TFM Sunrise Update 11-22-2021


Corn futures were up 2 to 3 cents overnight putting the nearby Dec contract at 5.74 and March at 5.80.  Out of the 15 trading days so far this month, the December contract has traded over 5.80 intraday on five occasions, but closed back beneath that point every time.  That being said, prices have avoided a sell-off and are hanging in at strong levels.  While demand news remains mostly bullish, the higher dollar and a solid start to planting in South America may cancel out some of that optimism.  Corn planted area in the 2021/22 summer crop in the Center-South region of Brazil should occupy 4.38m hectares, 0.7% above that planted in the 2020/21 season, which was 4.35 mil hectares, according to consultancy firm Safras & Mercado.  There were no changes compared to the previous survey, released at the end of August.  Weekly Export Inspections are on tap for later this morning.


Soybean futures traded two-sided overnight.  Jan beans are up 1-3/4 cents to 12.65 this morning.  Meal contracts are mixed, and soyoil is up 50 cents.  Dec meal has strung together five consecutive weeks of gains while tacking on more than $60 per ton from the low from October 13.  We view soybeans running into more resistance with ending stocks now comfortably back over 300 million bushels and South America off to a good planting season.  For the Jan bean contract, 200-day moving average resistance is drawn at 12.99.  Spot basis bids for soybeans shipped by barge to the U.S. Gulf Coast export facilities eased on Friday from the prior day’s one-month high, while corn bids firmed and wheat held steady, traders said.  Overnight, Chinese Ag futures had Jan beans down 40 yuan; Soymeal down 20; Soyoil down 128; Palm oil down 24; Corn down 12.  Malaysian palm oil prices overnight were down 34 ringgit (-0.68%) at 4959.  China imported 775,331 tons of U.S. soybeans in October, down 77% from 3.4 million tons a year earlier due to poor crush margins and price competitive Brazilian beans, according to data released from the General Administration of Customs.  Soybean shipments from the U.S. usually pick up in the fourth quarter of the year when the U.S. harvest gets underway and American beans dominate the market.


Wheat futures are 20 cents higher this morning with March KC contracts making new highs at 8.63.  March CBOT wheat peaked at 8.55-1/2.  March MPLS spring wheat is up 22-1/2 cents to 10.37 while staying rangebound.  The technically overbought condition in the wheat complex combined with a strong dollar leaves prices susceptible to downward pressure.  However, for now, price weakness is being met with with buying interest.  The Canadian government increased its estimate for year-end inventories of principal field crops and lowered its export expectations, a monthly report shows Friday.  Carry-out stocks of grains, oilseeds, pulses and special crops for the 2021-22 crop year that ends July 31 are pegged at 7.42 mil metric tons vs October estimate at 7.38 mil.  Total domestic use is estimated at 43.4 mil tons during the crop year vs last month’s estimate of 42.8 mil.  Exports are forecast to reach 36.7 mil tons vs October estimate of 37.4 mil.  Estimates were made before severe flooding disrupted grain transportation to the Port of Vancouver.


Cattle futures are called steady to Lower.  Friday afternoon’s November Cattle-on-Feed report was in line with expectations, but slightly heavy in terms of total cattle in feed lots.  As of Nov 1, total cattle on feed was 100% or equal to last year at 11.948 million estimated head.  Expectations were for 97.7%.  This number is the biggest concern, because most likely those extra cattle are the near market ready heavier weight cattle, which could keep a lid on the cash market.  Placements were at 102% of last year, market expectations were 102.4%, and Marketings were in line at 95% of last year as the low slaughter pace slowed the marketing pace.   Lasts Thursday’s Weekly Export Sales showed purchases by China of U.S. beef the previous week was the 4th largest sale overall since 2014, and historically large for China.  That demand tone can help support the market if that demand stays constant.  Active cash trade occurred in the North at mostly $133 to $134 live, and $209 to $210 dressed – $1 to $2 higher live and $2 to $3 firmer for dressed compared to the prior week.  Trade in the South was moderate volume at mainly $132 – $2 to $4 higher.  The Choice cutout moved $8.98 lower and Select decreased $4.13.  Demand has been weaker than expected with the upcoming holidays and the upcoming shortened production week.


Hogs are called steady to lower.  Futures were to end the week, as the weak cash market kept the pressure on the front month contracts.  December hog futures are challenging the trendline support under the most recent trend, and with the weak close on Friday, are open to breaking this barrier and testing the contract lows overall.   Cash prices look weak into the Thanksgiving day holiday, as the limited kill could back up hogs supplies.  The lean hog index was down 1.02 to 75.26, and was 2.69 lower on the week.  National direct hog trade was softer, losing .15 versus Thursday.  Fundamentally, this week is difficult for the hog market with the reduced slaughter pace.  Technically, the hog market on the front end looks challenged and poised to possible test the recent contract lows in December futures.



Matthew Strelow

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