TFM Sunrise Update 10-07-2021


Corn futures were mixed overnight with Dec up 2-1/4 cents to 5.34-1/2 while hovering around the contract’s 50-day moving average the past two weeks.  Talk of increased harvest pressure and thoughts of a less-than-friendly Oct Supply/Demand report next Tuesday is helping subdue buying interest.  Dec 2022 futures, which pushed to a new contract high of 5.38-3/4 on Monday are fractionally lower this morning to 5.27-3/4.  The dollar is weaker and crude is showing signs of slowing its ascent by trading 1.17 lower this morning.  Trade estimates for this morning’s USDA Weekly Corn Export Sales are 350,000 to 800,000 tons.  The agency’s Foreign Agricultural Service’s forecast for China corn imports in 2021-22 marketing year is 6 million metric tons below WASDE forecast in September.  Estimates for corn imports in 2020-21 is raised to 30 million tons.  Grain traders reported that spot basis bids for corn and soybeans were steady to stronger at river elevators in the U.S. Midwest on Wednesday as costs for barge freight continued to fall.


The soy complex was narrowly mixed overnight.  Nearby Nov beans are trading 2-1/2 cents higher this morning 12.44-1/2.  Next year’s new crop Nov contract is up a penny 12.46.  Futures traded an inside session yesterday and again overnight, consolidating in new, lower ranges following the fallout from last week’s Quarterly Grain Stocks report.  Technically, the new trading ranges secure the contract’s 200-day moving average an area of resistance on the November 2021 bean chart moving forward into harvest.  Frist support lies at 12.34.  Trade estimates for this morning’s USDA Weekly Export Sales are 600,000 to 1.20 mil tons.  Malaysian palm oil prices overnight were down 23 ringgit (-0.47%) at 4849 after rallying to a record high as exports tumbled from second-largest grower Malaysia and weaker crude oil prices damped its appeal for biodiesel use.  China’s markets are closed for holiday and will open tomorrow.  In South America, Brazil’s new crop seen 8.2 mil tons larger than the 2020-21 crop, according a Bloomberg survey of seven analysts.  Planted area is seen 1.8 mil hectars higher at 40.3 mil.  Conab, the Brazilian national supply company, is scheduled to release its first estimates for the 2021-22 crop the morning of Oct. 7.


Wheat futures were mostly unchanged overnight.  U.S. Chicago wheat futures are up 4 cents to a round number of 7.50.  This puts the contract in a technically bought situation after rallying to through the September trading trading range on Oct 1.  Dec KC wheat is up 3-1/2 cents this morning to 7.48-1/2; And, Dec MPLS spring wheat is up 7 cents to 9.46.  European milling wheat futures etched a new contract high this week.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 500,000.  Egypt, this week bought their 240,000 tons of wheat from Russia and Ukraine, putting its total purchases for the 2021-22 season about 27% below a similar time last year.  A government agency in Pakistan has issued an international tender to purchase and import 90,000 tons of wheat, keeping up a trend of strong import demand after more than 1.1 million tons bought in past weeks.


Cattle futures calls are mixed.  Mild gains were made on Wednesday as cash traded started to develop with most deals tagged at $124 in the south, steady to $1 higher in some areas.  Northern dressed trade was marked at $196, full steady with last week.  Retail values were softer on the close, with Choice losing 1.09 to 286.62, and Select 4.87 to 2662.91.  The load count was light/moderate at 157 loads.  The Choice/Select spread stays wide at 23.71, showing decent demand for the Choice beef product.  Cattle numbers may be tightening, but packers are still passive in their bids for cash cattle. With daily slaughter 5,000 head over last week, there still doesn’t seem to be any urgency for packers to bid up for cattle.  Feeder cattle gained from .700 to 1.600 on follow-through buying and short-covering.  We are cautious with the feeder cash index trading at 152.88, a $4.00 discount to the front-month Oct futures, which expire on 10/14.  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.  Outside markets were negative on Wednesday, and if that pattern continues, the market will likely be open to further downside.


Hogs are called mixed.  Technically, the market has turned into an uptrend, but with such a strong rally after the Hogs and Pigs reports, the market was due for some correction.  Support levels held on Wednesday, but may need strong retail and export numbers to initiate new buying.   Soft closes for both National Direct cash trade and carcass values on Tuesday helped bring selling pressure into the hog market on Wednesday.  Direct cash trade was lower, losing 1.25 on carcass based prices to $70.01, and live pricing fell 2.30 to $54.65.  This will limit gains today.  On Wednesday, midday pork carcass values surged higher at midday, gaining 8.76, and held a potion of those gains into the close, finishing 4.73 higher to 112.86. The load count was light at 288 loads.  The trade will be watching export sales numbers.  Last week was strong at 42,000 mt.  The Lean Hog Index traded 0.06 higher to 94.11.  A premium to October and December hogs should help support the front of the market.



Matthew Strelow

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