TFM Sunrise Update 12-22-21


Corn futures traded higher overnight, breaching the elusive $6.00 barrier in the nearby contracts as the calendar marks the passing of the winter solstice.  March corn rose 4-3/4 cents to match the high from July 2 at 6.03.  December 22 corn was up 2-1/2 cents to 5.52-1/2.  Double-digit gains in beans helped the cause overnight as corn prices build a technically overbought condition on the charts.  Good demand for corn combined with dry weather concerns in Brazil and Argentina help support this market heading into the holiday trading schedule.  Tuesday’s noon Central Brazil maps added some rain.  If realized, this could add uncertainty to the long range forecast.  Weekly Ethanol Stats will be out later this morning followed by Weekly Exports tomorrow morning.  Output and stockpile projections for the week ending Dec. 17 show production seen slightly lower than last week at 1.086 mil barrels per day.  the ‘Stockpile’ average estimate is 21.051 mil barrels vs 20.883 mil a week ago.  This would be the fifth straight week over week increase and the highest since August.


The soy complex traded higher overnight.  Jan beans advanced 12 cents to 13.20.  Nov beans gained 4-3/4 cents to 12.59-1/4.  Jan meal is now trading north of $390 while making new multi-month highs this week to last night’s peak at 397.10 as prices test $400, a line the front month has not traded above since early June.  Stressful weather conditions in South America underpin bean prices into the end of the year with holiday and year-end position-squaring expected to keep price movement active.  Chinese Ag futures overnight featured May 22 beans down 37 yuan; Soymeal up 8; Soyoil up 130; Palm oil up 150; Corn down 20.  Malaysian palm oil prices were up 64 ringgit (+1.46%) at 4448.


The wheat complex was moderately higher overnight with March Chicago wheat up as much 7-3/4 cents to two-week high of 8.06-1/2, putting the price back above the contract’s 50-day Moving Average line after a strong close.  Tuesday’s action saw the contract close above the down-trend channel resistance which was a positive technical development heading into the overnight session.  March KC was up a nickel to 8.46-1/2; And, March MPLS spring wheat up 5-1/2 cents to 10.31.  Market price sentiment is generally positive as U.S. Plains topsoil conditions dry out, exacerbated by last week’s high winds that hit the southern Plains states of Texas and Oklahoma Panhandles, Kansas, and Colorado, as well as inflationary concerns supporting commodity values.  Outside markets are also helping as crude and stock index futures rebound.


Cattle futures are called mixed after a rebound on Tuesday.  Feb live cattle, at 136.925 have erased a week-long down-trend to climb back above the contract’s 50-day Moving Average and potentially complete a retracement pullback from the Nov 29 contract high.  March Feeders, at 161.825 are exhibiting a similar pattern while flirting with the contract’s 50-day MA.  Light cash trade has occurred so far at $135 live and $215 dressed. Cattle owners were pricing most cattle at $138/cwt amid light show lists from last week.  Look for more cash sales activity today.  Boxed prices were soft as the choice/select spread narrowed.  USDA will release its COF report tomorrow after the markets close, one day early since markets are closed on Friday.  Nov placements onto feedlots are seen rising year over year to 1.97 mil head.  That would be the second straight increase after a 2.4% rise in October.  Marketings are seen up by 4.4% year over year, following four straight months of declines.  The feedlot herd as of Dec 1 is seen mostly unchanged from a year ago at 12.04 mil head.


Hog opening calls are mixed as nearby Feb futures experience choppy action, underpinned by bouts of buying on dips.  Look for more two-sided action as traders anticipate tomorrow’s USDA Hogs and Pigs report scheduled for release after the markets close since markets are closed on Friday.  USDA raised its 2021 estimate for meat prices for the eighth consecutive month, according to the December Food Price Outlook report released on the agency’s website.  February hogs are shaping up to forming an inverted head and shoulders chart pattern which points to a stronger market.  Pork cutouts eased $1.08 yesterday.  The premium of the futures over cash is a large limiting factor.


Matthew Strelow

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