TFM Sunrise Update 1-28-2022


Corn futures were up overnight, potentially finishing off a strong week of trade into new highs.  March corn was up 4-3/4 cents this morning to 6.30 and up 12 cents for the week.  Dec corn is fractionally higher to 5.67-1/2 versus yesterday’s intra-session contact high of 5.75.  For the week, the contract is up a few cents.  Dry South American weather continues to drive prices higher into the end of the week and month.  For the month, so far, the nearby contract has moved 38 cents higher, new crop (Dec) up 28 cents.  One group this week estimated U.S. 2022 corn acres near 91.5 million versus 93.3 last year. This could produce a crop near 15 bil bu versus 15.115 last year leaving the key up to demand for 2022/23. They estimate demand near 14.575 bil which would suggest a carryout near 1.60 bil bu.  Others have a crop closer to 14.900 and demand near 15,040, suggesting a carryout closer to 1.150 bil bu.


Soybean futures up overnight led by a 10 cent gain in the nearby contracts.  March beans posted a new high of 14.59-3/4.  Nov advanced to within a fraction of Thursday’s new high etched at 13.47-1/4 last night on an 8-1/2 cent gain to 13.46-1/2.  March beans have advanced $1.39 per bushel, so far in January, Nov 70 cents.  March meal is back over $400 to 408.80, and soyoil continued its trek into new highs overnight on gains of 65 cents.  Look for choppy to higher trade to highlight the marketplace as South American weather underpins prices.  Parana state estimated their soybean crop at 12.8 mmt or down 35% from the previous estimate of 18.4.  This and talk of lower Rio Grande Do Sul and Paraguay crops could drop South America crop closer to 169-179 mmt versus USDA’s Jan estimate of 199.  Abiove estimated Brazil soybean crop at 135.8 mmt down 4.2 from previous estimate and exports at 86.9 also down 4.2 mmt from previous estimate.  Overnight, Chinese May bean futures were up 55 yuan; Soymeal up 44; Soyoil up 174; Palm oil up 162; Corn down 3;  Malaysian palm oil prices overnight were up 184 ringgit (+3.38%) at 5628.


Wheat futures are moderately higher this morning.  March CBOT wheat were up to 7.88 last night and are 6 cents higher this morning at 7.83.  The contract is about even for the week after a strong push higher followed by pullback.  March KC wheat has traded both sides of $8.00 per bushel and is up a nickel this morning to 7.98-1/2.  The KC weekly chart has support near 7.87 with an uptrend line of support at 7.15 from the Aug, 2020 low.  There is a downtrend line resistance from the Nov, 2021 high near 8.54.  March MPLS wheat is up 4-1/4 cents to 9.07, but down 36 cents from last Friday’s settlement.


Cattle futures are called mixed for this morning after failing to see a follow-through move from Wednesday’s gains.  Positive news was lacking and a negative turn in the hog market spilled over to the cattle pit.  Retail boxed beef was lower the second consecutive day with Choice carcasses losing .35 to 289.11, and Select was .62 lower to 279.10.  the load count was light at 136 loads.  Cash trade still stayed overall light with sporadic trade in the south at $136-137, steady with last week, and Northern dress trade at mostly $218, also steady.  The near-term, and potentially long-term outlook is supportive for feeders.  Supply numbers, mainly due to higher feed costs and drought conditions in recent years suggests a downward bias to supply.


Hog futures are called weaker.  The recent rally leading to overbought conditions may be catching up and causing a reversal.  Follow-through pressure will be key today to help establish a true turn.  Hogs were well into overbought territory and some technical indicators are showing a turnaround in momentum and potential sell signals.  Direct cash hogs trade was firmer, gaining 5.83 at midday to 68.64.  The Lean hog index gained .75 to 79.20, trying to narrow the gap to the futures market.  February futures still hold a 7.825 premium to the index. The reversal off recent highs may be signaling an over-bought market, and susceptible to further pressure, but the strong demand and improving cash fundamentals could limit the near-term pressure.


Matthew Strelow

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