TFM Sunrise Update 11-24-2021


Corn futures were unchanged overnight in light holiday trade ahead of the closure of the markets tomorrow due to Thanksgiving.  March corn, at 5.88-1/2 is sitting atop a ceiling of technical resistance at the daily highs from the past two weeks.  Managed funds continue to be net buyers of corn futures, and they could add to positions on talk of lower U.S. 2022 supply and tight World 2021 supplies. Another round of new highs in the dollar overnight looks to keep commodity prices under some form of outside market-pressure.  Meanwhile, strength in energy markets and U.S. & E.U. wheat underpins corn.  Dec corn, at 5.80-1/2 finally managed a close above the elusive 5.80 price level on Tuesday, the highest close for the nearby contract since July 1.   Later this morning, we’ll get Weekly Ethanol Stats with production expected higher than last week at 1.065 mil barrels per day.  Stockpiles are estimated at 20.189 mil barrels vs 20.081 mil a week ago.


The soy complex is firm this morning with Jan beans up 3 cents to 12.76 while building a pattern of higher daily lows on the charts.  Meal prices are stabilizing after experiencing their largest drop of the month yesterday.  Overnight, Chinese Jan bean futures were down 47 yuan; Soymeal up 13; Soyoil down 118; Palm oil down 196; Corn down 24.  Malaysian palm oil prices overnight were up 64 ringgit (+1.32%) at 4916 snapping three days of losses, as data showed sturdy exports from second-biggest grower Malaysia.  Chinese soy imports from the U.S. are down 77% from a year ago.  Some estimate that China may now be covered for soybeans through December. The market will likely need a South America weather problem to push above resistance.  In South America, La Nina is seen as a threat to Brazil where, up until now weather has been favorable for growers.  Brazil could have soybeans for export as early as January.  Fertilizer companies will need to maintain higher-than-usual prices to encourage additional production capacity, Mosaic’s Brazilian head Corrine Ricard said at an industry event.


Wheat futures were firm overnight.  March CBOT wheat is up 2 to 8.57-3/4 within a 10 cent overnight range between 8.63-1/4 and 8.53-1/4.  March KC is up a nickel to 8.83-3/4; And, March MPLS spring wheat is up a penny to 10.46-1/2.  Wheat futures were once again higher on Tuesday and pushed up into new highs for the year.  Record low World exporters’ stocks-to-use ratio and higher Russian prices is also supportive.  Russian wheat prices for January is up to $373 and implies an export tax near $120.  Either World wheat prices will need to rally to slow demand or higher Russia wheat prices could increase U.S. exports.   Elsewhere, Egypt claims to have sufficient wheat reserves for up to 5 months.  On Monday, the USDA said that U.S. winter wheat was rated 44% good to excellent.  This is down 2% from last week. They also said that U.S. winter wheat is 96% planted.   The U.S. southwest and southeast Plains remain dry with an expanding drought still likely.


Cattle futures are called higher on follow through buying support, fueled by the talk of higher cash and technical strength in the market.  Deferred contract strength stays consistent as April and later contracts established new contract highs on Tuesday.  The breakout on Monday saw follow through on Tuesday as Front-month cattle are posting their highest closes since August.  The strong price action this week has broken out above the most recent trading range and is accelerating higher.  Light cash market trade at $136 was established in TX on small numbers, but $2 higher than last week.  The cattle market looks to be going into the Thanksgiving break strong with positive cash direction and technical break out in feeders.


Hogs are called mixed to lower with the soft cash market keeping the selling pressure on the front month contract.  Fundamentally, we could see pressure continue with the limited slaughter schedule and the backing up of hog supplies.  A potential break to new lows looks to be in the cards for Dec hogs, and with nearby contracts expected to follow.  The cash market stays extremely soft, acting as the main limitation in the hog market.  Currently hog supplies are plentiful, and that only adds to the production woes and cash issues.  The Lean Hog Index was down, losing .58 to 72.88.  Dec hog futures have now moved into a premium over the index, which could limit gains in the front month.


Matthew Strelow

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