TFM Sunrise Update 1-5-2022


Corn futures were narrowly mixed overnight while consolidating after Tuesday’s run-up on talk that South America weather could drop total 2022 corn production from USDA’s recent estimate.  March corn is down 1-1/2 cents to 6.08 while running into a ceiling of new resistance near a series of highs on the weekly charts.  March made its contract high at 6.40-1/2 back on May 7.  Dec corn is down 1-1/2 cents to 5.54-1/4.  One concern for corn bulls is the net long position built up by the funds, which ballooned to 373,345 contracts as of December 28th and was up 12,929 for the week.  A lower South America crop could add to U.S. export demand.  USDA estimated Brazil’s corn crop near 118 mil metric tons versus 87 last year.  There was talk on Tuesday that one trading house dropped their Brazil crop to 113 mmt.  There was also talk that Argentina’s crop might slip to near 52.0 mmt vs USDA 54.5.  We’ll get Weekly Export Sales tomorrow morning.  Weekly Ethanol Stats will be out later this morning.  Strong U.S. ethanol production and margins demands more cash movement. U.S. farmers sold cash last week, but may be done for now.


Soybean futures continued to make new highs for their move overnight on upward momentum from Tuesday’s rally.  March beans peaked at 13.97-1/4 before easing and are unchanged this morning at 13.89-3/4 versus the contract high of 14.45-1/2 from last June.  Nov beans eclipsed Tuesday’s high making it to 13.01-3/4 on gains of 2-1/4 cents.  The new crop contract is down 3 this morning to 12.96-1/2.  March meal followed suit, or led beans making a new high last night at 416.50 before trimming gains to 412.80.  March Soyoil is up .50 to a new 6-week high while gaining on soymeal on talk of lower palm oil supplies. The soybean complex remains over-priced against current fundamentals, but until the weather reports improve for our South American competitors, sellers are likely to stay mostly on the sidelines.


The wheat complex was down overnight after following row crops to a positive finish on Tuesday.  In addition, USDA dropped U.S. HRW crop ratings more than expected which helped KC futures vs Chicago and Minneapolis.  Increased moisture in the form of snow is helping U.S. north Plains vs last year while dryness in the U.S. south Plains could stress the 2022 HRW crop there.  The KS crop was rated at 33% Good-to-Excellent this week versus 51% in Dec and 62% in Nov.  NE was rated 39% G/E vs 64 in Nov and 37 last year. OK was rated 20% G/E vs 48 in Nov. USDA estimates.  Nearby March KC wheat is down 9 cents to 7.95; And, March Chicago wheat traded a 10-1/4 cent range overnight between 7.71-1/2 and 7.61-1/4 and is down 7 cents this morning to 7.63.  Resistance is near 7.80 then 8.00.  March MPLS Spring wheat futures are down a dime to 9.60-1/2.  The dollar is down 20 points this morning, but still strong overall and a negative factor for non-competitive U.S. wheat supplies.


Cattle futures are called steady to lower on follow-through from yesterday’s strong selling pressure that saw charts break down technically with triple digit losses.  A strong surge in grain prices acted as the trigger for the selling spree led by feeders.  The cattle market is still trending higher, but the weak price action may be signaling a pull back to test lower support levels as money flow has been moving out of the market.  Futures broke through the 10 and 20-day moving averages, before working of session lows.  Cash trade was still undeveloped with some light bids developing, countered by $140 asking prices.  Trade will likely hold off into the end of the week.  Expectations are for steady to higher cash trade supported by firmer retail values.  Carcass values were trending higher at midday and held some of those gains into the close with Choice carcasses adding .79 to 266.82, and Select was 0.33 firmer to 259.23.  The load count was light at 160 loads.


Hog futures are called steady to higher.  The premium of the futures market to the cash market weighs on front end prices, but the tight hog supplies help support deferred contracts and their overall uptrend.  A test of the 100 level seems to be in order.  February hog futures have continued to slide, building a short-term down trend since prices failed at resistance at the $84.00 level last week. Prices are testing lower moving average support, closing Tuesday under the 50-day for the first time in nearly a month.  This could open the door for additional downside pressure with a potential to a break to the bottom of the range near $75.00.  The cash hog market saw midday price ease .02 versus the previous day on direct trade, but the Lean Hog Index was firmer, gaining .10 to 71.85 and holding an 8.30 discount to the futures, adding to the selling pressure in Feb.  The front end of the hog market still has hog supplies to work through, keeping the pressure on the cash market.  Estimated daily slaughter was 472,000 head for Tuesday.  Midday carcass values were firmer but those values slipped into the close, losing .55 to 85.47, on a moderate load count of 434 loads.


Matthew Strelow

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