TFM Sunrise Update 10-18-21


Corn futures traded quietly overnight around Friday’s higher closing range.  For December corn, the overnight trading range was 2-3/4 cents from 5.27 to 5.24-1/4.  The dollar is up and crude is making a new high to begin the week.  We’ll get an update on harvest progress after the close today.  For now, the corn market is trying to find some grounding after a bearish USDA Supply/Demand report sunk the prices.  Weekly Export Inspections will later this morning will give traders some ideas into last week’s shipments.  Technically, December corn is trading squarely within a consolidative pattern between 50-day and 200-day moving averages, at 5.35-1/2 and 5.20, respectively.


The soy complex was mixed overnight with Nov beans down 2 this morning to 12.15-3/4, Dec meal off 80 cents per ton to 315.80; and Dec bean oil up .15 to 61.44.  As South American weather begins to play a bigger role in price outlook, so far, rains in Brazil and Argentina are helping crops get off to a good start.  More showers are needed for soybean planting and establishment in Argentina, though.  The U.S. soybean crush hit a three-month low in September and fell below an average of trade estimates, while soyoil stocks at the end of last month rose for a third straight month, according to NOPA data released on Friday.  Last week’s low of 11.84-1/2 is a bearish target for the November bean contract as bullish traders try to keep the market trading above $12.00.  Overnight, Chinese Jan bean futures were up 30 yuan ; Soymeal down 9; Soyoil up 154; Palm oil up 176; Corn down 4;  Malaysian palm oil prices were up 86 ringgit (+1.73%) at 5047 hitting a fresh record high as stronger petroleum prices and soybean oil futures increase its appeal as an alternative to biofuel.


Wheat futures are firm this morning with Dec Chicago and KC contracts up a penny to 7.35 and 7.44-3/4.  Dec MPLS spring wheat is unchanged at 9.68-3/4, mid range of Friday’s trading range that included a contract high 9.80, supporting the entire complex.  Underlying support stems from lingering concerns over the drought could spell for next year.  In addition, U.S. HRW 2022 prices are competitive on the global market.  The Ethiopian Trading Business Corporation is seeking 400,000 tons of milling wheat, the agency said in a tender notice on its website.  Export prices for Russian wheat rose to a nine-year high, the Sovecon analytical firm reported today.  Euronext wheat extended a rally on Friday to set new contract highs as rumors of further sales of France’s crop to China underscored strong demand and tightening availability in Europe.


Cattle futures are called steady to higher as December live cattle re-challenge the $130 price level after finishing last week at the top of the trading range.  This could open the door for additional follow through buying strength to start the week.  Cash trade saw moderate to active trade occurred in the North at mostly $124 live with a few up to $125, and mainly $196 dressed, steady to $2 higher compared to the prior week.  Trade in the South was moderate to active at primarily $124, steady/firm versus the previous week.  Carcass values’ rate of decline slowed from past weeks, with Choice boxes losing $4.98 and Select declining $3.76.  This would indicate the cutout is near a low before the Holiday season.  Feeder cattle have been lower across the complex.  The Feeder Cash Index traded at 153.35, down .66 and a $4.2250 discount to the front-month Oct futures.  We view the market may be building into a trading range, and searching for direction overall, but the high-range close on daily and weekly charts should support the market next week on Monday.


Hogs are called mixed.  Futures finished higher to end the week with moderate to strong gains.  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.   Short covering led by a turn higher in Thursday direct closing cash prices helped support.  December consolidated on Friday, despite the gains, traded within Thursday’s range.  The top of the gap on Dec is  at 77.200, with Wednesday’s low at 77.250.  That gap could fill this week, but the consolidation may prolong smoothing out the chart.  Cash markets had a firm close on Thursday, supporting the market to end the week, but direct trade on Friday’s close was softer, with carcass based pricing trading $.96 lower, and direct live prices were $1.08 lower.  The cash market will be key for price direction this week.  The Lean Hog Index traded .91 lower to 88.82 trying to tighten the gap with the December contract.  The premium to Dec hogs should help support the front of the market, trading at 10.545.  Friday’s closing pork carcass values were lower, with carcasses losing 4.74 to 101.32 on good movement of 334 loads.


Matthew Strelow

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