TFM Sunrise Update 12-20-2021


Corn futures traded lower overnight.  March corn is down 3 cents this morning to 5.90-1/4 while staying rangebound below $6.00 per bushel.  Since November 2, a series of higher highs supports an eventual run at that resistance level.  Weekly Export Inspections will be out later this morning with lingering support from a recent big sale to Mexico still on the trades’ mind.  China’s corn imports, which are set to exceed the quota next year, will come under control in the medium- and long-term as domestic production increases, so corn won’t follow in soybeans’ footsteps, an official at the Ministry of Agriculture and Rural Affairs told Yicai Global.  China’s corn output is likely to strike a balance with demand before long, thanks to supportive policies, said Xi Yinsheng, director of the Ministry’s Macroeconomic Research Office of the Research Center for Rural Economy.  China imported 26.23 million tons of corn in the first 10 months this year, more than three-and-a-half times what it did in the same period last year, according to statistics from the National Bureau of Statistics.  This morning, Stock index futures and crude are sharply lower, 385 points and 2.60/bbl, respectively.  The dollar is mixed.


Soybean futures are trimming overnight losses this morning.  Nearby Jan beans fell to 12.78-1/2 and are back to steady at 12.85-1/4.  March is down a penny to 12.87-1/2;  And, Nov beans are down 4 cents to 12.42-3/4.  Meal prices are firm, March soyoil is down $1.00 to 52.97 (March) while pulling on the complex.  The production of crude palm oil is expected to return in earnest next year in both Malaysia and Indonesia, OCBC Treasury Research said.  Soybean meal stays supportive.  Jan meal closed out last week $12.70 higher, including a $7.20/ ton jump on Friday.  Overnight, Chinese May beans were up 49 yuan; Soymeal down 6; Soyoil down 42; Palm oil down 96; Corn down 9.  Malaysian palm oil prices were down 113 ringgit (-2.56%) at 4295.  China’s soybean imports from the U.S. fell 40% year over year in November to 3.63 mil tons, according to Chinese customs data today.  Soy imports from Brazil rose 37% y/y to 3.75 mil tons in November.  In Brazil, Rio Grande do Sul and Parana Forecast look mostly dry through today followed by isolated showers tomorrow.  Temperatures are forecast to be near to above normal through.  Mato Grosso, MGDS and southern Goias is to see scattered showers with temps near normal.  Argentina’s forecast calls for Cordoba, Santa Fe and Northern Buenos Aires to be mostly dry with isolated showers and mixed temps through tomorrow.


The wheat complex is posting double digit declines this morning led by Chicago contracts.  March is down 14 cents to 7.61 while straddling 100-day Moving Average support after trading lower for threes consecutive weeks.  However, the weekly close last week was 24 cents above the daily low from Wednesday.  With that move, it is possible the market has put in a short-term bottom after a move which totaled $1.23-3/4 from the November 24 high to the December 15 low.  The contract’s 200-day MA is at 7.22-1/4.  March KC wheat is down 11 to 7.99; And, March MPLS futures are down 13 to 10.09-1/2.  There was some damage to U.S. wheat in the central Plains last week from the high winds that will continue to be talked about during this holiday-shortened week of trade.  Russia is considering imposing a higher tax on wheat exports, based on a formula that links the tax rise to increases in the price of the commodity.  Under the formula, the tax will rise if prices reach $375 a ton and again if they hit $400 a ton, according to documents published on the government’s proposed regulations website.


Cattle futures are steady to lower.  Live cattle futures and Feeder cattle futures saw selling pressure to end last week as a disappointing cash market and long liquidation pressured the market.  This leaves the market on a slippery slope going into the holiday week.  Feb cattle have held support at the 100 day moving average, but a break below leaves the charts open to a test of the 200-day moving average at $134.000, or even trend line support at the $130 level.  There was light trade in the South at mostly $136 to $138 live.  That is mostly $2 to $4 lower than last week.  Light to moderate live trade also developed in the North from $136 to $138, which was also $2 to $4 weaker. Dressed trade remained light going into the holiday week.  The Choice cutout moved $1.58 lower last week, while Select decreased $3.54/cwt.


Hogs are called mixed.  Feb hogs, after early session strength, slid back and are still building a consolidation pattern, resembling a bullish flag with a series of lower lows and highs. The 100-day moving average held prices in check for Feb on Friday. This pattern could break out to challenge resistance over the Feb hogs at the 84.00 levels.  The cash index traded 0.11 higher to 72.41.  For the week, the index traded 1.46 higher. The index is still running at a discount to the Feb futures of 8.39, which could limit gains.  Cash hogs have been showing some positive activity.  National Direct midday trade was 0.21 higher versus Thursday’s midday values and building an uptrend.  Pork carcass values closed weak on Friday, losing midday strength, closing down 5.67 to 90.85.82 with a load count that was moderate at 288 loads. Retail values trended mostly flat during the week.  Prices look to be working higher to possible challenge the most recent highs. The fundamentals will still be key for a sustained rally.


Matthew Strelow

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