TFM Sunrise Update 11-29-2021


Corn futures were mixed overnight and are down 1 to 2 cents this morning after riding out a volatile holiday-shortened session on Friday.  March corn, at 5.90, is sitting near last Wednesday’s multi-month high at 5.96-3/4 with the August 12 high of 5.99-3/4 a bullish target for the contract. December grain options expired on Friday.  Overreaction to news of a new variant Covid strain in South Africa gave both end users and professional traders a chance to buy corn futures on Friday’s dip.  Nearby Dec corn, at 5.85 tested 20-Day Moving Average support Friday before rebounding on the close and closing near Wednesday’s high.  Weekly Export Inspections will be out this morning.  Friday’s delayed Weekly Export Sales were near 56 mil bu.  In outside markets, stock index futures, crude and the dollar are all firmer this morning after Friday’s plunge.  Strong ethanol margins are still supporting corn.


The soy complex is firm this morning with Jan beans up 7 cents to 12.59-3/4, meal up $4.70/ton and soyoil up .42.  Friday’s sharply lower trade left gaps on the daily charts that technical traders will target in the near term.  For nearby Jan beans, the top of Friday’s range is at 12.54 with the contract’s 50-day Moving Average coming in at 12.50-1/2.  Talk of lower demand for U.S. soybeans and meal offered resistance to prices before Friday’s Covid selloff.  Soybean meal from Brazil is at a $50 per ton discount to the U.S.  USDA lowered their estimate of U.S. soybean export value 12% from their August guess which translates to 100 mil bu.  This could raise US carryout to 440.  Weekly U.S. soybean export sales were near 57 mil bu on Friday.  January soybeans on China’s Dalian exchange are around the equivalent of $17.80 per bushel.  Overnight, Chinese Jan bean futures were down 86 yuan; Soymeal down 2; Soyoil down 82; Palm oil down 94; Corn down 1.  Malaysian palm oil prices overnight were up 8 ringgit (+0.17%) at 4857 on prospects the omicron virus strain could delay the reopening of borders and prolong the shortage of plantation workers in the second-biggest grower Malaysia.


Wheat futures were firm overnight.  March CBOT wheat was up as much as 15 cents to 8.55-1/4 before trimming gains to 8.48-3/4.  March KC wheat peaked at 8.85 on gains of 16 cents.  March MPLS wheat rose as much as 16-1/2 cents to 10.65.  News of the new Covid variant in South America hit wheat hard on Friday, but prices managed a close off session lows.  Weekly U.S. Wheat export sales were near 21 mil bu. For now, world wheat buyers may be short and need to buy 2022 needs.  There is also concern that EU supplies are declining, rains in Australia is lowering the quality of their crop and higher Russia export tax could limit their exports in 2022.  Russia’s wheat export customs duty will increase to $80.80/ton this week from $78.30, the Agriculture Ministry said Friday on its website.  In the U.S., dryness across the south Plains could continue into spring.  Last week’s USDA weekly winter wheat crop rating dropped especially in KS and the PNW.  We’ll get an update after the markets close this afternoon.  Egypt’s General Authority for Supply Commodities said it was seeking an unspecified amount of wheat from global suppliers for shipment from Jan 9-20.  The deadline for tenders would be today.


Cattle futures are called steady to higher.  Despite strong weakness in outside markets on Friday, cattle finished mixed overall, and battled off early session lows.  Front end live cattle futures were supported by strong cash trade last week that mostly took place on Wednesday as live cattle sold for $138 to $140, and dressed cattle traded for $217 to $220.  This was $2-4 higher than the previous week.  Carcass values were mixed to end the week.  Choice carcasses were .90 higher to 280.01 and Select lost -1.19 to 262.28.  The load count was light at 50 loads.  Carcass values were choppy, but Choice carcasses traded mostly sideway on the week.  Technically, strong reversals off session lows with an outside day (trading outside the previous day’s range) is sign of good strength and should see some additional buying strength to start this week.  Chart action shows prices have broken out to the upside.  Caution comes from seasonality, which typically sees a peak after Thanksgiving, and prices pulling back into a end of year low.  For now, the buyers are in the market, and a near-term top is still on the horizon.


Hogs are called lower after strong selling pressure to end last week pointing to a near-term technical break.  Prices are holding on moving average support under the market, but if this level breaks, prices have more room to move lower.  The discount of the cash market to the futures market opened the door for the technical breakdown.  Hog production stayed heavy last week at 566.7 million pounds last week, up 1% week.  The market has a comfortable supply of market hogs available.  The Lean Hog index traded 2.70 lower and Dec hog futures have now moved into a premium over the index, which could limit gains in the front month.  Retail pork values trended lower last week, pushed by the heavy production. Pork carcasses closed 1.00 lower to 83.98, down nearly $6.00 from Friday’s close the previous week.


Matthew Strelow

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