TFM Sunrise Update 2-2-2021


Corn futures traded mixed overnight within Monday’s higher trading ranges.  March corn traded both sides of 5.50 and Dec got to 4.49-1/4.  Prices are still pointed higher, overall, with early guesses for U.S. 2021 corn acres coming in near 94.0 mi acres versus 90.8 last year.  This could suggest a corn crop near 15.500 bil bu.  If demand is near 15.150 to 15.300 bil,  carryout could range from 1.15 to 1.60 bil bu.  Right now, the U.S. carryout number could be as low as 1.552 bil bu with corn export commitments near 1.916 bil vs 848 last year.  We’ll get an updated balance sheet from USDA next Tuesday followed by their annual Outlook conference Feb 18-19 which will include their first look at US 2021/22 supply and demand.  Overnight, South Korea bought 60,000 tons of option-origin corn.


Soybean futures were lower overnight with March down a dime to 13.54-1/2 while slumping below 10 and 20-day moving average resistance drawn at 13.72-1/2.  Nov beans were down 4 to 11.50.  Meal and soyoil are off slightly, too, this morning.  Prices are consolidating and showing signs of forming pennants on the daily charts as the trade digests growing production estimates out of Brazil and an uptick in the dollar.  AgRural forecasts a record 2020-2021 soybean crop of 131.7 million metric tons in Brazil.  There is also market chatter regarding estimates that Brazil’s soybean harvest could start in 2 to 3 weeks, talk of good rains in Argentina and the end of the Argentina truck strike.  Brazilian farmers had harvested soybeans from only 1.9% of the area planted to beans as of Jan. 28, according to agricultural consultancy AgRural.  That’s the slowest start in ten years and far behind the 8.9% that had been harvested on the same date last year.  Conditions will trend drier in the middle part of this week for Argentina with net drying expected in most of the country through week 1 of the outlook.  Some rise in crop stress will occur as a result mostly in the far south where there was not as much rain recently. Greater rain will likely occur in week 2.  The GFS model is struggling some with the potential mid-February rain events; though, last evening’s run was at least similar to the midday GFS model run in showing rain returning to the region.


Wheat futures were two-sided overnight and firm as of this morning.  A rising dollar and talk of an uptick in farmer selling in Russia is providing headwinds for an otherwise strong market.  Russia announced plans to increase exports to 70% on June 1 for prices over $200 per tonne.  This is in addition to a tax on Feb 15 and March 1.  This may have led to farmer selling before the exports taxes slow exports.  Once demand slows, U.S. exports could benefit.  Russian farmers may also now plant fewer wheat acres in spring than expected, thus lowering production by as much as 2 million tonnes.  Weather-wise, Feb to March weather for the U.S. Plains looks be normal for temperatures.  Rainfall could be below normal west and above normal east and in SRW areas.  In tender activity overnight, Egypt seeks optional-origin wheat and Japan seeks 87,000 tons of optional-origin wheat.


Cattle futures are called steady to higher.  Prices held firm Monday and slightly recovered from Friday’s weakness.  Cash optimism is prevalent this week with a strong demand tone.  In addition, carcasses stayed strong with choice trading at $235 and weights stayed heavy at 844 lbs, +5 vs last week and +17 over last year, keeping production heavy at 550 million pounds for the week, 4.6% over last year.  This would normally keep pressure on the front month, however, a very cold forecast for the weekend may temper selling pressure; Improved packer margins should support cash; Grain markets will be a key factor in Feeder Prices.


Lean hog futures are called steady to higher.  Snow and a frigid forecast is viewed as friendly for prices.  Slaughter numbers starting to show a decline week-over-week and down 1.4% compared to last year.  Cash markets are still choppy and at a discount to Feb futures which settled at 69.55.  The demand tone is strong as carcasses are trading at the $85 level on good movement.  Prices remain technically overbought and have been consolidating for a week.  Farther out, deferred futures maintain a technical pattern is still in an uptrend overall.


Matthew Strelow

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