TFM Sunrise Update 2-16-21


Corn futures were higher overnight along with double digit-gains in beans and wheat.  The dollar is down 35 basis points to a 3-week low, offering support to exportable commodities.  Dec corn got to 4.55 on gains of 6-1/4 cents.  Old crop May corn rallied 12 cents to 5.48-1/2 before trimming gains to a nickel.  Last week’s range was 5.23-1/4 to 5.72.  This could be the range for nearby corn prices until more is known about China’s appetite for imports, and South America’s crop.  Chinese Ag futures conclude their week-long holiday this week for the celebration of Chinese Spring Festival.  Trade resumes on Feb. 18 (Thursday).  This week, USDA will have their annual Outlook Forum where they will release their first U.S. 2021/22 corn supply and demand.  Trade estimates are for U.S. 2021 corn acres to be near 92.9 million and a crop near 15.243 bil bu.  The trade also looks for U.S. 2021/22 corn carryout near 1.725 bil bu.   Weekly Export Inspections will be out this morning.  Meanwhile, Brazil’s weather will be mixed over the next ten days to two weeks.  Southern parts of the nation will experience good drying conditions favoring soybean maturation and harvesting as well as Safrinha crop planting.  Argentina’s weather is becoming more tenuous with restricted rainfall over the next ten days to two weeks.  Scattered showers and thunderstorms in the coming week will be sporadic and light leaving some areas quite dry while others get enough rain to slow drying rates to buy more time for crops.


Soybean futures gapped higher overnight to a session high of 11.93-1/4 (May).  That was a jump of 22 cents.  As of 5:15 this morning, the contract is up 12 cents to 11.83-1/4.  Nov beans saw gains of as much as 13-1/4 cents to 11.86-1/4.  With the latest stocks-to-use ratio near a record low of around 3%, nearby contracts have more room to probe higher.  Soyoil futures are scoring new highs.  Today,  NOPA will come out with their Crush data.  U.S. soybean processing plants likely turned in their third-largest monthly crush on record in January and the largest-ever crush for the first month of the year, according to analysts polled.  This week’s USDA annual Outlook Forum will feature their first U.S. 2021/22 soybean supply and demand.  Trade estimates for 2021 soybean acres are near 89.8 million and crop near 4.520 bil bu.  Trade estimates for U.S. 2021/22 soybean carryout is near 179.  Overnight, Egypt announced tenders seeking 30,000 tons of optional-origin soyoil, and 10,000 tons of sunoil.  Egypt’s soybean imports surged in January with strong supply from the U.S.  Their soybean imports for the first four months of the current marketing year totaled about 1.48 million tons, an 8% increase from the same period last year, and 52% above the three-year average of 973,830 tons.


Winter and spring wheat futures rallied overnight amid a frigid weather in the Plains, a sharp drop in the dollar; And, higher row crops.  In addition, Russia has slowed new cash selling. This and talk that their exports could be lower than USDA’s guess offers support.  Looking ahead, NOAA suggests some weakening of La Nina in April which spells normal spring weather across most of the U.S. plains and Midwest.  May Chicago wheat was up nearly 20 cents to 6.56-1/2.  May KC wheat was up 20-1-2 cents to 6.43.  May Mpls rose 15 cents to 6.41.  This week, USDA will release their first U.S. 2021/22 wheat supply and demand.  Trade estimates for U.S. wheat acres are near 45.3 million and a crop near 1.874 bil bu.  Trade estimates for U.S. 2021/22 carryout is near 769 mil bu.  Overnight tenders has Japan seeking 82,393 tons of optional-origin wheat;  Algeria seeks optional-origin wheat; Syria seeks 200,000 tons of optional-origin wheat.


Cattle futures are called higher based on strong closes on Friday.  This opens the door for additional money flow and technical buying to start the week.  In addition, the major storm across cattle country will support prices, affecting cattle movement and likely cattle weights.  Cash trade will likely trend higher this week, supporting the markets.  Carcass values softened on the week last week, dropping $1.29 in choice as the retail market may be hitting seasonal top.  The strong start in the grain markets will weigh on feeder prices, and may limit upside.


Lean hog futures are called steady to higher, underpinned by a strong winter storm that will slow hog movement and weight gains, thus supporting prices.  A good price push higher on Friday was dampened by some profit taking going into the 3-day weekend, and the market is viewed as technically over-bought and due for a correction, so look for bouts of price weakness if buying interest fades.  However, deferred contracts are technically buoyed, and the demand pace will stay supportive in those contract months.  Retail demand and pork carcass prices finished last week strong, trading higher and over the $90 barrier.  A push higher in grain prices supports the longer-term hog market with the prospects of tighter hog supplies with the possibility of good long-term demand.


Matthew Strelow

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