TFM Sunrise Update 12-03-2021

CORN

Corn futures were firm overnight.  March corn is up a penny this morning to 5.77-3/4 and down 13 cents for the week, but in the middle of the last five weeks’ trading range.  Early reports that the new Omicron strain of the Covid virus is having a milder impact on patients is helping settle outside markets and trader anxiety, allowing participants to resume a ‘risk on’ approach to trading.  Fund managers, meanwhile remain net long corn in hopes of higher demand lowering the U.S. 2021 and 2022 corn carryout.  That number will be released in next Thursday’s monthly WASDE report.  Meanwhile, strong U.S. domestic corn basis due to favorable ethanol margins and slow farmer selling is helping the basis and spreads.

SOYBEANS

The soy complex is firm this morning with Jan beans up 8 cents to 12.52-1/4.  For the week, the nearby contract is unchanged.  Meal is up $2/ton while staying near 350 (Jan).   Next week’s December 9 USDA Supply and Demand report is expected to show a higher carryout due to lower U.S. exports and lower China imports.  NASS, this week reported 196.90 mb of soybeans were crushed in October – the highest monthly crush on record.  Meanwhile, Brazil is looking for a record early harvest.  There remain reports of drier weather for South Brazil and Argentina surfacing; that could help support the soybean complex after the recent selloff, but further north, most areas in Brazil are getting sustainable moisture.  Chinese Ag futures overnight showed Jan beans up 3 yuan; Soymeal up 46; Soyoil up 22; Palm oil up 132; Corn up 1.  Malaysian palm oil prices overnight were down 34 ringgit (-0.73%) at 4650.

WHEAT

Wheat futures were off slightly overnight, easing from a mid-week rally off Tuesday’s lows.  March CBOT wheat, this morning is down 4 cents to 8.11-3/4, near the lower end of last night’s trading range between 8.19-3/4 and 8.09.  For the week, the contract is down about 30 cents.   March KC wheat is down 7 cents to 8.35-1/4, 34 cents on the week.   March MPLS futures are down a nickel to 10.37-1/4 and down 11 cents this week.  The trade continues to monitor tension in Russia and Ukraine.  Half of Ukraine’s Army is at the Russian border.  Escalation in tension could rally grain prices.  Paris milling futures bounced back this week which lent support to the U.S. wheat complex.  The U.S. southern Plains have a dry forecast for the next couple weeks.  Elsewhere, Australian weather is turning drier on the heels of recent wet conditions raising concerns over quality.  Expectations that a tender for more than 500,000 metric tons of wheat by Saudi Arabia for April through June will include U.S. HRW exports is also noted as a supportive factor.

CATTLE

Cattle futures are called mixed to higher after posting moderate to strong gains on Thursday as cash trade underpins the market.  Light trade was seen across all of cattle country with trade ranging $140-142.  This was steady to $3 higher than last week in most areas, and with the Dec futures trading well below those level, helped get the buyers into the cattle futures.  Boxed beef values have been trending lower this week.  At midday, Boxed beef values found a little footing, and held those gains into the close with Choice carcasses gaining 1.80 to 272.02 and Select was .28 higher to 258.25.  The load count was light at 174 loads.  USDA released the weekly export sales numbers for last week, and new beef sales totaled 21,600 mt, up 12% from last week and 5% from the 4-week average.  South Korea, China, and Japan were the top buyers of U.S. beef last week.  Feeder cattle saw moderate gains at the cash feeder market has been trending higher.   January feeders are running a premium to the cash index, which helped limited its rally potential.  The Cash feeder index was .26 lower to 161.34, but has been trending higher.

HOGS

Hogs are called steady to higher.  Futures rallied off early session lows to finish with triple digit gains yesterday on stronger demand prospects.  With the strong price action, the February contract posted and outside day, and closed near the top of the trading range.  This strong close should be supportive this morning.  Plus, Weekly USDA export sales last week posted new sales of 41,400 MT, up noticeably from last week, and 48% higher than the 4-week average.  Mexico, China, and Japan were the top buyers of U.S. pork last week.  Carcass values have been trending higher this week, but at midday, as retail pork carcasses were surged 9.31 higher, and held most of those gains into the close, finishing 5.72 higher to 88.09.  The load count was moderate at 380 loads.  After rising for three consecutive days,  National Direct morning hog report posted mild losses, slipping 0.17.   The Lean Hog Cash Index was firmer, gaining .23 to 70.27.  Dec hogs are still holding a premium of 4.130 over the index, which could limit gains in the front month.  The hog market environment, overall is looking defensive, but the turn higher on Thursday is changing the picture into the week end.

Author

Matthew Strelow

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