TFM Sunrise Update 12-10-2021


Corn futures were down 1 to 2 cents overnight to 5.90 in the March contract.  $6.00 remains an upside target for the bulls, as well as formidable resistance area.  For the week, March corn is up 6 cents.  Yesterday, USDA pegged U.S. 2021/22 corn ending stocks at 1.493 bil bu, unchanged from November, but above the average estimate of 1.487 bil, setting the stage for an adjustment in the big January 12th report.  Favorable conditions for corn planting and establishment are reported in central Brazil.  Dryness over southern Brazil is causing some stress, though and dryness in Argentina remains a concern for corn planting and establishment.  Later today we’ll get the updated weekly Commitment of Traders report.  Basis bids for row crops shipped by barge to the U.S. Gulf Coast softened on Thursday but markets for both crops remained inverted, with spot values quoted at a premium to deferred months, reflecting exporter demand and rising costs for barge freight, traders said.


Soybean futures were unchanged overnight.  Jan beans, at 12.64-1/2 are down 3 cents for the week within a narrowing trading range.  Soymeal is up $2.00/ton at 361.70.  March soyoil futures are down .40 this morning after making a fresh multi-month low on Thursday.  USDA, yesterday left 2021/22 US soybean ending stocks at 340 million bushels, unchanged but beneath the average estimate of 352 mb.  Soybean futures reacted by closing with small gains but comfortably off early morning lows, while meal futures held small gains right around the 360 mark. The market may continue to find some support given the reports of dry weather over the next week for decent-sized production areas in Brazil and Argentina.  The USDA also confirmed private sales of 280,000 tons of U.S. soybeans to unknown destinations, including 140,000 tons for delivery in the 2021/22 marketing year that began Sept. 1 and 140,000 tons for delivery in 2022/23.  The USDA left their estimate for Brazil and Argentina’s soybean production unchanged from November at 144 and 49.5 million metric tons, respectively, while CONAB adjusted their estimate for Brazil to 142.8 mmt.  Overnight, Chinese bean futures (MAY 22) were down 55 yuan; Soymeal up 36; Soyoil down 126; Palm oil down 146; Corn down 8;  Malaysian palm oil prices were up 22 ringgit (+0.46%) at 4800.


Wheat futures were firm overnight with March CBOT up 6 cents to 7.82-3/4.  The contract has been active this week in a downward direction.  For the week, the price is down about 20 cents.  March KC wheat is down 3 cents this morning to 7.99-1/2 and down 25 cents for the week.  March MPLS wheat is down 5-1/2 cents this morning to 10.27-3/4, up 7 cents since last Friday’s settlement.  USDA estimates U.S. 2021/22 carryout at 598 mil bu, up from 583 mil last month and above the average estimate of 589 mil.  World carryout was also higher at 278.2 mil metric tons, up from 275.8 mmt last month and the average guess of 276.3 mmt.  This may be enough to encourage long liquidation following a push to nine-year highs.  In addition, weather news has turned somewhat bearish with better conditions slated for parts of the U.S. Plains and a drier forecast for Australia.


Cattle futures are called steady to lower as the disappointing trend in retail values pressures the cash market this week.  A light trade has developed with Southern live deals marked at $140, roughly $2 lower than the bulk of last week’s business.  Northern dressed deals are being marketed at $220, fully steady with last week’s trade.  The short-term demand concerns have also limited the market’s rally potential.  Boxed beef values were mixed at the close on Thursday with Choice carcasses gaining .44 to 264.55 but Select was 1.41 lower to 251.68.  The load count was light to moderate at 204 loads.  On Thursday morning, USDA reported new net sales of 4,200 MT for 2021, a marketing-year low, down 80% from the previous week and 81% from the prior 4-week average, but new net sales of 10,400 MT were recorded for 2022.  South Korea, Canada and China were the top buyers of US beef last week.  The seasonality makes the market cautious and searching for a nearby low, so cattle prices may be poised for a push lower, especially if the cash market fades.


Hogs are called steady to higher.  Hog futures posted a recovery rally, with triple digit gains supported by a improving retail market and value buying.  The hog market saw a bid on Thursday, ending a 4 day selling streak after moving into an oversold territory.  The key will be follow though into the end of the week.  Short covering and technical buying stepped into the market as prices held the 75.00 level in February hogs.  Pork cutout values have been moving higher this week, helping support prices.  At midday, pork values were slightly firmer, but fell into the close dropping 3.48 to 86.96.  The load count was moderate at 363 loads.  USDA released weekly export sales of 19,800 MT for 2021 were down 52% from the previous week and 26% from the prior 4-week average.  Mexico, Japan and South Korea were the top buyer of U.S. pork last week.  The cash market has been showing some signs of life, and yesterday’s midday national direct cash prices were 4.29 higher than Wednesday’s values.  The cash index was .11 softer to 70.83 and trading at a discount to futures, which could be a limiting factor.


Matthew Strelow

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