Weekly Ethanol Stats will be out later this morning.  Production is seen lower than last week at 1.043 mil bbl/day.  Stockpiles average estimate is 23.955 mil bbl vs 23.592 mil a week ago.  This would be the highest since last February.  In outside markets, the dollar is up 15 points this morning, crude is up .58; And, U.S. stock index futures are trading 350 points higher ahead of the conclusion of the Fed’s policy meeting.


Soybean futures were mostly steady overnight, pausing and consolidating mid-week after recent price strength.  Nearby March beans are steady at 14.07-1/4.  Nov beans are down 2 cents to 13.16-1/2,  After falling through the $400/ton threshold last week, the front month soybean meal contract has continued to weaken by another $1.90 yesterday to 392.  Private forecasts for South American point to a sub-130 mil metric ton crop at a time when U.S. soybean exports remain behind USDA’s goal.  Basis bids for soybeans and corn shipped by barge to the U.S. Gulf Coast firmed on Tuesday, supported by exporter needs amid a shortage of freight that has reduced supplies of grain in the pipeline, traders said.  Overnight, Chinese soybean futures (May) were up 97 yuan; Soymeal up 17; Soyoil unchanged; Palm oil up 74; Corn up 22.  Malaysian palm oil futures were up 47 ringgit (+0.89%) at 5329.


Wheat futures were down double-digits overnight with March CBOT and KC contracts down 12-1/2 cents to 8.05-1/2 and 8.22, respectively.  Last night’s weakness highlights recent volatility in the wheat markets as traders try to account for potential military action overseas along the Ukrainian border, shrinking crop ratings in KS, TX, OK and NE, and a drought map that is expanding for the U.S. Plains and Canada.  Dry conditions across the region have made farmers wary of booking new deals due to uncertainty about how big their harvest will be.  March MPLS wheat fell 16 cents overnight to 9.31.


Cattle futures are called steady to lower.  Weather and cold storage was considered supportive, yet the hangover from lower demand due to Covid is keeping near-term prices rangebound to weaker.  A light cash trade was reported in most areas yesterday.  Southern live deals were marked at $137, Northern dressed trade was marked at $218, both fully steady with last week’s prices.  Carcass values have been trending higher, but took a pause on Tuesday, with Choice carcasses losing 1.12 to 292.38, and Select losing 1.47 to 283.32 on light demand of 143 loads. Daily slaughter look to have moved passed COVID slowing with estimated daily slaughter at 118,000 head, 1,000 head more than last week. Strength in the grain markets and the overall cautious tone in Live cattle pressures the feeder market as charts continue to look technically weak.


Hog futures are called mixed to higher.  Hogs futures pushed higher on Tuesday as strong technical buying and money flow pushed most contracts to new highs on the close.  The market is technically overbought, and may be susceptible to a pull back.  The strong premium to the cash market stays as a potential limiting force.  Midday direct cash hogs traded .56 lower to 61.25, but the Lean hog index gained .81 to 78.32. The Index is trading at a 9.13 discount to the February futures, and an 18.930 discount to the April contract.  Hog retail values were softer on Tuesday, closing 3.20 lower to 92.46.  The load count was moderate ate 347 loads.  Deferred contracts stay on their strong upward climb, pushing to new highs. Sumer hogs are trading well above the $100 level, and targeting a challenge of $110.  USDA monthly cold storage showed that frozen pork supplies were down 1% from the previous month and down 4% from last year.  The tighter supplies picture reflects the demand, and the overall tighter hog supply.


Matthew Strelow

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