TFM Sunrise Update 10-06-2021


Corn futures were down 2 to 3 cents overnight pressured by a 43 point jump in the dollar and harvest pressure.  Dec corn is at 5.35 and poised for a third consecutive down day.  Crude advanced to a new high for the move overnight before retreating, and stock index futures are down 300+ points this morning while putting in some wide daily trading ranges.  The outside market forces may influence corn and other commodities until there is enough solid fundamental news to take over price direction.  Weekly Ethanol Stats will be out later this morning, Weekly Exports tomorrow morning, and then the October Supply/Demand report next Tuesday.  Ethanol output and stockpile projections for the week ending Oct. 1 are seen higher than last week at 924,000 barrels per day.  This would be the first increase in production after declining the past two weeks.  Stockpile average estimate is 20.246 mil bbls vs 20.22 mil a week ago.


The soy complex was narrowly mixed overnight.  Beans reversed higher on Tuesday and may be in for choppy, two-sided trade as harvest progresses and traders set sights on next week’s October monthly Supply/Demand report.  Nov beans are down a penny this morning to 12.49-1/2.  Meal prices are steady at there lowest price since October of 2020.  That market fell $12.10 last week and is down $5.70 so far this week.  Meanwhile, strength in the palm oil sector is helping beans level off from a negative post Quarterly Stocks report market reaction.  Malaysian palm oil prices overnight were up 132 ringgit (+2.79%) at 4870 buoyed by tight global vegetable oil supplies and strong demand, but there are warnings that the rally may soon run out of steam.  China’s markets are still closed for holiday.  In South America, favorable conditions for soybean planting are seen in Brazil.  More showers are needed for soybean planting and establishment in Argentina.


Wheat futures were mostly unchanged overnight.  Prices failed to make a serious run at the August highs earlier this week and are now in consolidation mode.  Dec Chicago wheat is fractionally lower this morning to 7.44-1/4, as is Dec KC at 7.40-1/2.  Dec MPLS wheat is up 2 to 9.27-1/2.  U.S. futures prices have been volatile for this time of year, as well as Matif wheat futures, which are making new highs this week.  On Monday, Russian officials announced an export quota system slated to start mid February.  Around the globe, isolated showers in the Pacific Northwest are predicted, but not enough, delaying winter wheat establishment.  Cold temperatures next week will be very unfavorable.  Recent showers in the Central and Southern Plains are seen easing heat stress and favoring planting and establishment.  Dryness and heat this week will causing stress for drier areas.  Favorable conditions for winter wheat planting and establishment are expected for most of Europe.  Mostly favorable conditions are expected in Ukraine for winter wheat planting and establishment, but more moisture is needed for Russia.  Australia is calling for favorable conditions for reproductive to filling winter wheat.   Recent showers are benefiting reproductive to filling winter wheat in southern Brazil and Argentina.  Favorable conditions for planting winter wheat in China are expected.


Cattle futures calls are mixed.  We view the cattle market may be trying to etch out a bottom, but the fundamentals will still be the key in signaling that the bottom may be in.  Futures finished mixed on Tuesday, with the majority of contracts seeing some follow through strength from Monday.  Dec cattle were soft, weighed on by stagnant cash and Weak Choice retail values.  Cash trade has been slow to develop to start the week, but talk of some Nebraska trade at 122 with dressed trade at $196, may have limited gains.  The bulk of trade will likely develop into the end of the week.  The expectation is for steady to lower cash trade.  Closing retail values were undefined, with Choice losing 1.47 to 287.71, but Select was firm, gaining 2.62 to 267.78, giving the market some optimism that the retail slide may be nearing an end.  The load count was moderate at 171 loads.  With total beef slaughter down 4.1% from last year, cattle numbers may be tightening, but packers are still passive in their bids for cash cattle.  With daily slaughter at 122,000 today, there still doesn’t seem to be any urgency.  Feeder cattle advanced from 1.000 to 1.850 higher.  Like live cattle, optimism may need to tempered with the feeder cash index trading at 152.79, a $4.000 discount to the front month October futures.


Hogs are called mixed to lower.  Technically, the hog market has turned into a uptrend, but with such a strong rally after the Hogs and Pigs reports, the market was due for some correction.  Support levels did hold on Tuesday, however, the reversal off midday strength will likely pressure the market on the open.  Weekly slaughter is running around 4% lower than last year, and the tighter supply picture will keep some general support in the hog market.  Pork carcass values have been trending higher, but closed lower on Tuesday, losing 4.247 to 108.13 with a moderate load count at 341.   Closing direct cash trade on Tuesday was softer, with carcass based prices down $.75 and Live pricing .31 lower, which could also limit early trade.  The Lean Hog Index traded .66 higher to 94.05.  Holding a premium to October and December hogs, should help support the front of the market.



Matthew Strelow

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