TFM Sunrise Update 10-12-2021


Corn futures were quiet again overnight within Monday’s narrow trading ranges.  Dec corn, at 5.32 continues to churn sideways along 10 and 20-day Moving Averages ahead of today’s October Supply and Demand report set to be released at 11:00 AM Central.  The U.S. is expected to get a lot of rain over the next few days, which should delay harvest.  USDA Weekly Harvest Progress numbers will be released this afternoon, delayed one day due to the Columbus Day holiday.  Harvest is expected to be around 46% complete in this week’s report versus the 32% average.  Meanwhile, Brazil’s forecast is showing good rains over the coming weeks.  The funds remain net long more than 160,000 corn contracts. Today’s October USDA report will likely play a big part in determining the corn direction over the coming weeks.  We expect volatility to follow the release of the numbers as South American weather drives prices.  Most expect the agency to lower U.S. 2021/22 corn carryout, and hope for an uptick in exports.  The U.S. crop is looking to come in around 15 bil bu, ethanol usage near 5.3 bil and residual use near 5.7 bil, while exports average guess is around 2.6 bil. leaving Ending Stocks around 1.3 bil bu vs USDA 1.408 bil.


The soy complex was down slightly overnight with Nov beans off 3 cents to 12.25-1/4 while continuing to cave in to a fresh 6-1/2 month low that was etched at 12.23-1/2.  Meal futures also barely took out Monday’s low overnight.  USDA was closed for holiday on Monday, so harvest progress numbers will be out later today with 48% completion expected versus the 39% average.  We look for an uptick in 2021/22 carryout numbers by USDA today. and a U.S. crop near 4.40 bil bu, Crush near 2.20 bil, exports 2.02 and Ending Stocks near 300 mil versus USDA’s 185 mil.  Prices will need to see an increase in Chinese buying and lower 2022 South American crops for prices to go higher.  Chinese Jan bean were up 24 yuan overnight; Soymeal down 38; Soyoil down 70; Palm oil down 86; Corn up 14 — Malasyian palm oil prices overnight were down 104 ringgit (-2.10%) at 4851 as exports of the commodity weakened in October, according to a Kuala Lumpur-based trader.


Wheat futures are firm this morning, underpinned by new highs in oats this week.  Russian wheat values were seen adding some underlying support to the wheat market as prices rise for 12 straight weeks.  In addition, U.S. wheat production is at a 19 year low.  Dec Chicago and KC contracts are up 1 to 2 cents to 7.34 and 7.35-3/4, respectively after running into technical resistance in the 7.50 to 7.75 price area.  Prices continued to slump yesterday and again overnight ahead of today’s USDA reports.  Dec MPLS wheat is up 3 to 9.48-1/2 this morning.  USDA, today should drop World wheat total supply with world wheat milling supplies near a record low.  The average trade guess for 2021/22 wheat carryout is near 576 mil bu vs 615 mil in September.  U.S final exports may drop, offsetting an expected reduction in the U.S. 2021 wheat crop and ending stocks.


Cattle futures calls are mixed.  Prices consolidated on Monday for the second trading day, holding near the top of last week’s trading range in an overall quiet session.  Live cattle are challenging resistance at the overhead moving averages which could limit the upside and the recovery off the lows.  Typical Monday trade in the cash market as bids and asking prices are undefined.  The majority of trading volume will likely hold off until late in the week.  Trade is expected to stay mostly steady again with last week’s levels.  Closing retail values were mixed, with Choice losing 2.15 to 281.12, but Select lifted .90 to 263.64 The load count was light at 107 loads.  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.  Last week total beef production slaughter was up 3.1%, reflecting a larger supply picture.   Feeder cattle mostly higher trade, with the exception of October cattle.  The premium of the futures to the cash index weighed on the front end of the market.  The Feeder Cash Index traded at 153.62, down .95, and a $5.705 discount to the front-month Oct futures.


Hogs are called steady to weaker.  After consolidating, sellers returned to the hog market to start the week.  December hogs fell to test support at the $80 level, which held.  Pork carcasses at midday traded higher, which lift prices off the lows for the day.  Carcasses closed higher holding a portion of those gains, gaining 1.02 to 108.35.  The load count was moderate at 318 loads.  Negotiated hog prices are $0.69 lower at $68.37 per cwt on 3,806 head, keeping pressure on the market.  The Lean Hog Index traded 0.64 lower to 91.95.  Holding a premium to Oct and Dec hogs should help support the front of the market.  Pork production was up 3.7% from last week, and slaughter was 3.2% higher.  The stronger production numbers weighed on prices to start the week.  Technically, the hog market uptrend is still intact, but was due for some correction.  Support levels held again yesterday, but may need stronger overall fundamental numbers to initiate new buying.


Matthew Strelow

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