TFM Sunrise Update 12-27-2021


Corn futures traded higher overnight, posting new highs for the move as price volatility precedes the new year.  Technical buying is evident fueled by lower 1st crop yields in Brazil that threaten to tighten South American 2022 supply and add to U.S. demand.  Funds are net long around 370,000 corn contracts.  Domestic corn use is also seen higher than USDA estimates.  Weekly Export Inspections will come out later this morning.  Corn exports to Mexico are are seen higher.  March corn peaked at 6.12 last night on gains of 6-1/4 cents after pushing through $6.00 last week for the first time in 6 months after testing resistance at 5.90.  Dec 22′ corn futures hit 5.57-3/4., up 4-1/4 cents.  For now, outside markets are mixed with the dollar up 15 points, crude down 79 cents, gold down and stock index futures mostly steady.  Weather will continue to be a catalyst for price direction until the January 12th USDA report.  Brazil’s first corn crop faces weather issues as the crop’s pollination stages unfold.


Soybean futures were up overnight.  Jan beans rose 11-3/4 cents to 12.43-3/4.  November beans traded a nickel higher to 12.70.  Jan soymeal hit 410.90 per ton on gains of $4.80 after rallying $26.70 last week alone.  After trading down near $3.00 in late October, it has been sharply higher ever since with the lead month up more than $60 per ton so far this month.  A warm and dry forecast for southern Brazil and NE Argentina over the next 2 weeks underpins price movement as crop stress is closely monitored.  Favorable conditions prevail for reproductive to filling soybeans in central and northern Brazil, while poor conditions continue in the south.  Markets are closed again on Friday for holiday.  Funds are long an estimated 87,000 soybeans, 55,000 soymeal and 58,000 soyoil.  Overnight, Chinese bean futures were up 28 yuan; Soymeal down 7; Soyoil up 128; Palm oil up 134; Corn down 2.  Malaysian palm oil prices were down 45 ringgit (-0.97%) at 4604.


The wheat complex was firm overnight along with row crops.  March Chicago wheat rose 5-1/4 cents to 8.20.  The contract was up almost 40 cents last week, breaking a three-week losing streak.  News that Ukraine would limit wheat exports helped the rally.  March KC was up 6-1/2 cents to a one-month high of 8.68; And, March MPLS wheat traded 2-1/2 cents higher to 10.35 while staying rangebound.  U.S. weather looks mostly dry for the Plains, but some two-week forecasts are calling for welcomed moisture in the U.S. Southern region that could create headwinds for market strength, along with a strong dollar.  Elsewhere, favorable conditions for winter wheat establishment is reported in southern Europe.  Dormant crops are mostly in good conditions across the north and east.  Crop that is dormant in Ukraine and western Russia is in poor condition.  Isolated showers in Australia are not overly concerning for harvest the of winter wheat.  Winter wheat in China is in favorable condition. Scattered showers in North Africa favor winter wheat planting and establishment.  Drought in Morocco continues despite showers, however.


Cattle futures are called steady to higher on follow-through from Friday’s strong finish.  The monthly Cattle on Feed report showed very little in terms of surprises.  Total cattle on feed was 100% of last year, just a tad higher than expectations, Placements at 104%, were slightly above expectations, and Marketings were 105% of last year.  Placements were slightly higher, but so were the Marketings number, keeping the report a wash according to the expectations.  Weekly export sales were showing new Net sales of 12,000 MT for 2021 were down 30%  from the previous week and 23% from the prior 4-week average. Retail values were firmer on Friday.  The load count was light at 91 loads.  The cash market was quiet on Thursday, with little additional movement.  Cash prices of $135 seemed to catch most of the business, which was steady to slightly lower than the previous week.  Cash will likely see steady to higher bids this weak.  Money has moved back into the cattle market to end the week, despite a strong week for grain prices in general.  Technically, the strong closes on the week have put a bottoming action into the charts.


Hog opening calls are steady to higher.  Technically, February hogs rallied to test trend line resistance that worked over top of the most recent highs, near the $84.00 level.  Quarterly Hogs and Pigs data was tighter than expected with All hogs at 96% of last versus expectations of 97%, Animals kept for breeding was 100% of last year, in line with expectations, and Marketing inventory was 96% of last year versus a 97% expectation.  The report revealed a tighter market hog inventory that the analyst expected, which should be supportive of prices.  Technical indicators are also pointing to the upside.  Retail pork carcasses were higher at the close on Friday gaining 6.80 to 91.47.  The load count was moderate at 321 loads.  The cash market has been building a base, but the Lean hog index traded .69 lower to 72.33 and was slightly lower by .08 for the week.


Matthew Strelow

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