TFM Sunrise Update 10-11-2021


Corn futures mostly steady overnight with Dec trading 5.29 to 5.32-1/4, supported by another new high in crude oil.  The dollar is consolidating near recent highs, too, which is a weighing factor on commodity prices.  Higher energy prices and tight corn supplies keep a bid under the market heading into tomorrow’s October Supply/Demand report.  Brazil’s corn production in the 2020-21 season, which began in March, is now seen at 85 mil tons, the USDA’s Foreign Agricultural Service said in a report on its website.  That’s below the USDA’s official estimate of 86 mil tons.  U.S. harvest progress, slow export demand, and South American planting limits rally potential.  Weekly Export Inspections will be out this morning followed by Harvest Progress this afternoon.  Meanwhile, market talk includes the fact that the fertilizer market has been hit hard this year due to extreme weather, plant shutdowns, sanctions and rising energy costs in Europe and China, pushing prices past levels that traders and farmers hadn’t seen since the global financial crisis.


The soy complex was also narrowly mixed overnight.  November beans are up 2 cents to 12.45, mid-range of last night’s 15-1/2 cent trading range from 12.35-3/4 and 12.51-1/4.  This is about mid-range of last week’s 31-1/2 cent range.  Bean meal is up 70 cents, and Bean oil is up .12.  Dec meal futures lost about $8 last week in a fourth consecutive week of losses and seventh out of the last eight.  That market has been down almost 5-1/2 consecutive months while shedding more than $100.  In a statement sent to Reuters on Friday, Brazil’s Paranagua port authority said exporters shipped 419,314 tons of soymeal last month, a 35% rise from August and almost 33% up from the same month a year ago.  Tomorrow’s USDA report will shed light on the potential trend for price direction moving into the end of the year.  Chinese Jan bean futures, last night were up 40 yuan ; Soymeal down 17; Soyoil up 72; Palm oil up 150; Corn up 34.  Malaysian palm oil prices overnight were down 13 ringgit (-0.26%) at 4953.


Winter wheat futures were firm overnight with Dec Chicago and KC contracts up 4 cents to 7.38 and 7.41-1/2, respectively after running into technical resistance in the 7.50 to 7.75 price area.  MPLS wheat is narrowly mixed this morning with nearby Dec fractionally higher to 9.47.  Both KC and MPLS contracts have provided the boost to the complex despite slack exports.  Tomorrow’s USDA report is expected to show a reduction in world wheat supplies, though.  Around the globe, isolated showers are forecast in the Pacific Northwest, but not enough, delaying winter wheat establishment.  Cold temperatures this week are not favorable.  Scattered showers in the Central and Southern Plains will ease heat stress and favor planting and establishment.  Favorable conditions for winter wheat planting and establishment is seen for most of Europe.  Mostly favorable conditions for  Ukrainian winter wheat planting and establishment, but more moisture is needed for Russia.  Favorable conditions for reproductive to filling winter wheat in Australia.  Recent showers benefit reproductive to filling winter wheat in southern Brazil.  More rain is needed for reproductive to filling winter wheat in Argentina.  Favorable conditions for planting winter wheat are noted in China.


Cattle futures calls are mixed having posted an impressive quick recovery, but could be running into some overhead resistance.  China has banned imports of U.K. beef from cattle under 30 months of age due to mad cow epidemic reported in the nation recently, according to a statement on the customs WeChat account today.  The downtrend is still intact, and the overall fundamentals may limit further upside.  The price action early this week will be key to set the tone in the market.  Cattle prices consolidated on Friday, holding near the top of last week’s trading range in an overall quiet session.  Cash trade was quiet on with the exception of some clean up trade around $124 in the South, steady to $1 higher in some areas.  Northern dressed trade was marked at $196, steady with the previous week.  Estimated slaughter last week, not counting Saturday kill, was 599,000 head, 19,000 more than the previous week.  Cattle supplies in the near-term still seem ample, and there still doesn’t seem to be any urgency for packers to bid up for cattle.  The Choice cutout ended the week $9.68 softer, and Select decreased $4.88/cwt.  With the large decline that has occurred over the last several weeks, buyer interest is expected to increase as they look to restock for the end of the year.  Feeder cattle saw some profit taking as well, losing from .075 to .875.   Oct futures expire on Thursday.


Hogs are called mixed.  Technically, the uptrend is still intact.  Support levels held again Friday, but may need stronger overall fundamental numbers to initiate new buying.  Friday’s closing direct trade was lower by .92 to $69.26 on carcass-based prices, and live pricing was $54.71, and had no comparison due to “confidentiality” on Thursday.  The Lean Hog Index traded 0.92 lower to 92.59 and should limit upside in futures today.  However, cash is holding a premium to Oct and Dec hogs which should help support the front of the market.  October hogs expire on 10/14.  Pork carcasses at the close on Friday traded softer.  Carcasses lost 5.27 to 106.99.  The load count was moderate at 280 loads.  Estimated hog slaughter for the week, not including Saturday kill is estimated at 2.373 million head, 20,000 more than last week, but 65,000 head under last year.  The overall trend should start showing tighter hog numbers, as the Hogs and Pigs report detailed.




Matthew Strelow

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