TFM Sunrise Update 11-11-21


Corn futures were down slightly overnight with Dec and March off 2 cents to 5.67-1/4 and 5.76-3/4, respectively.  Weekly exports sales numbers are delayed this week, and will be announced on Friday due to the Veteran’s day holiday.  There is talk that China is buying Ukrainian corn, and may wait for 2022 to buy U.S. corn.  U.S. corn export prices are competitive to buyers.  Many commodities are seeing pressure this morning due to the jump in the dollar yesterday, and again overnight as new highs develop.  For now, double-digit gains following the Nov WASDE report has prices back above it’s nearby moving averages and poised for a retest of the Nov 2 high of 5.86.  USDA estimated U.S. 2021/22 World exporters stocks-to-use ratio at 8.8 pct vs 7.4.  Still this includes 36 mmt more South America supply than last year.  Weekly U.S. ethanol production was down from last week, but the trade feels final U.S. ethanol corn use could be up another 150 mil bu.  Inflationary concerns creating headaches for growers penciling out higher 2022 production costs coupled with strength in the wheat complex bodes well for keeping the corn market supported.


Soybean futures were mixed overnight and are sitting at session lows this morning.  Nov is down 3-1/2 cents to 12.00, and Jan beans are off 1-3/4 cents to 12.15.  Following yesterday’s push to six-week highs, soymeal contracts are consolidating.  Given the fundamentals from yesterday’s USDA report and the strong start to South America’s planting season, price patterns appear to be governed by technical motivation this week.  Brazil and Argentina weather to date is favorable for crops.  Brazil soybean plantings are ahead of normal.  For beans, there was a quick rally from key support, but the trend is solidly lower.  Meal has shown signs of putting in a bottom; And, soyoil is consolidating a longer-term sideways trend while trying to gain on soymeal on talk of higher U.S. demand for green fuel in 2022.  Overnight, Chinese Ag futures (JAN 22) Soybeans were up 34 yuan ; Soymeal up 31; Soyoil up 246; Palm oil up 286; Corn down 22;   Malaysian palm oil prices were down 39 ringgit (-0.79%) at 4881.


Winter wheat futures are weaker this morning after KC contracts forged another new high on follow-through from Wednesday’s rally.  March KC peaked at 8.24-1/4 last night before settling back to 8.18-1/2.  March Chicago wheat is down 3 cents to 8.12 from last night’s high of 8.17-1/2 versus the contract high of 8.18 from Nov 2.  March spring wheat is up 7-1/2 cents this morning to 10.44-1/4 versus the contract high from Nov 2 of 10.66-1/4.  USDA November wheat World data was bullish for the market.  The World wheat exporters stocks-to-use ratio is a record low 12 pct.  Russia wheat export prices are still competitive to World buyers, and they may need to raise their export tax to reduce exports.  Meanwhile, the battle for 2022 U.S. acres is already starting with higher planting costs possibly favoring wheat and oilseeds vs corn.  Basis has a firm tone for all wheat and is at the high end of the historical averages.


Cattle market calls for steady to lower.  Cattle futures saw mixed trade on Wednesday, despite a firmer cash tone, as gains were limited due to soft retail values and spillover weakness from the feeder market.  February live cattle has been struggling with resistance at $137 area, and failed to get through.  A push this level could open the market for a potential breakout higher.  Cash trade started to develop on Wednesday, with light trade in the South mostly at $132, $3 higher than last week’s average.  Northern dress trade was mostly at $207, $4 higher than last week.  The stronger cash tone failed to move the market higher, though.  Midday retail values were lower, and they weakened into the close.  Choice carcasses slipped 2.28 to 285.52 and Select dropped 4.00 to 266.62.  The load count was moderate at 195 loads.  Feeder cattle saw weakness, relating to the stronger grain markets, bringing some follow through buying after the USDA WASDE report on Wednesday.  Front end November is started to get a head of the cash index, which traded .12 higher to 154.98, keeping pressure on the front end of the market. The cattle markets technical picture is improved, but prices may be limited in the near-term by price resistance.  The impact in grain markets, can still pressure the feeder complex, limiting gains.


Hogs are called mixed.  Wednesday’s session saw some value buying as prices tested and held support levels early in the session, to finish the day with marginal gains.  December hogs, following Tuesday’s weak close, challenged the trendline under the prices at the $74 level.   After prices held support, some value buying kicked in, lifting the front month futures.  Prices posted a bullish “Hook” reversal, an improved technical signal.  The rejection of lower prices looks supportive in the near-term.  The hog market still needs the fundamentals to find good support, and that is lacking overall.  Overall cash markets remain soft, but prices are back to historical levels, and that could build some support.  The National direct trade was .01 lower compared to previous day’s weight average.  The Cash Hog Index, while trying to get some footing slipped slightly, losing .06 to 79.23.  The index has built a slight premium to the December futures, trading 3.53 over the futures.  At midday carcasses were 1.51 lower, and price faded into the close, losing 1.98 to 90.57.  The load count was moderate at 347.34 loads.  Weekly exports sales numbers are delayed this week, and will be announced on Friday due to the Veteran’s day holiday.  Estimated slaughter was 478,000 for today, up 5,000 from last week.  Still below last years level, which expected given the supply estimates, but carcass weights are trending heavier.  For the week ending Nov 6, Iowa/S. Minnesota weekly hog weights rose to 290.1 pounds, up slightly from the prior week, and 2.4 pounds above last year.  The extra pounds has been compensating for the lower slaughter numbers in total.


Matthew Strelow

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