TFM Sunrise Update 12-23-2021

The CME and Total Farm Marketing offices will be closed Friday, December 24, 2021, in observance of Christmas


Corn futures were mixed overnight within Wednesday’s trading range.  March corn, at 6.04, is up 1-1/2 cents this morning and had an overnight range between 6.00-1/2 and 6.06.  For this holiday-shortened week of trading, the contract is up a dime.  Dec 22 corn is up 1-1/2 cents to 5.53 this morning.  U.S. domestic corn demand remains strong.  Trade estimates for this morning’s USDA Weekly Export Sales are 725,000 to 1.40 mil tons.  Reduced concern that the Omicron virus, while spreading fast, may be weaker than the Delta and Wuhan viruses and may not reduce food and fuel demand.  Meanwhile, crop concerns for our competitors in the Southern Hemisphere, which have seen hot and dry conditions hurt their yield potential on their first corn crop underpins prices.  Ethanol demand also remains a bright spot, but commodities in general have held a mostly bullish tone entering the latter half of the month.  A weaker dollar this week, higher crude and stock index futures is also noted.  Basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast were steady to higher on Wednesday, with spot values jumping as barge freight costs continued to surge, traders said.


Soybean futures were mostly steady overnight with nearby March up a penny to 13.30, July down 1 cent to 13.44-1/4 and Nov up 1-1/2 cents to 12.64-3/4.  New multi-month highs were posted in meal contracts again overnight, supporting the complex.  Nearby Jan meal closed over $400/ton for the first time for the front month since May 24.  Soyoil continues to struggle and is down slightly this morning.  Trade estimates for this morning’s USDA Weekly Export Sales are 700,000 to 1.70 mil tons.  Market-friendly weather in South America offsets questionable short-term demand fundamentals in beans as a thinly traded holiday trading schedule keeps prices buoyant.  Parana’s soybean crop estimate for 2021-22 season was cut to 18.4 mil tons from 20.9 mil in a previous report, the state’s agriculture agency Deral said Wednesday on their website.  Professional traders added to speculative longs before the long Holiday weekend betting that if the South America’s two-week forecast is warm and dry prices could trade higher Monday.  Given the current stocks-to-use ratio, the complex is overpriced and subject to wide swings.  Overnight, Chinese May bean futures were down 5 yuan; Soymeal up 44; Soyoil up 120; Palm oil up 122; Corn up 5.  Malaysian palm oil prices were up 30 ringgit (+0.67%) at 4478.


The wheat complex was mixed overnight.  March CBOT wheat is down a penny to 8.13, but up 38 cents for the week.  March KC wheat is up 2-1/2 cents to 8.56-1/4 while posting a 46 cent gain this week.  Trade and a close over 8.44 could suggest a test of 9.00.  Underlying support stems from a lower U.S. Dollar and talk that the Omicron Virus may be weaker than Wuhan and Delta and may not reduce U.S. food demand.  A dry and warm U.S. south plains forecast and lower U.S. farmer HRW crop insurance enrollment is also supportive.  March MPLS wheat is up 2-1/4 to 10.30 and up 8 cents this week.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 550,000 tons.  There is talk that Iraq bought 500 mt World wheat.  They are expected to tender for another 500 mt next week.  Of the total as much as half could be U.S. HRW.


Cattle futures are called mixed after holding their ground on Wednesday.  Feb live cattle, at 137.375 are back above the contract’s 50-day Moving Average and look to have completed a retracement pullback from the Nov 29 contract high.  March Feeders, at 161.925 are exhibiting a similar pattern while flirting with the contract’s 50-day MA resistance area.  USDA will release its COF report today after the markets close, one day early since markets are closed tomorrow.  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.  Small volume cash trade of live cattle at $135/cwt happened the south, and in the north at $136 to $137, $3 to $5 lower than last week.  Dressed prices moved from $215 to $217.   We view the remainder of this week’s activity to be light.  Normally, Feb and April futures can hold a $3 to $5 premium over cash this time of year, so we view the current prices as fair value as long as cash doesn’t slide further.  Choice beef prices are holding steady in the $260/cwt range.


Hog opening calls are mixed. Prices are sharply higher for the week with bullish reversals posted for all 2022 contracts including new highs in July through Dec.  Demand optimism and a lack of widespread Omicron lockdowns seem to be supportive this week. Today, we’ll get the Hogs and Pigs report with estimates for total supply down 2.8%.  Kept for breeding is estimated up 0.1%; and, market hogs down 3%.  Assuming no bearish surprises, the past of least resistance is higher for now.  Seasonally, futures should work higher into February.


Matthew Strelow

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