TFM Sunrise Update 2-16-2022


Corn futures were firm overnight.  May corn is up 4 cents to 6.41-1/2 this morning and is settling into a consolidation phase with the up-trend near the 10-day moving average.  Dec corn is up a penny to 5.90-3/4.  Outside markets are helping this morning with crude firm after a pull-back, and the dollar weaker.  Funds remain heavily net long corn and in a good position with little reason to exit their longs.  On Tuesday, Managed funds were net sellers of 25,000 corn, and are estimated long 351,000 contracts.  Weekly Ethanol Stats will be out later this morning.  Production is seen higher than last week at 1.003 mil barrels per day.  The average stockpile guess is 24.966 mil bbl vs 24.799 mil a week ago.  Weekly Exports will be out tomorrow morning.  Spot basis bids for corn and soybeans were mostly unchanged in the U.S. Midwest on Tuesday and farmer sales of both commodities were thin as soybean and corn futures fell farther from life-of-contract highs set last week.


The soy complex traded higher overnight with May beans up 15 cents to 15.70-3/4 and Nov up a dime to 14.42. On Tuesday, Managed funds were net sellers of 14,000 soybeans, 6,000 soymeal and 1,000 soyoil.  They are now estimated to be net long 156,000 soybeans, 66,000 soymeal and 79,000 soyoil.  Nearby March meal is up $7 per ton this morning to 445.80, and May soy oil is up .39 to 66.11.  Last Thursday, March meal futures traded an intra-day high of 477.90, the highest a front month contract has been since June 2014, before posting a bearish technical reversal.  Overall, the complex, as well as many other commodities are in a volatile state as South America’s growing season and Russia/Ukraine news plays out.  Brazil is expected to be 25% complete with harvest.  U.S. Jan NOPA soybean crush was 182 mil bu and below trade estimates yesterday.  Overnight, Chinese May bean futures were down 74 yuan; Soymeal down 2; Soyoil down 78; Palm oil down 66; Corn down 11;  Malaysian palm oil prices were down 49 ringgit (-0.87%) at 5608.

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Wheat futures were mixed overnight, trading mostly 10 cent ranges around Tuesday’s settlement prices.  May Chicago and KC futures are up 2-3/4 cents this morning to 7.88-1/2 and 8.12-1/4, respectively.  On Tuesday, Managed funds were net sellers of 13,000 Chicago wheat and are estimated to be short 38,000 contracts.  May MPLS Spring wheat is up 3 to 9.53-1/2.  Wheat price movement has been active in the wake of on-again, off-again threats from Russia’s intent to invade Ukraine, thus throwing a lot of ‘what-ifs’ into the conversation over wheat exports and transportation.  For now, tensions remain in place mid-week, though de-escalation appears to be happening.  Russian troops remain on Ukraine’s east and south borders and the Navy is blockading Ukraine ports.  SovEcon lifted their forecast for the Russian wheat crop to 84.8 million metric tons for 2022, up 3.6 mmt from the last estimate.  Weekly Export Sales will be announced tomorrow.  Egypt announced a wheat tender for next week.  Weather-wise, rain events remain in the forecast for the U.S. South Plains.


Cattle futures are called steady to higher on follow-through from Tuesday’s gains, and ahead of today’s Fed Cattle Exchange trade.  Packers in the south attempted to buy available cattle at $140 and were unsuccessful.  Most cattle in the south are priced $142 to $143/cwt while northern cattle are prices mostly at $145.  Buying interest in futures is apparent after prices pulled back into oversold territory on the charts following a three-day retreat.  Strong packer margins are also noted.  In addition, a recovery in the stock market and a weaker dollar is viewed as supportive.  April live cattle settled at 146.90 yesterday.  The next downside objective is 145.70.  On the upside, resistance lies around the 147.70 area.


Hog futures are called mixed after regaining some stamina in Tuesday’s session, keeping the bullish trend alive and well.  April hogs, at 104.15 look poised to make a run to Monday’s contract high of  107.70 in the near-term.  However, the market is again approaching overbought levels with the relative strength index (RSI) over 70.  The next area of resistance for April futures is around 105.65 and 106.87.  April is now the front month and has a large premium to cash.


Matthew Strelow

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