TFM Sunrise Update 10-21-21


Corn futures were mixed overnight and are slightly lower this morning.  Dec is down 1-1/2 cents to 5.37-3/4 as the dollar attempts to recover from falling to 3-week lows, and crude eases overnight.  This week Informa estimated U.S. 2022 corn acres near 92.3 mil vs 93.3 this year.  The crop is estimated near 15.213 bil bu vs 15.019 this year.  Yield is estimated at a record 181.0 BPA.  December 2022 corn futures are fractionally lower this morning at 5.34.  Trade estimates for this morning’s USDA Weekly Export Sales are 700,000 to 1.40 mil tons.  Meanwhile, the newswires for corn are too quiet to break prices out of their trading ranges.  Much of the market chatter continues to flow around scarcity of 2022 inputs affecting breakeven costs.


The soy complex is lower this morning.  Nov beans are down 6 cents to 12.39-1/2, a dime off last night’s high of 12.49-1/2 and 3 cents above the low of 12.36-1/2.  12.50 may be viewed as a sell for some of the long position holders in the market, leading to some market resistance today.  On the other hand, higher product values are helping soybean futures.  Talk of increased U.S. soyoil use for green fuel and new highs for rape oil suggest funds may still want to be buyers in that market.  Trade estimates for this morning’s USDA Weekly Export Sales are 1.50 to 2.50 mil tons for beans, 150,000 to 400,000 tons for soymeal; And, 4,000 to 25,000 for soyoil.  Overnight, Chinese Jan bean futures were up 56 yuan ; Soymeal unchanged; Soyoil up 324; Palm oil up 334; Corn up 17.  Malaysian palm oil prices overnight were down 113 ringgit (-2.23%) at 4958.  China’s soybean imports from the U.S. plunged 86% year-over-year in September to 169,439 tons, according to Chinese customs data Wednesday.  U.S. soy exports were disrupted after Hurricane Ida struck Louisiana in late August and cargoes faced competition from No. 1 soybean producer Brazil.  China’s soybean imports from Brazil fell 18% y/y to 5.94m tons in September.


Wheat futures cooled overnight with the Dec Chicago contract down 4 cents to 7.45-3/4, KC down 6-1/2 to 7.53-1/4; And, MPLS down 1-1/2 cents to 9.88-1/4 after setting a new contract high overnight at 9.96-3/4.  Potentially record low World milling wheat supplies is helping spring wheat futures target the 10.00 level.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 650,000 tons.  Dec Chicago prices are back testing 7.50 after seeing a pullback for much of October.  The contract high from August 13 stands at 7.86-1/2.  The contract high for Dec KC wheat is less than 20 cents away at 7.69.  Globally, surging prices in the U.S. and Europe, especially France means a loss in export competitiveness while supplies in the Black Sea area and Argentina remain weaker.  Volatility in the dollar and delayed planting in China due to heavy rains should keep prices choppy while attempting to maintain an uptrend, overall.  La Nina weather could reduce U.S. winter and spring HRW rains.  This week, Informa estimated U.S. 2022 all wheat acres near 48.8 vs 46.7 this past year.  Russia export prices continue to firm and the export tax increase.


Cattle futures are called mixed for this morning after finishing higher on late buying.  A steady to firmer cash tone and stability in the retail market supported the cattle markets and Dec held around the $130 price level, consolidating under the 100-day moving average.  The technical close on Tuesday was weak after Dec futures tested Tuesday’s high, falling just short of pushing back above.  The market could be squaring positions in anticipation of Friday’s cattle on Feed report.  The cash market came to life on Wednesday, and like last week, $124 seemed to catch most trade, running steady with last week.  There was some trade catching slightly higher bids, and that was supportive on the front-end October contract.  Midday retail values were mixed and held into the close.  Choice carcasses lost .85 to 280.03, and Select added 1.27 to 262.80.  The load count was light at 128 loads.  Choice carcasses are trading near 2-½ month lows, but seem to be finding some footing at the $280.00 level.  Weekly export sales will be released this morning.  Feeder cattle traded higher across the complex, despite the strong money flow in the grain markets.  The Feeder Cash Index traded .07 higher to 154.03, and still holds a small discount to the front-month Oct futures, but the gap has significantly narrowed.


Hogs are called steady to lower.  The market looks technically soft in the short-term, and the lack of true bullish news means Dec can potentially have a break in Dec to the $75.00 support level.  A further move past that level does open the door for a retest of the recent lows.  Cash market remains soft with the Lean Hog Index trading .25 lower to 86.63.  The premium of the index to Dec hogs should help support the front of the market, trading at 10.605 spread today, while unable to overcome the technical selling pressure on Wednesday.  The retail pork carcass sector was softer, losing 2.40 to 96.87 on movement of 397 loads.  Pork carcasses closed below the $100 level on Tuesday’s close, and the market can hopefully find a bottom in this window.  USDA weekly export sales will be announced this morning, and could help provide some direction for the market on the open.


Matthew Strelow

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