TFM Sunrise Update 2-25-2021


Corn futures were choppy last night within 5 cent trading ranges.  May corn is down 3 to 5.54.  Dec is fractionally higher to 4.77-1/2 after eclipsing Wednesday’s new contract high by a penny and a half to a new high of 4.79.  This marks the fifth consecutive contract high as talk of tightening old crop supplies help push prices higher in the face of increased planted 2021 acreage.  Trade estimates for this morning’s USDA Weekly Export Sales are 500,000 to 1.30 mil tons for old crop and 50,000 to 300,000 tons for new crop.  Newswires report China may be adding to feed imports due to increased piglet numbers.  Outside market support stems from a steep drop in the dollar to its lowest point since Jan 8 and new highs this week in crude oil.


Soybeans and soyoil made new highs overnight on bullish momentum.  Increased Chinese demand for palmoil and higher energy prices are driving bean oil futures sharply higher and over the 50 level.  Hit by Brazil shipment delays, Chinese soybean crushers forced to shrink curtail operations sharply in the coming months due to harvest delays in top exporter Brazil, pushing up prices and likely leading to a rundown in inventories.  The perception held among bullish bean traders has also been validated by Fed Chairman Jerome Powell’s comments about continuing to pump $120 billion each month into the U.S. economy as the country’s lifestyle returns to normal by year-end.  Nov beans hit new contract highs for a fourth consecutive session overnight reaching 12.52-3/4 on gains of 14-1/2 cents.  May beans rallied 20 cents to 14.45-3/4.  The latest South American weather forecast states net drying will continue across much of Argentina through next Wednesday.  Pockets of increasing crop stress will continue the next seven days as a result of the dryness. Last evening’s GFS model was notably wetter in southern Argentina Mar. 9 – 11.  In Brazil, Mato Grosso through Minas Gerais will still be notably wet through Saturday leading to some more fieldwork delays; though, the zone of heaviest rain next week will shift to an area from Mato Grosso through Parana.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 800,000 tons versus 456,000 last week.  New crop sales are estimated near zero to 500,000 tons versus 168,000 last week.


Wheat futures were mostly unchanged overnight with a weaker tone despite a 45 basis point drop in the greenback.  May Chicago wheat, at 6.84-1/2 is in the upper half of last night’s trading range between 6.86 and 6.78-1/2 after experiencing a new contract high close yesterday while reaching the highest level since January 18.  July Chicago and KC wheat made a new contract highs yesterday and then consolidated overnight.  U.S. weather maps lowered the rainfall forecast for much of the U.S. south plains over the next week.  This was no surprise to many market participants who voiced their opinion that previous weather maps were too wet.  May Mpls spring wheat is off a penny this morning to 6.56-1/2.  Trade estimates for Weekly Export Sales are 250,000 to 700,000 tons versus 399,000 last week.  The recent rally in the World vessel freight rate has reduced U.S export competitiveness to North Africa and Mideast buyers.  Matif wheat futures continue to trend higher due to talk of lower EU supplies and lack of Russia new crop wheat prices.  In last night’s tender activity, Taiwan seeks 100,410 tons of U.S. wheat,  Japan bought 57,000 tons of Australian wheat, Jordan bought 60,000 tons of optional-origin wheat; And, Philippines passed on 145,000 tons optional-origin wheat.


Cattle calls are for steady to higher.  Technically, prices posted a recovery and charts are improved, but follow-through buying today will be key for this to be a turn higher or just a corrective bounce.  Despite cash markets still undefined and early indications of being steady at $114, cattle futures have seen some recovery off this push lower on value buying and short covering.  Trade will likely hold off into Friday as the feedlots hold out for a better bid.  Strength in the neighboring hog market is helping support the livestock complex fueled by very good demand.  Retail demand for beef stays supportive: Choice carcasses finished .46 higher to 240.75, but Select was softer, down .74 to 229.79.  Good movement was noted on 129 loads.


Lean hog calls are steady to higher after April finished limit higher yesterday on strong demand and technical buying led a breakout through recent highs.  With limit up close in April hogs, the hog futures have expanded limits today of $4.50.  Weekly export sales could help set the tone as export demand stays strong like the past few weeks.  The Lean Hog Index climbed another .42 to 78.16, and is now 50 points away from October highs.  The strong premium of April futures to the index could limit additional gains as the market hits over-bought territory leaving prices ripe for a price correction, particularly in the deferred contract months.  Retail carcasses softened of midday strength and dropped .61 on the day to 92.14.  Product movement was very good at 371 loads.  The soft retail close may limit some buying enthusiasm on the open, but good product movement and carcass values over $90 shows the strength in the product market.


Matthew Strelow

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