TFM Sunrise Update 10-4-21


Corn futures were narrowly mixed overnight.  December corn is down 2-1/2 cents this morning to 5.39, mid-range of of the past two days’ trade and just under the contract’s 50-day Moving average at 5.40-1/4.  Overall, the corn market is experiencing counter-seasonal price strength amid good harvest progress.  Although Sept 1 Quarterly Stocks were above trade estimates, the 1.236 bil bushel figure is still the lowest in 7 years.  The agency also lowered the 2020 corn production total amid lower yield and a 200,000 acre reduction to harvested area.  On Friday afternoon, USDA released Grain Crushings report.  U.S. corn used for ethanol was 417.3 mil bu in August, a 1.5% increase year/over/year.  DDGs production rose to 1.27 mil tons.  Today, Weekly Export Inspections and Crop/Harvest Progress will be out.  Basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast were mostly weaker in nearby loading slots on Friday, pressured by rising supplies amid the ongoing harvest and lackluster demand, traders said.


The soy complex is in the red this morning with Nov beans down 9 cents to 12.37-1/2, and meal and soyoil down .70.  Prices have little reason to move higher to begin the week amid good harvest weather and a negative reaction to last Thursday’s Quarterly Stocks report.  Beans and meal are experiencing follow-through to the downside this morning and have already taken out Friday’s new multi-month lows.  Within the latest USDA balance sheet, the agency reported Sept 1 stocks at 256 mil bu vs pre-report estimates of 172 mil bu.  This compares to 525 mil bu the same month last year.  Yield was was also pegged higher to 51 BPA, as well as harvested area last year by 100,000 acres.   Friday’s August Fats and Oils report showed soybean crushings at 168 mil bu, 3.7% lower than the same period last year.  Crude oil production was 1.1% lower than same period.  Crude and once-refined oil stocks were up 12.3% year/over/year.  This week, China is not expected to be active in the market due to their Golden Week Holiday.  Malaysian palm oil prices overnight were up 65 ringgit (+1.44%) at 4570.


Wheat futures were mixed overnight and are mostly steady this morning.  Dec Chicago wheat is fractionally lower to 7.54-1/2, but did eclipse Friday’s multi-week high to 7.59.  U.S. wheat production is the lowest in the last 19 years.  September 1 quarterly stocks were estimated at 1.780 billion bushels versus pre-report estimates of 1.857 billion bushels.  Last year, stocks were 2.158 billion bushels at this time.  First quarter wheat demand of 896 mil bu is at an 8-year high.  Dec CBOT futures are now only about 30 cents away from the Aug 13 contract high of 7.86-1/2.  Dec KC wheat rose to 7.59-3/4 and is down 4-1/2 cents this morning to 7.55.  Dec MPLS futures are off a penny to 9.28.   Overnight,  Russia’s Ministry of Agriculture reported grain exports in the agricultural year of 2021-2022 (from July 1, 2021 to June 30, 2022) lost 22.4% and totaled 9.9 mil tonnes as of September 23.  They also plan to set wheat-export limits as part of grains quotas from mid-February to help keep domestic flour and bread prices in check, underscoring worries about tightening global supplies.


Cattle futures are called steady to weaker.  Overall, charts look technically weak, and with the closes today, additional downside selling pressure is expected as the bottom is still not in place.  We view selling pressure is likely to continue in this bear spread market.  On Friday, Feb Live cattle closed under the 200-day moving average and the fundamentals are not helping support the price.  The summary of cash trade was still disappointing.  Activity occurred in the North at $122 to $124 live, and a range of $192 to $197 dressed, mostly $1 to $2 softer than last week.  Moderate volumes were traded in the South at mainly $123 to $124, steady relative to the prior week.  Retail values trended lower again last week.  The Choice cutout ended the week $10.62 softer and Selects decreased $5.67/cwt. The lack of demand strength keeps the pressure on the market.


Hogs are called mixed to higher.  Some end of the week profit taking limited gains in the hog market as consolidation occurred amid a strong technical picture.  Despite trading softer on Friday, Dec futures held most of the gains on the week and traded to its highest price point since July.  The market remains bull spread overall, and with Oct at a premium to Dec, a push to the upside seems likely as Dec looks to challenge the $90 level.  At the close Friday, pork carcasses gave up Midday gains, and closed lower to end the week.  Carcasses were 2.90 lower to 113.89.   The load count was moderate at 331 loads.  Despite the soft close, carcass values trended higher on the week wit the pork cutout index 7.96 higher on the week.  Direct cash values ended at $72.92, down .86, and Live pricing lost $1.59 to $58.42.  The Lean Hog Index slipped .02 to 92.90, and traded 1.01 higher on the week, reflecting more stability in the cash market.  The gap with the Oct futures has basically closed, while the discount to futures in Dec is still at $7.725, which supports the market.  Hog prices are poised to work higher, chasing the premium in the front end of the market, supported by tighter supplies.



Matthew Strelow

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates