TFM Sunrise Update 10-14-2021


Corn futures traded two-sided overnight from 5.15 to 5.11 in the December contract and are firm this morning.  A slight technical bounce is noted after the recent price drop, and a sharp pullback in the dollar is helping.  The nearby contract experienced follow-through selling yesterday Tuesday’s USDA report to approach long-term support at $5.00.  The contract did close beneath the 200-day moving average, something it has not done since September of 2020 and could influence some additional long-covering as we move through the week.  A close under $5.00 will likely influence some notable downside follow-through, but until that mark is breached the market is stuck in its recent range.  Outside markets hold a more negative tone this week with the energy complex halting its recent rally while the Dollar Index reversed its up-trend the last 24 hours.  U.S. crude stocks as of Oct 8, will be released today and are expected to stay 60-65 mil barrels (14%) below last year.  Ethanol output and stockpile projections for the week ending Oct. 8 are 985,000 barrels per day and would be the second consecutive increase in production.  Stockpiles average estimate is 19.834 mil barrels vs 19.931m a week ago.


Soybean futures were up  4 cents overnight in the November contract to 11.99-1/4.   The meal market has moved to an extensive oversold level as it tries to find some footing, and while soybean futures have broken hard as well, they did manage to close well off their lows yesterday.  Daily export demand will be watched closely for signals to fundamental support for beans.  Weekly Export Sales are pushed back to tomorrow morning due to the Government holiday Monday of this week.  U.S. soybean crushings likely fell to a three-month low in September, according to analysts polled ahead of a monthly NOPA report due tomorrow.  NOPA members, which handle about 95% of all soybeans processed in the US, were estimated to have crushed 155.072 million bushels of soybeans in September.  If realized, the figure would be down 2.4% from the 158.843 mil processed in August and down 4% from September 2020, when crushers processed 161.491 mil.  It would also be the smallest crush since June.  Soyoil supplies at the end of September were projected at 1.663 billion pounds.  If realized, the figure would be down 0.3% from 1.668 billion the prior month.  In addition, fund positioning is being monitored.  Overnight, Chinese Jan bean futures were down 101 yuan; Soymeal down 27; Soyoil down 52; Palm oil down 8; Corn down 18;  Malaysian palm oil prices fell 138 ringgit (-2.75%) at 4883.


Dec winter wheat futures in Chicago and KC were up a nickel overnight to 7.23-3/4 and 7.26-3/4, respectively.  Dec MPLS was up 3 to 9.51-3/4.  Prices are back near where the they started the month of October.  The complex is set for some rebound strength after tumbling while etching new daily lows for more than a week.  Volatility is high as outside markets, including neighboring row crop prices make their moves on inflationary concerns.  Declining momentum studies have slowed down mid-week with sub $7.00 price levels serving as pivot points for trend direction in winter wheat.  Isolated showers in the Pacific Northwest are still not enough to prevent delaying winter wheat establishment.  Cold temperatures this week are very unfavorable.  Scattered showers in the Central and Southern Plains are easing heat stress and favoring planting and establishment.  Elsewhere, favorable conditions for winter wheat planting and establishment are seen for most of Europe.  Mostly favorable conditions for winter wheat planting and establishment in Ukraine is noted, but more moisture is needed for Russia.  Favorable conditions for reproductive to filling winter wheat in Australia and southern Brazil is being reported.  More rain is needed in Argentina.  Favorable conditions are occurring for planting winter wheat in China.


Cattle futures calls lower on follow through selling led by a lackluster cash market and concerns over U.S. inflation data.  The soft price action will lead to some additional selling pressure as the cattle market may be building into a trading range, and may be working back toward the bottom of that range.  Outside markets were an influence, as the release of the Consumer Price Index, a measure of inflation, was at 5.4% year-over-year in September.  Cattle markets are concerned if inflation is elevated, consumer discretionary income would be less, cutting into U.S. consumer demand.  The Live cattle market is still a bear spread market, which keeps the selling pressure on the deferred contract, as market looks to remove the premium from the deferred contracts.   Cash trade got a slow start on Wednesday, and early results were disappointing to the market.  Southern business was being completed at $122-124, and Northern dress trade at $196, fully steady with last week.  Midday retail values were lower, and that trend held into the close.  Choice carcasses lost 1.05 to 280.02,  and Select fell 2.65 to 258.70. The load count was light/moderate at 171 loads.  Feeder cattle traded lower across the complex.  The premium of the futures to the cash index weighed on the front end of the market.  The Feeder Cash Index traded at 154.26, up .11, and a $3.390 discount to the front-month Oct futures.


Hogs are called mixed.  The market finished marginally lower on Wednesday, as the overall negative market tone, and lack of fundamental support limited the upside potential.  Technically, uptrend is still intact, but prices are filling gaps and firming up the charts.  Prices are now testing the bottom of the range, an will need some fundamental help to turn the corner.  October hogs expire today, 10/14.  December softened off session lows, but still seems to be targeting the gap on the charts established from the bullish response to the Hogs and Pigs report.  The top of that gap is  at 77.200, with Wednesday’s low at 77.600.  Like in cattle, the concerns of inflation leading to tighter consumer spending due to elevated costs weighed on the long-term hog futures.  Cash still holds a softer tone.  Direct trade has been mixed, but still overall soft.   The Index traded 0.66 lower to 90.94, trying to tighten the gap with the October contract’s expiration.  The premium to Oct and Dec hogs should help support the front of the market, but the overall selling pressure was too strong on Wednesday.  Pork carcasses closed sharply lower on Tuesday afternoon, adding to the selling pressure on Wednesday.  At midday Wednesday trade, hog carcasses snapped back, gaining 7.26, and held some of those gains into the close, finishing 2.47 higher to 104.85 on good movement of 418 loads.


Matthew Strelow

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