TFM Sunrise Update 2-22-2022


Corn futures shot higher into new contract highs overnight.  May corn peaked at 6.69-1/2 on gains of 16-3/4 cents.  Talk of record demand for U.S. corn in Q2 has driven May corn to 6.70.  Much of market action or reaction is focused on Putin’s speech that declared Ukraine states of Donetsk and Luhansk free and independent.  Putin also ordered peace keeping troops into those states.  We’ll USDA Weekly Export Inspections later this morning.  Last Friday, the Brazilian farmer sold 25,000 tons of corn capping off a 75,000 total for the week.  Summer corn is 24% harvested after advancing 3% last week.  Argentinian growers sold 340,000 tons last week.  The trade will be watching 2nd crop Brazil corn conditions.  N Africa, SE EU and Italy remains dry.  Between Feb 1 and 10, Ukraine exported about 1.5 mil tons of corn, up 821,000 tons in the same period last year when 27% of the total went to China.  New highs in Crude oil coupled with a weaker dollar and soaring beans and wheat offers outside market support.  May corn volatility softened last week, but stays at a 5-year high. 


The soy complex was strong overnight to start the 4-day trading week.   May beans rose as much as 29-1/2 cents to16.33, only 1-1/2 cents from the contract high from Feb 10.  Nov beans reached a new high of 14.83, up 19 cents.  Last week, China bought 4 to 6 cargos of U.S. beans out of the Pacific North West.  May meal futures are up 4.0 per ton to 449.70 while staying inside last Friday’s trading range.  May soyoil soared to a new high of 69.90 and is up 1.87 to 69.48 this morning.  Brazilian soybeans are 32% harvested after advancing 10% last week versus 25% for the 5-year average.  There is talk that Brazil’s soybean crop could be 124 mmt vs USDA 134 and Argentina 39 vs USDA 45.  The Parana crop could be 14 vs 21 expected.  Argentina and South Brazil will be warm and dry over the next week.

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Wheat futures rallied overnight with strong gains posted across the complex on events in Ukraine.  World buyers are short and need Black Sea exports.  EU exportable supplies are down.  N Africa and SE EU remains dry and looks to need to increase imports.  Wet weather is moving across U.S. Midwest and Delta, but SW Plains will miss the rains.  May Chicago wheat rose 27-3/4 cents to 8.31-3/4.  May KC wheat gapped higher overnight en-route to hitting an overnight high of 8.70-1/2.  Current prices may be undervalued if the U.S. HRW crop conditions are below average.  May MPLS spring wheat followed suite, gaining as much as 17-3/4 cents to get to an overnight high of 9.80.


Cattle futures are called steady to lower.  Live cattle futures upward momentum is fading led by a softening in the retail market and technical selling.  The April contract has showed signs of losing upward momentum, as prices have slid into a $3.00 trading range, moving today to the bottom of that range, and closing below the 10-Day moving average.  April live cattle has traded within this range for the past 14 days.  A potential head and shoulders pattern is forming on the chart, which if a downside break were to occur could have the market testing 142.500 and trend line support.  There was active fed cattle cash trade in the North at mainly $142 to $143 live, and mostly $225 to $226 dressed. That is mostly steady to $1 firmer compared to the previous week.  Moderate trade also developed in the South at mainly $142 live, which was $2 higher than the previous week.  The Choice cutout moved $5.24 lower last week, while Select decreased by $4.10 /cwt.  Price declines slowed towards the end of the week, indicating that winter lows should be near.  Cattle markets overall are still in an uptrend, but momentum has slowed.  Prices may be reaching winter highs, and a potential pull back may be in front of the market as charts have turned more negative.


Hog futures are called higher.  Technically, buyers are expected to stay active as they anticipate tightening supplies through the year.  Prices pushed and closed at new contract highs on Friday, opening the door for more money flow and a challenge of the $120 level in the summer contracts.  Nearby April looks to be challenging the 110.00.  Carcass values trended higher last week, closing up .18 on Friday to 110.09, advancing more than $3.00 on the week.  Friday’s load count was moderate at 301 loads.  Cash hog values are also trending higher on strong packer demand and tight supplies.  The Cash Lean Hog index gained .90 to 94.24 on Friday, and was 6.50 higher on the week.


Matthew Strelow

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