TFM Sunrise Update 12-15-2021


Corn futures traded narrowly mixed overnight.  March corn is down 2 cents this morning tot 5.88-1/4 and stays rangebound under $6.00 since early November.  Some selling pressure in the spot contract reflects farmer selling corn before year end tax purposes.  The price of phosphorus-based fertilizers in the U.S. ranges between roughly $830 to $920 per ton, up from between $450 and $500 per ton at this time last year, according to agricultural research firm DTN.  Anhydrous ammonia, which helps convert nitrogen into a form usable for plants, is assessed at over $1,300 per ton, an all-time high. Though, in technically overbought territory, the corn price trend remains positive with some caution warranted.  Weekly Ethanol Statistics will be out later this morning.  Production is seen lower than last week at 1.084 mil barrels per day.  Stockpiles average estimate is 20.579 mill barrels vs 20.464 mil a week ago.  Meanwhile, a drier than normal trend in parts of Brazil and Argentina help keep corn futures poised for an eventual test of resistance building up on the charts.  Weekly Export Sales will be out tomorrow at 7:30 AM CT.  Global demand for corn remains strong with a large purchase of U.S. corn by Mexico last week.  There remain rumors that China is interested in U.S. corn as well.  The market is also staying focused on South American weather forecasts.  A strong La Nina phenomenon is developing, which means “farmland in the Argentine Pampas region will suffer a prolonged dry lapse that’ll start in January and extend until the start of March,” Buenos Aires Grain Exchange climatologist Eduardo Sierra said in an emailed report.


Soybean futures are down 2 cents this morning with Jan at 12.57-1/2, and Nov 22 bean at 12.41.  March Soybean meal is up 3.00/ton to 376.80 after eclipsing Tuesday new high last night to 378 as technical buying lifts the market.  Supply fundamentals bode well for price strength in meal, too, as traders react to talk of increased meal usage and a tight supply of canola meal.  U.S. beans are overpriced based on their 7.8% stocks-to-use ratio, and weather in South America, though still a concern for many, is viewed by others as less threatening than previously advertised.  Soy crushers in Brazil’s group Abiove project higher 2022 soybean output.  Jan beans are back below the 60-Day Moving Average suggesting more weakness mid-week.  The next downside target is 12.23 with upside resistance in the 12.58 area.  Today’s NOPA U.S. Nov soybean crush is seen at 181.8 mil bu, 0.4% higher vs November of last year, and a decline of 1.2% vs a month ago.  Oil stocks at the end of last month seen at 1.861 bil lbs vs 1.558 bil a year earlier.

Chinese May bean futures were down 56 yuan overnight; Soymeal up 24; Soyoil down 88; Palm oil down 160; Corn up 14.  Malaysian palm oil prices overnight were down 214 ringgit (-4.55%) at 4485 to its lowest level since late September on worries about deteriorating demand from top buyers India and China.


Wheat futures are lower this morning.  March Chicago and KC contracts are down 12 cents to 7.75 and 8.00-3/4, respectively.  March MPLS wheat is down 4-1/2 cents to 12.16-1/2.  The overnight weakness keeps the short-term downward correction alive on the heels of an increase in Global and U.S. carryout total in last week’s WASDE report.  In addition, the dollar remains in an uptrend, and Russia’s export tax on wheat was raised to $91/metric ton.  This should support U.S. exports in the future.  But for now, prices are subject to two-sided trade as participants eye the upcoming holiday trading schedule ahead of the new year.  High winds are picking up steam today in the Southern U.S. which could wreak some havoc wheat going into dormancy, as well as further dry out wide areas of acreage.


Cattle futures are called steady to lower.  After posting a bullish reversal on the charts to start the week, the cattle market was looking for some follow through to the upside, but instead got price consolidation.  The cash market is still slow to develop, but a few starter bids surfaced at $138 in the south, versus asking prices of $140-142.  Most cash trade will likely hold off into the second half of the week, but steady trade looks to be the early trend.  The short-term demand concerns have limited the market’s rally potential, as retail beef prices have trended lower.  Feeder cattle added moderate losses as well.  Jan feeders are running a premium to the cash index, which limits rally potential.  The Feeder Cash Index traded 0.39 lower to 161.77.  The market may be making a seasonal turn higher that runs into the end of the year.  Despite the improved technical signal from the price action yesterday, the market will still need support from the cash market to move higher.


Hogs are called mixed for this morning.  Futures continued to consolidate at the top of last week’s trading range as prices seek direction this week.  The recent hog rally was likely limited by the influence of the Dec contract expiring, keeping prices in line with the cash index.  With the Dec contract now expired, Feb hogs will shift back to the fundamentals in the market.  The premium of the Dec futures to the cash index pressured prices for the front month, trying to connect the two at expiration.  The cash index traded 0.60 higher to 72.18. The index is still running at a discount to the Feb futures, which could limit gains.  National Direct midday trade was 0.11 higher versus Monday’s totals, as the cash market shows some signs of life.  After trading $10.00 off of yesterday’s midday values, pork carcass stayed on a negative trend, closing 1.55 lower to 85.48.  The load count was moderate at 366 loads.


Matthew Strelow

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