TFM Sunrise Update 12-07-2021


Corn futures were unchanged overnight.  Look for choppy trade to continue until USDA comes out with the December WASDE report mid-session on Thursday.  Many participants expect a small decline in the U.S. carryout.  We’ll watch news headlines pertaining to tensions between Russia and Ukraine, as well as South American weather.  AgRural reported summer corn is 94% planted in Brazil’s Center-South, compared to 96% a year earlier.   Spot basis bids for soybeans and corn shipped by barge to the U.S. Gulf Coast strengthened on Monday on exporter demand and rising costs for barge freight, traders said.  Technically, March corn, at 5.84 is bumping up against resistance just under 6.00.  Stock index futures are up another 350 points after a strong move yesterday; And, crude is following suit, up 2.00/bbl.  The dollar is mixed this morning.


Soybean futures were unchanged overnight with Jan beans trading near 12.60 and Jan soybean meal finding a rallying point around the 350.00/ton price area after falling to start the week.  The trade is posturing for higher U.S. carryout figure on Thursday due to lower exports.  On top of that, demand may be further affected by an early South American harvest.  Brazil’s 2021-22 soy planting was 94% done as of Dec. 2, according to AgRural.  This compared to 90% a week earlier, and also a year before.  Dry weather in Brazil’s Southern region threatens the growth of newly-planted crop.  There are still hopes afloat that China will eventually step in and buy more beans from the U.S.  Chinese Ag futures overnight were up 38 yuan in May beans; Soymeal down 36; Soyoil up 58; Palm oil up 56; Corn down 5; Malaysian palm oil prices overnight were up 179 ringgit (+3.77%) at 4929.  A newswire story read: It’s “critically important” for the U.S.-China trade deal to be extended and improved upon, Terry Branstad, former U.S. ambassador to China and former longtime Iowa governor, says Monday at a farmer conference in Chicago.  “Although it’s not perfect,” the deal has been beneficial to American farmers.  Under the deal signed early in 2020 just before the coronavirus outbreak, Chinese buyers have purchased record amounts of U.S. corn, soybeans, pork and beef.


Wheat futures were narrowly mixed overnight after posting modest gains to begin the week.  Russia may limit wheat exports to 9 mmt beginning in February.  Rising tensions between Russia and Ukraine may shove prices higher and keep the positive trend alive ahead of Thursday’s WASDE report.  Overnight news stories included: French farmers are seen planting 6.8 mil hectares of winter-grain crops for the 2022 season, the country’s agriculture ministry said Tuesday on its website.  That’s down 0.4% from last year, but 1.6% above the five-year average.  March Chicago wheat is down 2-1/4 cents this morning to 8.04.  The actively traded KC contract is fractionally higher to 8.23-1/4;  And, March MPLS is up 1-3/4 cents to 10.30-1/2.


Cattle futures are called steady to higher.  The strong outside markets, namely equity and energy markets are getting a boost from some easing fears regarding the Omicron variant of COVID.  Technically, cattle charts are still in consolidation, posting a series of higher highs and lows while building a flag pattern.  Improved fundamentals will still be key to a re-challenge of the previous highs.  Expectations are for cash prices to be steady to higher, supporting the market this week.  Boxed beef values were mixed at midday, but trended softer into the close with Choice carcasses slipping 1.83 to 272.53 and Select was .79 higher to 257.85.  The load count was light to moderate at 116 loads.  Feeder cattle also posted moderate gains.  January feeders are running a premium to the cash index, which may limit rally potential.  The Feeder cash index traded 1.15 lower to 160.43 on Monday.  Overall, the seasonality makes the market cautious and the price action has signaled a near-term top.


Hogs are called lower on follow-through from technical selling pressure to start the week as demand concerns and continued weakness in cash break prices lower.  Technically, hog futures gapped lower to start the session, triggering stops underneath the market.  The weak close at the lower end of the trading range for the day, opens the door for additional technical selling today.  The futures market hold a strong premium to the cash markets, which makes the market vulnerable to additional selling pressure, especially given the overall weakness in cash.  Despite some strength on Friday, National Direct morning hog report posted strong drop, losing 2.26 from Friday’s gains.  The Lean Hog Cash Index was softer, losing .33 to 70.53. Dec hogs are still holding a premium of 1.52, and Feb is over $7.00 premium to the index, which could limit gains in the front months.  After a very poor close on Friday afternoon, losing 6.72 in pork retail values, prices rebounded on Monday midday gaining back 7.93. The retail market held some of those gains closing 2.34 higher to 83.71. The load count was moderate at 399 loads.  The hog market is in a sideways, choppy trading pattern, and on longer-term charts is building a large wedge formation. Monday’s price break moved prices back towards the bottom of the range.


Matthew Strelow

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