TFM Sunrise Update 11-23-2021


Corn futures traded narrowly mixed with a weaker tone overnight amid new highs in the dollar.  Strength in wheat is a supportive factor for corn as inflation underpins products and commodities, favoring a strong long position held by the managed funds.  Those funds may want to add to longs on talk of higher inflation, lower U.S. 2022 acres and tight World supplies.  Most analysts estimate U.S. 2021/22 corn carryout near 1.290 bil bu vs USDA 1.493.  March corn is down 2 cents to 5.82-1/4, within Monday’s 9-1/4 cent trading range.  Nearby Dec corn, at 5.74-1/2 remains rangebound below 5.80.  Other than a drier trend in Argentina, generally favorable South American weather bears watching as source of price resistance.


The soy complex is lower this morning with Jan beans off 6 cents to 12.68-1/4, meal and soyoil down 70 cents.  Dec meal futures have failed to stay above $375/ton the past six sessions as the dollar makes new highs and higher U.S. ending stocks surge in the face of slack buying from China.  Most analysts estimate U.S. 2021/22 soybean carryout near 400 mil bu vs USDA 340 due to the lower exports.  Cumulative bean inspections for the year are 26.9% below last year and 32.6% of USDA’s forecast for the 2021-22 marketing year versus the five-year average of 34.1%.  Weather-wise, concerns are beginning to build over too much dryness in Argentina.  Planting in Brazil reached 84.2% as of Nov 19.  This compares with 77.6% a week earlier and 74.1% a year before, consulting firm Safras & Mercado stated in an emailed report.  Talk that USDA NASS could drop U.S. soybean yield in January and the forecast of drier Argentina weather offers support.  Overnight, Chinese Jan bean futures were down 59 yuan; Soymeal up 37; Soyoil unchanged; Palm oil down 88; Corn down 23.  Malaysian palm oil prices overnight were down 107 ringgit (-2.16%) at 4852.


Wheat futures were unchanged overnight.  March CBOT wheat is at 8.57-1/2.   March KC is up 2 to 3 cents to 8.69; And Mach MPLS is down 2 to 12.29-3/4.   Even though the dollar continues to climb into new highs for the year, wheat continues to hold its strength.  EU/Paris wheat futures put in all-time highs and Australia is suffering from too much rain.  In addition, Chinese demand is putting pressure on world supply.  Russia’s export pace is at risk of slowing down due to their high taxation.  Technically, winter wheat futures lead now lead the complex strength with new contract highs posted in Monday’s trade.  Look for more upside probing as holiday-trade volume ebbs and flows this week.  Any increase in wheat demand or lower supply could push wheat futures higher.


Cattle futures are called steady to higher on follow-through from Monday’s gains.  According to the USDA’s Nov. 22 cold storage report released on the agency’s website, Beef supplies fell to 477.1 mil pounds from 500.2 mil last year.  The strong technical picture is supporting the cattle markets, as prices are looking to challenge or post new contact highs.  Deferred contracts posted new highs again to start the week.  In addition, the prospects of strong cash markets and firm retail values supported the market to start the week, accelerating the uptrend with good money flow.  Friday’s Cattle-on-feed report contained few surprises, and the market felt optimism on cash trade, allowing the market to push higher.  Asking prices are around $136. With the shortened holiday trade this week, it is likely cash trade could kick in sooner than later this week.  Carcass values are trying to get a bid to start the week.  At midday boxed beef values were trending higher.  Prices softened off those midday gains to finish mixed with Choice beef gaining .84 to $279.25, but Select was .10 lower to $263.73 on total movement of 124 loads.  Feeders saw marginal gains, led by the strength seen in the live cattle market.  


Hogs are called mixed following a firm start to begin the week supported by the strength in the overall livestock market, and improved retail values.  Dec hog futures challenged trendline support and found some value buying to start the week. According to the USDA’s Nov. 22 cold storage report released on the agency’s website, Total pork fell 1.7% from Oct. of last year.  Pork belly supplies dropped to 11.6m pounds from 19m last year.  The cash market remains extremely soft, acting as the main limitation in the hog market.  Look for cash prices to stay weak into the Thanksgiving Day holiday, as the limited kill could back up hogs supplies.  The Lean Hog Index was down sharply, losing 1.80 to 73.46.  Dec hog futures have now moved into a premium over the index, which could limit gains in the front month.  Midday values saw gains of 1.32 higher for pork retail values, but prices fell into the close, losing 3.57 to 86.25.  The load count was moderate at 384 loads.  Fundamentally, this week could keep pressure on the hog market with the limit slaughter schedule and the backing up of hog supplies.


Matthew Strelow

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

back to TFM Market Updates