TFM Sunrise Update 10-26-2021


December corn futures traded a 4 cent range overnight between 5.39-1/2 and 5.35-1/2 while trading inside Monday’s range.  In the report Weekly Crop Progress report, the USDA pegged the corn harvest at 66%.  The market had been looking for 65%.  Illinois is 78% complete, Iowa 60%, and Indiana is 57% complete.  Outside markets are flat/weaker with the dollar still rangebound, albeit higher for the year, and crude pausing from its run higher.  Rains in the eastern Corn Belt likely disrupted harvest to start this week.  There is some concern over the quality of corn in North China where they have been dealing with heavy rains.  Central Brazil also received some heavy wind, rains, and hail recently.  Summer corn planting in Brazil Center-South is 53% done, compared with 45% a week earlier and 46% in the 5-year average.


The soy complex is mixed this morning.  Nov beans are down 2 to 12.35-1/4.  Meal is off 80 cents.  Soyoil is firm.   Despite rumors last week, there was a lack of export sales announcements yesterday, which may have created disappointment in the market.  The USDA pegged the 2021 soybean harvest at 73% complete, versus a 5-year average of 70%.  This was just below market expectations for 74% complete.  Brazilian crop conditions remain favorable at this time, with what could likely be a record crop in 2022.  Soybean planting there is 38% complete as of October 21, according to AgRural.  This compares to 22% a week earlier and 23% a year earlier.  Mato Grosso and Parana states, the more advanced regions, are already approaching the final stretch of planting.  In other states, work has picked up and is ahead of the 5-year average in Matopiba and Rio Grande do Sul, which have a later calendar.  Overnight, Chinese Jan beans were up 24 yuan ; Soymeal down 22; Soyoil up 118; Palm oil up 174; Corn up 37.  Malaysian palm oil prices overnight were up 45 ringgit (+0.91%) at 5014 but there is increasing concern that the rally will attract regulatory scrutiny in top buyers India and China.


Wheat futures are mostly lower this morning after seeing Dec MPLS contracts make new highs the past four days.  That contract is down 2 cents to 10.25 versus Monday’s new high of 10.31.  Dec KC also posted new highs the past couple days and is down 5-1/2 cents to 7.72-1/4 after first testing Monday’s new high of 7.82-1/4.  Dec Chicago wheat is down a nickel to 7.54-3/4.  That contract’s peak from back on August 13 stands as a bullish target at 7.86-1/2.  The complex’s short term trend is higher as momentum studies point to more testing of resistance areas.  For Dec Chicago wheat, the next area for an upside target is 7.69-3/4 with first support down around 7.48.  Weekly Crop Progress showed winter wheat 46% Good-to-Excellent vs 41% a year ago.  Winter wheat planted 80% vs 70% last week, and 84% a year ago; And, Winter wheat emerged 55% vs 44% last week, and 60% a year ago.


Cattle futures are called steady to lower after seeing some of Monday’s early rally fail to attract new buying.  After the open, price action was weak.  The biggest support in the COF report was the low placement number, coming in well below expectations, and that supported the feeder market and deferred cattle contracts.  Total cattle on Feed at 99% was within expectation, but the totals for heavy weight cattle, on feed for 150+days, continues to stay heavy.  Compared to last year, 150 day cattle were 14% higher.  This is a reflection of the slow slaughter pace, which has led to a buildup of cattle.  Heavier supplies keeps the cash market in check, which is evident as we trade mostly steady the past few weeks.  The cash market was a typical Monday with bids and asking prices undefined.  The cash market will likely be  the most limiting factor in the cattle market in the near-term.  Midday retail values were softer, but rebounded into the close, as Choice carcasses gained 1.22 to 283.44 and Select added .08 to 263.19.  The load count was light/moderate at 136 loads.  Demand concerns remain in the front of traders’ minds, and its possible impact on cash markets, but some firmness in retail values will be supportive.  Even after a friendly report, the cattle market seems to be looking for a direction.  October live and feeder contracts expire this week, and that could keep the market choppy, but the cash market and retail market will still be the key for price direction.


Hogs are called mixed following choppy action to start the week.  A weak cash and retail tone limits the upside in the hog market.  December hogs consolidated above Friday’s range, as the premium of the cash index to the contract likely supported the market.  The overall cash market remains soft, but Dec hogs are supported by the 9.500 discount to the Cash Hog Index.  The Cash Hog Index traded 1.13 lower on Monday to 83.70, trying to tighten the gap.  The weak index reflects the soft overall cash market tone.  The pork carcass cutout Index also traded softer, down .58 to 98.67, reflecting the tone in the retail pork values.  At midday, the retail pork carcass prices are trying to get back above the $100 level, trading 2.24 higher, but prices faded into the close, losing 3.69 to 94.58 on moderate movement of 375 loads.  Concerns in longer-term demand will keep selling pressure in the market into the summer months, as overall global export demand is likely softening.  The fundamentals have stayed very soft, and keep the sellers active in the market.  The hog market may be starting the bottoming process, but with an oversold situation, and pork prices representing a good value, the low is still likely undefined ahead of the market overall.


Matthew Strelow

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