TFM Sunrise Update 3-1-21


Corn futures were steady to 2 cents higher overnight while maintaining a bullish tilt above moving average support.  December corn is at 4.73 with and mid-range of last week’s 4.79 contract high and 10-day moving average low of 4.65-1/4.  May corn is fractionally higher to 5.48.  Strength in the bean complex and demand-led support ahead of Weekly Export Inspections later this morning helped prop-up corn overnight as the calendar turns over a new month.  China’s soybean futures on the Dalian Commodity Exchange hit a record high to begin the week, on tight supply and as some farmers are expected to reduce soy acres in favor of corn on higher profit potential.  Outside markets are mixed with the dollar, stock indexes and crude up again after mixed trading last week.


Soybean futures were higher overnight with double-digit gains posted across the board.  May beans gains as much as 18-1/4 cents to 14.22-1/2, and Nov rallied 13-3/4 cents to 12.36-3/4.  The USDA is scheduled to release its monthly fats and oils report at 2 p.m. CST.  U.S. soybean processors likely crushed 5.867 million short tons of the oilseed in January, or 195.6 mil bu; estimates ranged from 195.0 mil bu to 196.1 mil bu, with a median of 195.6 mil bu.  If realized, the crush would be up from the 193.7 mil processed in December and 188.8 mil crushed in January 2020.  It would also be the biggest January crush on record and the second-largest crush for any month, behind only October 2020.  Chinese Ag futures (May) settled up 78 yuan in soybeans, down 11 in Corn, down 51 in Soymeal, up 166 in Soyoil, and up 86 in Palm Oil.  Malaysian palm oil prices were up 50 ringgit at 3,792 (basis May) at midsession, a 7 week high, following rival vegoils.  Weekend weather in South America featured mostly dry conditions except for a  few locations in La Pampa, San Luis and west-central Cordoba where rainfall totaled .25 t 1.18 inches.  Overall, net drying is expected over the next 10 days.


Winter wheat futures were up 3 to 4 cents overnight in keeping with a firm tone in row crops and equities to begin the week and new month.  May Chicago wheat is trading at 6.64-1/2 and KC at 6.38.  1,288 HRW wheat deliveries against the nearby March contract were posted; 612 in HRS wheat.  The dollar continued to see strength overnight on the heels of new multi-week highs late last week.  Traders need to be cautious of a bearish crossover on the daily charts triggered by last week’s action.  With wheat prices technically overbought, lower prices could result if support levels are broken, particularly if the greenback continues to strengthen.  Seasonals suggest a lower futures trend into U.S. spring weather and harvest.  Spring wheat futures were up 5 to 6 cents overnight while leading the strength in the complex.


Cattle calls are mixed to start the week.  Cash trade wound up mostly steady last week as the market still works through backed up cattle supplies.  Expectations are for cash to be steady to higher this week.  Retail values ended the week stronger, as Choice gained .14 to 240.53 and Select was .94 high to 229.73. Movement was moderate on 59 loads.  For the week, Choice carcasses gained 1.54, while Selects gained 1.32. The strong retail should help cash optimism next week.  Outside markets should continue to influence the cattle market as was the case last week when weakness in the equity market weighed on cattle prices.  Stock index futures are up more than 200 points this morning.   Overall, the technical picture looks weak, with April cattle posting its lowest close in a month on Friday. The $120 level will be a key swing point and may represent a value given the retail strength.


Lean hog calls are steady to lower on follow-through from risk-off trade in the markets on Friday, led by the equity markets.  If this soft tone continues, the hog market is still due for additional profit taking.   The hog market had become over-bought and due for a correction.  Selling pressure is likely to continue to start the week.  Retail carcass values finished the week softer, losing 1.29 to 93.84. Movement was moderate at 213 loads.  A soft retail close could aid pressure on the open.  For the market bulls, last week, retail carcasses gained 1.73 from Monday’s close, as pork product prices stay strong on good demand.   Cash markets stay supportive, and that could bring buying support back into the market at lower levels.  The Lean Hog Index gained .83 to 79.95 on Friday, and is projected to cross over 80.00 to start the week.  This is the highest levels in the index since August 2019.


Matthew Strelow

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates