TFM Sunrise Update 10-15-21


Corn futures traded higher overnight, posting a 7-1/2 cent gain to 5.23-3/4 in the nearby December contract.  Some short profit-taking is noted heading into the weekend following a negative reaction to the latest USDA data.  Funds remain net long near 140,000 corn contracts as harvest slows in some areas due to rain.  Weekly export sales will be released today, due to the Columbus Day Holiday last Monday.  Trade estimates range from 250,000 to 500,000 tons.  For the week, Dec corn is down 7 cents, but supported by being the world’s cheapest supply-line.  Basis bids for corn shipped by barge to the U.S. Gulf Coast strengthened on Thursday, buoyed by rising costs for barge freight.


The soy complex was higher overnight with Nov beans up a dime to 12.16-1/4, meal up $3 per ton; And, soyoil up .57.  Weekly export sales will be released today, due to the Columbus Day Holiday last Monday.  Trade estimates range from 600,000 to 1.40 mil tons for beans, 100,000 to 320,000 tons for meal; And (5,000) to 30,000  for soyoil.  For the week, Nov beans are down 26-1/2 cents.  Nov 2022 beans have traded lightly this week and are at 12.20, down 29 cents for the week while falling through their 3-month sideways trading range.  Soaring fertilizer prices could lead farmers to switch about 3 million acres of corn to soybeans, according to Patricia Luis-Manso, head of agriculture and biofuels analytics for S&P Global Platts.  Overnight, Chinese Jan beans were down 75 yuan ; Soymeal up 27; Soyoil up 52; Palm oil down 22; Corn up 19.  Malaysian palm oil prices overnight were up 88 ringgit (+1.80%) at 4965 bouncing back from its worst daily loss in almost four weeks as higher petroleum prices and firm soybean oil futures increased the appeal of the tropical oil as an alternative, especially in biofuel.


Dec Chicago wheat futures rose a dime overnight to 7.34-3/4 and is unchanged for the week.  Dec KC was up 11-3/4 cents to 7.42-3/4 and is up a nickel for the week.  Dec MPLS gained 7-1/2 cents to a new contract high of 9.67-1/2 after gaining 21 cents on the week.  Trade estimates for Weekly export sales are 250,000 to 500,000 tons.  The Ethiopian government issued an international tender to buy about 300,000 tons of milling wheat.  Winter wheat prices are consolidating in the big scheme of things while catching a bid at week’s end amid rising open interest.  The dollar is down for the week, but trading in its new higher range, thus putting pressure on wheat prices.  In addition, USDA, this week tightened U.S. and World Ending Stocks at a juncture in time where Iran increased import intentions and China raised minimum purchase prices for 2022 wheat.


Cattle futures are called steady to higher following a rebound on Thursday as a firmer retail tone and a strong equity markets brought some buying strength into the cattle markets.  Outside markets were an influence, as equity markets rebounded strongly, bringing some “risk-on” trade into the cattle complex.  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 back months.   December is back challenging the $130 price levels, which could limit the upside.  Cash trade saw more light to moderate trade on Thursday.  Bids were consistent if not firmer in some regions at $124, which has caught the majority of the trade for the week at this point.  Most likely cash trade will be put together for the week, with the exception of some clean up trade today.  Midday retail values were firmer, supporting the market, and most of those gains into the close.  Choice carcasses gained 0.30 to 280.32, and Select added 1.98 to 260.68. The load count was light/moderate at 143 loads.  Feeder cattle traded higher across the complex.  The premium of the futures to the cash index limited gains on the front end of the market.  The Feeder Cash Index traded at 154.01, down .25 and a $4.415 discount to the front-month Oct futures.  If carcass values can push higher, that will lift the market.


Hogs are called mixed to higher.  Weak price action led by the soft fundamentals was noted yesterday.  Oct hogs finished their trading life at 88.200.  December faded through the day, and 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 77.250.  That gap will likely fill today, given the weak price action on Thursday, as Dec hogs has closed lower 9 out of the past 10 days.  Cash markets still hold a softer tone.  Direct trade did rebound on Thursday’s close, with carcass based pricing trading $.14 higher, and direct live prices were $2.46 higher.  The higher trade should help support the market open.  The Lean Hog Index traded 1.21 lower to 89.73 trying to tighten the gap with the October.  The premium to Dec hogs should help support the front of the market, but the overall selling pressure has been too strong lately.  At midday, buying prevailed in the retail pork carcass sector, and the market held some of those gains into the close, gaining 1.21 to 106.06 on good movement of 422 loads.  Weekly export sales will be released today, due to the Columbus Day Holiday.  Technically, the hog market uptrend is still intact, but prices are filling gaps and firming up the charts.  Prices are now testing the bottom of the range, and will need some fundamental help to turn the corner.


Matthew Strelow

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