TFM Sunrise Update 1-6-2022


Corn futures, along with the rest of the grain and oilseed complex was in the red overnight as bouts of long liquidation follow the recent rally.  Managed funds are estimated long 376,000 corn contracts.  March, July and Dec corn were down 2 cents to 6.00-1/4, 5.98-1/4 and 5.52-3/4, respectively.  Technically the nearby and new crop contracts continue to stick to the $6.00 and $5.50 areas ahead of the January Crop Report.  Weekly ethanol production was up 12% from last year, and stocks were down 8%.  Trade estimates for this morning’s USDA Weekly Export Sales are 500,000 to 1.20 mil tons.  Spot basis bids for corn rose at rail market terminals in the U.S. Midwest on Wednesday, grain dealers said.  The corn basis was also steady to firm at processors and river terminals.  There is talk that South America corn production could be down 8-10 mil metric tons from USDA’s December estimate.  Argentina’s two-week forecast is warm and dry.  Early crop there is pollinating in 100 degree temps.


Soybean futures dropped from Wednesday’s higher trade overnight.  Nearby March lost 21 cents to 13.63-1/4.  July beans are down 15-1/2 cents to 13.91-1/2.  Nov is down a dime to 12.94.  March soymeal is down 5.40 per ton to 4.08.  March Soy oil is down .44 to 59.00.  Trade estimates for this morning’s USDA Weekly Export Sales are 400,000 to 1.30 mil tons.  Meal sales are estimated to be 25,000 to 250,000 tons, and soy oil sales, zero to 25,000.  Beans stay supported by a warm and dry weather forecast for South Brazil and Argentina and a wet forecast for NE Brazil.  Managed funds are net long 107,000 soybeans, 53,000 soymeal and 51,000 soy oil ahead of expected rebalancing next week during the January Crop report.  Basis bids for soybeans shipped by barge to the U.S. Gulf Coast rose on Wednesday, supported by exporter demand and rising costs for barge freight as cold temperatures and low water levels slowed traffic on some Midwest river segments, traders said.  Chinese Ag futures were mixed overnight.  May beans were up 23 yuan; Soymeal down 27; Soyoil down 46; Palm oil up 2; Corn down 16.  Malaysian palm oil prices were down 51 ringgit (-1.01%) at 4985.


The wheat complex was down overnight with March Chicago 5 cents lower to 7.55-3/4, KC down 8 to 7.79 and the nearby MPLS contract down 11-1/2 to 9.36-3/4.  Trade estimates for this morning’s USDA Weekly Export Sales are 150,000 to 400,000 tons.  Spot basis bids for hard red winter wheat shipped by rail to exporters at the U.S. Gulf were steady to firm on Wednesday, grain dealers said.  The basis was steady to weak at truck market terminals in the southern U.S. Plains, falling by 5 cents a bushel in Catoosa, Oklahoma where sales were slow.  There is widespread belief amongst the trade that U.S. wheat prices are not competitive in the global marketplace which could force USDA to lower their export guess and raise U.S. 2021/22 wheat carryout.  A drop in U.S HWR crop ratings underpins prices, but recent cold temps is not expected to harm the 2022 crop.  U.S. 2022 SRW crop ratings were above last year, and increasing snow cover across the U.S. north plains should add moisture there.


Cattle futures are called steady to lower.  The strong push lower in prices on Tuesday kept the sellers in place on Wednesday.  Technically, front-end futures are now challenging the bottom of the trading range.  February cattle closed at 137.25, under the 50-day moving average, and will likely test the 100-day average further below at 136.20.  The actions of the White House and President Biden to look at the beef market issues may have brought some caution to the live cattle market.  Talk of lowering beef prices for the consumer could be an outside factor pressuring the market.  This brings uncertainty, and markets don’t like uncertainty.  Cash trade began to develop on Wednesday with light trade ranging from $138-140, mostly steady with last week.  More trade will continue to develop going into the end of the week.  Beef demand remain strong and that is reflected in carcass values.  Carcass values trended higher on Wednesday with Choice carcasses added .11 to 266.93, and Select was .38 firmer to 259.61.  The load count was moderate at 156 loads.  The Choice/Select spread has moved to 7.32, tightening and reflecting the demand for Choice quality beef.


Hog futures are called steady to higher.  Hogs saw a strong price recovery as the cash market shows indications of moving through a buildup of hog supplies. The prospects of tighter hog numbers is supporting the cash market.  The estimated daily slaughter was 470,000 head for Wednesday, down 2,000 from last week, and 22,000 from last year.  The cash hog market bolstered prices as midday direct prices surged 5.14 versus yesterday, and the Lean Hog Index was firmer, gaining 0.90 to 72.75 and holding a 9.525 discount to the futures, limiting upside in the Feb futures that settled at 82.275.  Midday carcass values were firmer, adding to the buying support.  Pork carcasses added 7.96 into the close, finishing .45 higher to 85.92, on a moderate load count of 326 loads.  The deferred contracts are showing good strength and an overall uptrend, supported by a tighter hog supply, and a test of the 100 level looks imminent.


Matthew Strelow

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