TFM Sunrise Update 3-17-2021


Corn futures were mixed overnight with a weaker tone in most contracts.  May corn did rise to a new high for the week before settling back to Tuesday’s higher closing range, supported by strong Weekly Exports and higher domestic basis as exporters, ethanol plants and animal feeders all bid for what is left of the 2020 U.S. corn crop.  Dec corn is 3-1/4 cents lower to 4.74-1/2 while oscillating around the contract’s 20-day moving average and inside yesterday’s 6-3/4 cent trading range.  Today’s Weekly U.S. ethanol production is expected to be up slightly from last week as plants recovered from the week of record cold temps.


Soybeans were lower overnight.  Nearby May was down 7 cents to 14.16-1/4.  Nov was down 5-1/2 cents to 12.39-1/2.  Meal, too, was lower; soyoil contracts mixed.   Technically, prices are trending sideways with Managed Money looking to hold long positions into the March 31 Prospective Plantings estimate of U.S. 2021 acres and March 1 stocks in case USDA numbers are below trade average guesses.  Meanwhile, the U.S. and China will meet tomorrow in Alaska.  Most look for China to agree to buy U.S. goods under the Phase 2 agreement.  In return the U.S. would drop or reduce the 35% tariff on Chinese imported goods.  Chinese Ag futures (May) settled down 77 yuan in soybeans, up 45 in Soymeal, down 186 in Soyoil, and down 218 in Palm Oil.  Malaysian palm oil prices were down 13 ringgit at 3,882 (basis June) at midsession with a better export outlook supporting prices amid higher output forecasts.  China’s crush margins and crush rate are lower due to ASF.  This could slow demand for U.S. soybean exports and has also dropped Brazil soybean export prices.  Drier Brazil weather should help soybean harvest there and rains in Argentina could stabilize the crop there.


The wheat complex was lower overnight.  May winter wheat contracts fell 6-1/2 cents to 6.40-1/2 and 6.01-3/4 in Chicago and KC, respectively.  May Mpls was down 4-1/2 to 6.33-1/4.  The wheats did make a strong showing at the end of the day yesterday led by the corn market.  However, momentum studies are still bearish while having slipped to oversold levels in the absence of fresh bullish news and firmness in the dollar.  July KC fell to it’s lowest level since January 8 yesterday and below the 100-day moving average before turning higher.  Improved crop ratings in the U.S. and Europe will make it tough for the markets to regain upward stamina.  U.S. SRW acres could be up as farmers look to harvest the wheat and double crop with soybeans.  The key will be HRS acres.  Soils are dry across the U.S. north Plains and could stay dry through the rest of March and most of April, forcing farmers to switch intended wheat acres to other crops.


Cattle calls are steady to higher as the cattle market remains buoyed by overall buying support in the deferred contracts.  Front month futures are being pressured due to the premium in the futures to the cash market.  Cash was undeveloped again on Tuesday, indications are for steady, but asking prices are $116-117.  Beef wholesale carcasses finessed firmer with Choice carcasses up 2.16 to 226.93, and Select was .72 higher to 218.77. Moderate demand at 132 loads is supportive.  The strong retail values and strength in the futures prices can hopefully pull cash prices higher.  Money flow has been moving into and supporting the cattle market as open interest has grown showing the addition of new long positions.  Friday’s Cattle On Feed report may limit further strong movement as traders square positions ahead of that report.


Hog calls are for higher trade underpinned by strong cash and midday retail strength pushing futures prices to new highs and summer months over the $100 level.  The softening afternoon retail market may slow the market’s upward momentum, though.  In addition, the hog market is extremely over-bought, and in need of some correction.  That said, the strong fundamentals have kept the buyers in the market in the short-term.  The Lean Hog Index traded another .95 higher to 89.35 as the cash market stays extremely strong and supportive of the front month April contract.  June hogs are trading at their highest levels since June 2014, settling above the key psychological $100 level.  Charts look strong with price discovery looking for a top the hog market.  Midday hogs carcass values were 1.11 higher to 103.55, but lost those gains into the end of the day, finishing 1.54 lower to 100.90.  Demand was moderate at 349 loads for the day.


Matthew Strelow

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