TFM Sunrise Update 3-16-2021


Corn futures were mixed overnight, trading around Monday’s trading ranges.  May corn crept 2 to 3 cents higher to 5.52 on lingering support from strong weekly export inspections that led to a positive technical close giving the contract a bullish tilt.  The next area of resistance is around 5.58 and then an upside target of 5.63-1/2.  Dec corn is trading an ‘inside day’, down 5 cents to 4.3-3/4 and at 20-day moving average support.  For now, trade focus remains honed in on South America.  Many view only 40% of Brazil’s corn crop getting planted prior to the optimal date, creating vulnerability to dry conditions after April 1.  Farmers there have sown about 15% less of their second-crop than this time last year.  In Argentina, occasional periods of shower and thunderstorm activity in the next seven to ten days are still expected to help reduce crop stress and stop the decline in crop conditions.  In the U.S., southern corn planting was 14% complete in Louisiana and 1% complete in Mississippi.


Soybeans traded two-sided overnight with May down 5 this morning to 14.14-1/2 while posting an 11-1/4 cent trading range between 14.25 and 14.13-3/4.  Nov is down 6 to 12.38.  Rains in Argentina combined with lower than expected U.S. Feb NOPA soybean crush data and weekly US exports are seen weighing offsetting talk of lower South America supplies and hope of new China buying U.S. soybeans.  The U.S. and China will meet on Thursday in Alaska sparking ideas that China may buy some U.S. Ag goods before the meeting.  Most look for China to agree to buy U.S. goods under a Phase 2 agreement in return for the U.S. dropping or reducing the 35% tariff on China’s imported goods.  Overnight, Chinese Ag futures (May) settled down 81 yuan in soybeans, up 25 in soymeal, up 74 in soyoil, and up 2 in Palm Oil.  Malaysian palm oil prices were up 18 ringgit at 4,038 (basis June) at midsession, marking the longest winning streak in 19 years on improving exports.


The wheat complex was lower overnight by as much as 10-1/2 cents in May KC to 5.96-1/4 and 7 cents in May Chicago wheat to 6.38.  Technically, prices are searching for near-term lows near 100-day moving average support after closing with an upward price reversal after having reached oversold levels.  May Mpls wheat was down 4-1/2 cents overnight to 6.34-1/2.   2021 northern hemisphere world weather will be key to prices.  Weekend rains were beneficial for U.S. HRW growing areas.  USDA’s NASS on Monday rated 38% of the Kansas winter wheat crop in good-to-excellent condition, up from 36% a week earlier.  For Oklahoma, the agency rated 57% of the winter wheat crop in good-to-excellent condition, up from 53% a week earlier.  Texas was rated 27% G/E, unchanged from the previous week.  For Colorado, the USDA rated 25% of the winter wheat as G/E, an improvement from 19% in the state’s previous report, released in late February.  Overnight tenders showed Japan seeking 135,603 tons of optional-origin wheat and Pakistan seeking 300,000 tons of optional-origin wheat.  


Cattle calls are steady to higher.   Open interest has increased, indicating funds are helping push good money flow into the market on value/technical buying.  This is helping deferred contracts push to new contract highs.  The premium of the board to the cash market is a concern, and that will limit the upside in the April contract, as slaughter numbers stay relatively heavy.  Cash trade was undeveloped on Monday, but expectations are for steady again, unless the strength in futures can pull it higher.  Carcass values finished the day softer with Choice losing 1.10 to 224.77, and Select 2.22 to 218.05 on good movement of 103 loads.  Even with the weaker carcasses, the value of retail beef is still trading well above 5-year averages, with spring grilling demand right around the corner.


Hog calls are for steady to higher.  The market is in consolidation mode to start the week, but strong retail trade did help pull prices off of session lows yesterday.  Pork carcasses held most of Monday’s midday gains, and finished 4.14 higher to 102.44, with moderate movement at 295 loads.  The strength in retails should support prices, as the summer hog months look to take out the $100 barrier.  The strong retail values keep the cash market strong, as the Lean Hog Index traded another .75 higher to 88.40.  April is still at a premium to the index, and that may limit some front-end upside.  Plus, the hog market is over-bought and may be due for a pullback, but the downside may be limited in the near-term given the fundamental strength overall.


Matthew Strelow

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