TFM Sunrise Update 11-15-21


Corn futures were quiet overnight to start the week.  March corn is down 2 cents this morning to 5.83 after lightly trading a 4 cent cent range between 5.85-1/4 and 5.81-1/4.  The corn market finished higher for four days in a row to close out last week while advancing a total of 24-1/4 cents to 5.77-1/4 on the nearby Dec contract.  The market was able to do this despite a bearish Supply and Demand report released on Tuesday.  Weekly Export Inspections will be out this morning.  Higher total demand could lower U.S. 2021/22 corn carryout to 1.240 bil bu.  This could suggest little room for any 2022 weather problems.  The trade is already concerned that the U.S. 2022 corn crop could be lower due to the higher cost of planting.  Additional support stems from a higher wheat trade, higher ethanol and fuel prices.


Soybean futures were mixed overnight.  Jan beans are down 3-1/2 cents to 12.40-3/4 while trading in the upper portion of Friday’s higher trading range.  Soyoil is off 50 cents per contract.  Nearby meal contracts are firm.  The soybean meal market jumped a whopping $17.60 per ton on Friday, pushing the December contract up to 362.10.  This took the market up 29.40 for the week and marks the fourth up week in a row for soybean meal.  Today’s U.S. October soybean crush is seen at 183.6 mil bu, 0.9% lower than October of last year, and an increase of 19.4% from a month ago.  Oil stocks at the end of last month are seen at 1.726 bil lbs vs 1.487 bil a year earlier.  In last Tuesday’s USDA Supply and Demand report, the agency said U.S. soybean yield would fall to 51.2 bushels per acre, down .3 bpa from the October estimate.  The USDA also estimated world 2021/22 ending stocks at 103.7 mmt versus the expected 105.50 mmt.  Conab reports that the Brazil’s crop increased to a record 142.01 mil tons.  U.S. exports are still suspect, as they are down 33% from this time last year.  China’s lack of buying and the effects from recent hurricanes are likely to blame for weaker exports.  A favorable start to South America crops and slow China buying are also weighing factors.  Overnight, Chinese Jan bean futures were down 13 yuan ; Soymeal up 2; Soyoil up 42; Palm oil up 58; Corn down 18.  Malaysian palm oil prices were up 31 ringgit (+0.63%) at 4966.


Wheat futures are mixed this morning with March Chicago up 1-3/4 cents to 8.30-1/4, March KC unchanged at 8.34-1/2.  As futures trend higher U.S. HRS basis continues to fall.  March MPLS is up 3-1.2 cents to 10.50 this morning.  Prices are showing few signs of retreating, even after closing higher every day last week despite the U.S. dollar trading at a 16 month high.  Lingering support from last Tuesday’s drop in world wheat ending stocks to 275.80 mmt tons in the November WASDE report, dryness in the U.S. Plains and Black Sea regions, and Argentina’s wheat harvest delayed due to wet conditions keeps the wheat market(s) in an bullish posture.  Recent wheat tenders are as follows: Iraq will issue an international tender to buy 500,000 tons of wheat in December or early 2022, a trade ministry spokesperson told Reuters on Friday; The Taiwan Flour Millers’ Association has issued an international tender to purchase 48,000 tons of grade 1 milling wheat to be sourced from the United States;  The Ethiopian government issued an international tender to buy about 300,000 tons of milling wheat;  The United Nations agency issued an international tender to purchase about 110,000 tons of milling wheat for supply to Ethiopia.


Cattle futures are called steady to lower.  On Friday, the firmer cash tone supported the Dec futures, but deferred contracts saw selling pressure from caution due to the strong grain markets and weakness in the feeder cattle.  Overall, price action stayed consolidative in narrow trading ranges.  February live cattle are still being held in check with resistance at $137 area, and failed to get through.  Cash trade saw light activity at $132, steady with trade from earlier in the week.  However, this failed to move the market higher, and the lack of reaction is concerning.  The Choice cutout moved $5.08 lower last week, and Select decreased $0.93.  Ample supply and already high prices have caused the market to stall in a time where normally the cutout would move higher.  The Choice/Select spread has begun to tighten, trading at 15.81 at midday, which may be reflecting a softening demand tone for the Choice beef Product.  The cattle markets, technically are still in a near-term uptrend, but prices may be limited in the near-term by price resistance.  Seasonal demand softness will be a concern as the market moves into and past the Thanksgiving Day holiday.


Hogs are called steady to higher.  Hog futures saw good buying strength Friday after a friendly export sales numbers supported the market.  Weekly exports sales were firm for the week, bringing some optimism to the hog market.  New weekly sales for 2021 were 23,300MT, which was down 49% from the previous week’s strong number.  It was the sales for 2022 that were supportive, with new sales of 13,600 MT going on the books.  Retail values had good strength at midday, but prices turned soft into the close, losing 1.09 to 94.71.  The load count was moderate at 320 loads.  Overall, retail prices have firmed nicely into the end of the week.  Overall cash market remains soft, but prices are back to historical levels, and that could build some support.   The Cash Hog Index slipped losing .77 to 77.95. The index has built a slight premium to the December futures, trading 2.075 over the futures.


Matthew Strelow

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