TFM Sunrise Update 2-3-2021


Corn futures were lower overnight, giving up 5 to 6 cents in the front months and 4 cents in new crop.  A strengthening U.S. dollar combined with fewer concerns about South America’s crop is seen weighing on row crops mid-week.  Talk of an overbought market after six consecutive higher closes led to a negative set-up with some back tracking yesterday and follow-through last night.   March corn, at 5.36-1/2 is already nearly 15 cents off of Monday’s fresh contract high of 5.55-3/4.  Dec corn is at 4.43-1/4 while favoring it’s downward-trending 10-day moving average.  The trade will also be watching old-new corn spreads for a signal of tight U.S. supplies and start of rebound in futures.  Today’s weekly EIA ethanol production is expected to be down slightly from last week with a small uptick in ethanol stocks from last week.  China continues to look at offers for U.S. ethanol following a large procurement last week.  Yesterday, USDA announced sales of 115 mt corn to Mexico and the trade is looking for large weekly U.S. corn export sales with at least 4.0 mmt to China.


Soybean futures were as much as 13 cents lower overnight with March tracking its downward trending 10-day moving average at 13.47.  Nov beans were down are down a dime to 11.40-1/2, though off last night’s low of 11.35-3/4.  Chinese Ag futures (May) settled down 74 yuan in soybeans, down 3 in Corn, down 62 in Soymeal, down 150 in Soyoil, and down 148 in Palm Oil.  Malaysian palm oil prices were down 162 ringgit at 3,229 (basis April) at midsession on export demand concerns and India’s import tax hikes.  New crop soybean export commitments are a record 3.6 mmt and there continues to be talk that China is asking for prices of U.S. old crop PNW soybean and new crop soybeans as favorable China soybean crush margins continues to suggest record China imports.  However, a lack of new old crop U.S. soybean sales to China this week and the approach of Brazil’s record soybean harvest is weighing on sentiment.  Overnight tender wires showed South Korea buying 60,000 tons of option-origin soymeal.


Wheat futures lower overnight and are breaking into new 1-1/2 week lows due to a higher dollar and lack of new U.S. wheat sales.  Topping action in row crops is also a guiding factor for the weakness.  March Chicago wheat was down 9-3/4 cents to 6.35, March KC was down 6-1/2 to 6.12-1/2; And, March Mpls was down 6-1/2 to 6.14-1/2.  The U.S. two-month weather forecast suggests dry weather for the western portion of the south Plains but normal rains for the central and eastern portion of the south Plains and most of U.S. SRW areas.  An arctic blast will push deep into the central U.S. Friday through next Thursday bringing 7 days of daily low temperatures near or below zero.  A forecast snow event just ahead of the cold wave is expected to limit a winter kill threat for all but 5% of the HRW wheat in the north Plains and all but 20% of SRW wheat in central MO and south IL.  Tender Activity showed that Egypt bought 480,000 tons of Russian, French and Romanian wheat (around $311 per ton with freight).


Cattle futures are called steady to higher led by the back months as money flows into the livestock sector.  Prices have held firm or recovered slightly from Friday’s bearish performance.  We look for a steady to higher cash market to set the tone for today amid strong demand.   We’ll get the Weekly Fed Cattle Exchange at 10 AM Central.  Most asking prices are at $115/cwt this week.  In the north, winter storms and frigid temps will alter some marketing plans.  While this week will provide ample numbers, the supplies moving forward will tighten.  Carcass values remain strong with choice trading at $235.  Weights stay 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 will weigh on the front month.  Movement in grains, which are lower at the moment, 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.  Meanwhile, in addition, slaughter numbers are beginning to show a decline week-over-week and 1.4% lower than last year.  The cash market is still choppy, and Feb still holds a premium to the index, helping limit gains in the front months.  Demand is strong as carcasses are trading at the $85 level on good movement.  Father out, deferred contracts maintain an upward technical pattern.


Matthew Strelow

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