TFM Sunrise Update 11-3-2021


Corn futures were narrowly mixed overnight while back peddling from Tuesday’s new highs for the move.  Dec corn is down a penny to 5.72 after running into some trendline resistance.  Arguably, corn prices have become technically overbought and due for a pullback, particularly with the same situation unfolding in the wheat market.  In addition, topping action in crude oil and an elevated currency (US dollar) market offer resistance.  We do not look for the corn market in implode, however, as traders wage a 2022 acreage battle amid high fertilizer costs and incentive for growers in fringe states to opt for seeding other higher priced commodities.  Commodity quote firm, Barchart released a final U.S. corn production forecast of 15.4 bil bu with a yield of 182.8 bu/ac.  This compares to the USDA’s 15.0B bu of production and 176.5 bu/ac yield.  Weekly Ethanol Stats will be out today.  Production is seen slightly higher than last week at 1.108 mil barrels per day.  This would match a record high for weekly production in data going back to 2010.  Stockpiles average estimate is 20.031 mil barrels per day vs 19.925 mil a week ago.


Soybean futures were mostly unchanged overnight with the November contract fractionally higher this morning at 12.44-1/2.  March beans are 2-1/2 cents lower to 12.53-3/4.  Talk of slowed U.S. competes with negative influences from good weather in Brazil and ideas that the November Crop Report will see an upward adjustment to the U.S. Crop.  But, all in all, prices remain stuck in neutral when viewing daily charts as indicated by adherence to 10 and 20-Day moving averages.  Commodity quote firm, Barchart released a final U.S. soybean production forecast of 4.5 bil bu with a yield of 51.4 bu/ac.  This compares to the USDA’s 4.4B bu of production and 51.5 bu/ac yield.  On the upside, March beans face downward sloping 50-day moving average resistance at 12.70.  Overnight, Chinese Ag futures had Jan beans up 20 yuan; Soymeal down 25; Soyoil up 70; Palm oil up 90; Corn up 21; And, Malasyian Palm is up 103.


Wheat futures traded mixed overnight.  Dec Chicago wheat is up 3-1/2 cents to 7.95.  The March contract is up 3 to 8.06-1/2.  Dec and March KC wheat is up a penny to 7.99-1/4 and 8.02-3/4, respectively.  Dec MPLS wheat is down 1-1/2 cents to 10.74, and March is unchanged at 10.56.  All three markets experienced reversal action off of new contract highs in Tuesday’s trade as overbought technical indicators weighed on Tuesday’s trade.  This may signal more two-sided trade moving forward as buying interest slows mid-week.  Open interest, though, stays on the upswing, favoring underlying price strength.  In addition, European milling wheat futures forged a 13-1/2 year high before easing on Tuesday.  Commodity quote firm, Barchart released Canadian wheat production forecasts.  For spring wheat, they peg a 746.4 mi lbu crop with a yield of 46.3 bu/ac.  This compares to the AAFC’s 668M bu of production and 38.7 bu/ac yield (includes spring wheat and winter wheat, excludes durum wheat).  Elsewhere, the list of pending wheat tenders show: Pakistan issued a new international tender to purchase around 90,000 tons of wheat after cancelling a previous tender seeking the same volume; The Ethiopian government issued an international tender to buy about 300,000 tons of milling wheat;  And, an Ethiopian government agency issued a new international tender to buy about 400,000 tons of milling wheat.


Cattle futures are called firmer.  Buyers were active yesterday, pushing prices to triple-digit gains as firmer retail values supported the market with the anticipation of higher cash market overall.  Feeder market likely led the cattle complex higher with their sharp gains.  Cattle prices challenged the technical barrier of the 100-day moving average on the front end of the board.  The level acted as resistance, but prices closed near the top of the range for the day, which should support the open today.  Cash trade was still quiet on Tuesday.  Producers are hoping for some follow through strength after last week’s bid higher.  Asking levels are near $128, but packer bids are undefined at this point.  Midday retail values were higher, but the afternoon closes saw softness from those gains.  Choice carcasses slipped .20 to 287.38, and Select added 1.74 to 266.13.  The load count was light at 114 loads.  The firmer move overall in carcass values recently has the Choice boxed beef trading at its highest point in nearly a month supported by holiday/seasonal demand.  Feeder cattle saw strong gained across the market, fueled by weakness in the corn and wheat market on Tuesday, and supported by the friendly tone in live cattle and retail demand.  November feeders tested and held support at the 152 level, and saw strong price recovery on the session.


Hogs are called mixed.  Cash trade and retail values are still weak adding to the selling pressure.  Hog charts are trying to build a short-term uptrend, but the price action yesterday was disappointing as prices fell back to test the support at the 10-day moving average amid weak fundamentals.  Overall cash markets remain soft.  The Cash Index was 0.73 lower to 79.16.  In afternoon National Direct hog trade, on a national basis compared to the previous day’s weighted average, values were quiet, losing .46 keeping the overall cash tone weak.  The retail pork carcasses found some support and were firmer at the close, gaining 1.77 to 94.21.  Movement was improved at 412 loads. We view the market as trying to build a bottom, and the strong price action the past few days reflects that idea, but days like Tuesday still reflect that the hog market is not out of the woods.  Feb hogs could look to see some recovery into the $80 window.


Matthew Strelow

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