TFM Sunrise Update 11-5-2021


Corn futures were again narrowly mixed overnight with a firm tone.  Dec corn is up a penny this morning to 5.60-1/4 within a range between 5.62-3/4 and 5.59.  The dollar is maintaining its strength for the week, thus creating some resistance to upward price movement in commodities.  In addition, crude fell rather hard this week, but is up slightly this morning.  Corn futures worked lower on Thursday for the third day in a row as the market goes through a correction after the recent rally, influenced by weakness in neighboring beans and wheat.  For the week, Dec corn is down 8 cents.  High input costs for 2022 continue to draw attention to the market.  A shortage of nitrogen fertilizer is getting so bad that farmers won’t be able to get what they need for fields in the near future.  That’s according to executives at CF Industries Holdings Inc., who spoke on an earnings call Thursday.  If the owner of the world’s largest nitrogen facility is right and farmers have to scale back fertilizer applications, that could lower corn yields, pushing up the price of food even further.  Food inflation is already a concern, with a United Nations gauge of global prices at a decade high.  December 2022 corn futures are currently oscillating around 5.50 per bushel.


Soybean futures were weaker overnight in quiet trade.  Jan beans are down 1-1/2 cents to 12.21-1/4 after shedding 20 cents on Thursday.  For the week, the contract is down 28 cents.  Meal and oil contracts are also weaker.  Soybean meal struggled on Thursday after posting new highs for the move on Wednesday.  That market gave back $5.00 per ton in the December contract and closed at 335.80.  There was talk that Brazil may be offering soybeans to China as early as late December.  If this happens, the USDA could raise its U.S. soybean carryout to more than 500 million bushels.  The recent rally in meal stemmed from a lack of China lysine being imported to the US, which could force end users to use more soybean meal, thus potentially increasing meal use by as much as 15%.  U.S. weather should be dry for the next 10 days or so, which should help harvest.  Overnight, Chinese Ag futures featured Jan beans up 91 yuan; Soymeal down 42; Soyoil down 252; Palm oil down 234; Corn up 7;  Malaysian palm oil prices overnight were down 136 ringgit (-2.68%) at 4935 falling the most in about seven weeks following losses in soybean oil and as traders weighed prospects for higher stockpiles in Malaysia.


Wheat futures are firm this morning with Dec and March Chicago contracts up 4 cents to 7.77-3/4 and 7.90-1/4, respectively.  For the first week of November, prices have eased from new contract highs are down 5 cents.  Dec KC wheat is up 1-3/4 cents 7.86-3/4, and mostly unchanged for the week.  March is up 2-1/2 cents to 7.92.  Dec MPLS future are up 6 cents to 10.22-3/4, but down 30 cents this week.  March is up 5-1/2 to 10.06-3/4.  With the surge in the dollar and wheat market price strength, U.S. wheat supplies continue to top global prices.  However, the rally has led to some back peddling after becoming an overbought market complex.  Look for choppiness to continue ahead of the weekend as traders position themselves for next week’s monthly USDA Supply/Demand report.


Cattle futures are called steady to lower.  Cattle traded fairly even with Wednesday’s trading range yesterday, and tried to fill the small price gap on the charts.  Technically, charts are still in a near-term uptrend, but with the weak price action and long range close, cattle could be poised to push lower today.  February live cattle challenged overhead resistance at $137 and failed to get through.  The chart is looking at a potential double top.  Cash trade came to a standstill after Wednesday’s $2-3 higher activity for the week.  Trade looks to be done for the week with the exception of some light clean up trade.  Retail carcass values are trading near monthly highs, and Midday retail values were higher and held gains into the close.  Choice carcasses gained 1.73 to 290.22, and Select added .50 to 268.22. The load count was light at 147 loads.  Weekly export sales didn’t move the market with new sales at 16,700 MT, down 13% from last week.  The live cattle market may be at a short-term cross road, failing at resistance the past two days.  The improved fundamentals support the futures market, but the today’s close may be key for next week’s price direction.


Hogs are called steady to higher after posting triple digit gains amid a strong round of weekly export sales.  Feb hogs climbed back over the $80 level.  The $82.50 level over Feb will be an area of strong resistance with the 100-day moving average and trendline ceiling running off the high from September.  Weekly export sales came in at 45,700 MT, which was up 55% from last week’s numbers.  China returned to the market, picking up 16,000 MT and was the top buyer for the week.  After a strong close in retail pork values on Wednesday, Thursday saw some softness.  Pork carcasses were 2.75 lower to 97.69 Load count was moderate at 418 loads.  Overall cash market remains soft, and the Cash Hog Index reflects that trading is 0.34 lower to 78.70.  In National Direct hog trade, on a national basis compared to the previous day’s weighted average, hog values were lower, dropping $1.21.  The overall tone stays weak, but prices on the cash market are pulling in line with last year and multi-year averages, bringing some optimism that a floor could be near.


Matthew Strelow

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