TFM Sunrise Update 2-15-2022


Corn futures traded lower overnight within Monday’s trading ranges.  May corn lost 8-14 cents to 6.47 amid double digit losses in beans and wheat.  Dec corn fell a nickel to 5.93-1/4.  The dollar is down 31 points, and crude is coming off its new high from yesterday, down $2.50.  Stock index futures, meanwhile, are up 320 points after trading lower the past three sessions.  Russia’s moving into attack positions, according to newswires, and the U.S. believes Russia will attack Ukraine by the end of the week, although it’s not yet certain what form it will take, one official said.  For now, grains and oilseed markets are taking a ‘risk-off’ posture within a historically bullish market that features a lot of liquidity.  Weather-wise: Climate models and observations suggest the 2021–22 La Niña has peaked, and will most likely return to neutral El Niño–Southern Oscillation during the southern hemisphere autumn, the Bureau of Meteorology said in a statement.  Scattered showers are delaying safrinha corn planting over central and northern Brazil, but benefiting development.  Dryness farther south is concerning for developing corn, even with some showers this week.  Isolated showers in Argentina are not enough for corn.


Soybean futures are lower this morning with May beans down 12-1/2 cents to 15.61 and Nov down a dime to 14.32-1/2.  Meal and oil prices are softer this morning, too, as bullish momentum fades and prices try to consolidate within the bull market.  South American crop production estimates and weather continues to underpin price.  However, there were no morning export announcements to start the week, which bucks the concept of “feeding the bull” and supporting more buying interest.  Today’s NOPA Crush for January is expected to show 1.3% higher than a year ago, and an increase of 0.3% versus the previous month.  Oil stocks at the end of last month are seen at 2.047 bil lbs vs 1.799 bil a year ago.  Chinese Ag futures were down overnight with May beans down 55 yuan; Soymeal down 67; Soyoil down 4; Palm oil up 18; Corn down 3.  Malaysian palm oil prices were down 10 ringgit (-0.18%) at 5657.

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Wheat futures fell overnight led by the winter wheat contracts.  May Chicago and KC dropped 20 cents to 7.85-1/2 and 8.11, respectively after failing to hold Monday’s gains into the close.  Both markets are trending sideways with wide swings to show for the chart pattern since topping out in late November.  Last night’s price retreat highlights the volatility in the marketplace that, for now, is zapping any upward momentum.  May MPLS Spring wheat shed a dime to an overnight low of 9.52-1/4.  In South America, official estimates released this month show that the current high prices for wheat in the Brazilian market tend to keep large the area allocated to wheat crops.  Production is forecast to be high, and the national wheat output may again set a record.  In this scenario, farmers – majorly from southern Brazil – are expected to sow wheat in areas that are usually empty during the winter season.  TX and OK could see rain this week, but dry weather is featured in the long range forecast for the U.S. South Plains.  More immediate concerns over Russia’s intent to invade Ukraine have market participants on the edge of their seats ready to pull the trigger on wheat and other commodity trades.


Cattle futures are called mixed. Cash markets will likely take shape tomorrow.  The nation’s beef plants killed 659,000 head, the largest slaughter of the year and 20,000 more than last week and 53,000 more than last year.  Cattle owners will be pricing all cattle higher this week.  Firmer cutout values were reported yesterday morning with choice gaining 24 cents and select adding 1.79.  Expectations that declining Covid cases could mean better demand is helping to provide support, while higher energy and inflation is expected to weaken consumer purchasing power.


Hog futures are called steady to weaker as topping action weighs on sentiment.  Prices found some semblance of support yesterday since posting bearish reversals, which may be an indication of value buying on the recent dip.  However, the market is still considered ‘overbought’ following the steep rise so far in 2022.  Since the first of the year, hog futures have traded more than 15% higher and cash hogs have moved from the mid $70s to the low $90s.  Mostly spring like weather is in the forecast for the next two weeks for the U.S. Look for more choppy to lower action today as the world watches Russia’s actions against Ukraine this week.


Matthew Strelow

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