TFM Sunrise Update 10-25-21


Corn futures were mixed overnight with a higher bias.  Dec corn edged out last week’s highs, gaining as much as 4 cents to get to a 2-1/2 week high of 5.42.  The contract managed to finish 12-1/4 cents higher last week as prices approach the upper end of a roughly 50 cent range between 5.00 and 5.50 as stronger demand for corn in ethanol production in recent weeks, surging energy markets, and growers deal with concerns over high input costs for 2022.  Long position holders in corn do make the market susceptible for a washout at some point, though.  Crude is making a new high this morning, while the dollar stays rangebound of the last five trading sessions.  With the corn market now trading above its 50-day moving average, the bulls have the edge to start the week.  The contract’s 100-day moving average at 5.46-1/4 is an upside target.  Weekly Export Inspections are on tap for later this morning followed by harvest progress data after the close.  Harvest was expected to slow during the weekend as rain was forecast for large swaths of the Corn Belt.  Basis bids for corn shipped by barge to the U.S. Gulf Coast for export were flat to lower on Friday, continuing a recent slide fueled by rising supplies and sluggish demand from exporters, traders said.


The soy complex is higher this morning.  Nov beans are up 8 cents to 12.28-1/2, but off last night’s high of 12.35-1/4 where the contract’s 20-day moving average slowed last night’s price rally.  Bean meal is up $2.00 per ton while forming a distinct bottom in that market; And, and soyoil is up .37.  After pushing beneath the $310/ton mark two weeks ago, the December soybean meal contract has been up six of its last seven trading sessions to close $10.80/ton higher last week alone.  Most technical indicators point to a further recovery from here as the market will attempt to avoid six straight months of lower trade this week.  Weather forecasts are mixed over the next couple weeks with a wetter forecast for the U.S. which may slow harvest a bit, but large chunks of Brazil are expected to get beneficial rain within that timeframe.  Chinese Jan bean futures were 25 yuan overnight; Soymeal up 18; Soyoil down 14; Palm oil down 20; Corn up 16.  Malaysian palm oil prices overnight were up 46 ringgit (+0.93%) at 4970  amid stronger edible oil prices, while investors fretted that supply shortages may stretch to next year.


Wheat futures made new highs overnight led by KC and MPLS contracts.  Chicago Dec futures rose 11 cents to 7.67 before trimming gains.  The contract ran into resistance around the 7.60 area, but now looks at the contract high of 7.86-1/2 as a rallying point.  Dec KC wheat advanced 7-1/2 cents to a new high of 7.81-1/2.  Dec MPLS rose 7-3/4 cents to a new high of 10.20-3/4.  Tighter stocks around the world keep a bid under the market.  Like oats and rapeseed, there appears little selling near contract highs in MPLS contracts.  Spot basis bids for HRW wheat were firm at elevators that ship supplies by rail to exporters at the U.S. Gulf on Friday, with the market underpinned by strong overseas demand.  Russia’s wheat export tax hit $67 with some estimates pointing to a test of $70 soon.


Cattle futures are called steady to higher.  Friday’s Cattle on Feed numbers held some surprises that will likely impact the market this week.  Total Cattle on Feed as of Oct. 1 was at 99% of last year or approximately 11.550 million head.  This was slightly below average expectations and within the trading estimated range.  The Placements provided the positive surprise at 97% of last year versus expectations of 101.4% and below the range of expectations.  The low Placement number should be supportive for the open.  Marketings were in line with expectations at 97% of last year.  The cash market was very quiet to end the week at $124, running steady with the previous week.  The retail market seems to have found a bottom with the Choice cutout increasing $0.34 last week and Select increasing $2.04.  Higher quotes were noted towards the end of the week and the expectation is steady to higher asking prices for this week.  The low placement number on the COF report Friday should be supportive of Feeder cattle prices overall.   The price action was weak on Friday going into the end of the week, but the friendly Placement numbers should help provide some support next week.


Hogs are called mixed following choppy action last week.  December hogs lost 4.950 during a difficult week and are looking to challenge the previous lows near the $72.00 price level.  Hog prices were volatile during the session, which could be an indicator that prices are starting the bottoming process at this point, but the fundamental will still be the key to turning the market.  Cash markets remain soft, pressuring the hog market.  Afternoon direct trade on Friday was mixed with Direct carcass based pricing .20 higher but Live pricing $1.92 lower, which will limit the market today.  The Lean Hog Index traded 1.06 lower to 84.83, and lost  3.99 for the week.  The index is trading at its lowest point since early March last spring.  The premium of the index to Dec hogs should help support the front of the market, trading at a 11.505 spread.  The retail pork carcass prices are trying to get back above the $100 level, were 4.10 higher on Friday afternoon, but lost those gains closing .01 lower to 98.27 on movement of 381 loads.  The fundamentals have stayed very soft, and keep sellers active in the market in an oversold market, thus pork prices represent a good value.


Matthew Strelow

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