TFM Sunrise Update 3-18-2021


Corn futures were quiet with a weaker tone overnight as contracts managed only 3 to 4 cent trading ranges ahead of this morning’s USDA Weekly Export Sales.  Trade estimates range between 300,000 and 750,000 tons versus 395,000 last week.  Overnight tenders showed Turkey bought 115,000 tons of optional-origin corn.  Dec corn traded a 2-3/4 cent trading range near 4.75 overnight.  This week’s Chinese sales of 2.2 mmt of U.S. corn should force USDA to increase its U.S. Export goal and China’s import guess, thus helping tighten the U.S. and World stocks to use ratio.  Some of that demand hinges on their pork production.  The growth has been smaller than anticipated following a 3 to 5% decline from Dec to Feb.  However, the sow herd is still 10 to 15% higher than one year ago.  The next key USDA report is the March 31 Acres and Stocks report.


Soybeans were lower overnight.  Nearby May was down 6 cents to 14.11-3/4.  A year ago, nearby futures were near $8 per bushel.  Nov was down 7 cents overnight to 12.28-1/2.  Meal and soyoil were also weaker.  Chinese Ag futures (May) settled down 115 yuan in soybeans, down 23 in Corn, down 15 in Soymeal, down 130 in Soyoil, and down 16 in Palm Oil.  Malaysian palm oil prices were down 122 ringgit at 3,815 (basis June) at midsession on concerns over rising output, tapering demand.  Trade estimates for this morning’s USDA Weekly Export Sales are zero to 400,000 tons.  Seasonally, U.S. exports slow and buyers switch to Brazil, but there have been some reports of China buying 3 U.S. cargoes his week while getting to 70% covered in May and 60% in June.  This suggests they may need to buy 6 mmt.  China’s soymeal prices have traded higher as hog producers returned as buyers.


The wheat complex was lower overnight pressured by spillover weakness in row crops, a higher dollar that could slow demand, and rains across the U.S. south Plains.  It remains dry across U.S. north Plains.  May KC wheat was down a nickel to 5.96.  From the Feb high near 6.64, the contract has dropped to a low near 5.90.  Chicago May wheat, down 4 to 6.36 overnight has dropped from 6.58 to 6.30.  May spring wheat was off 2 cents to 6.31-1/4.  Weekly U.S. wheat export sales are estimated near 150,000 to 500,000 tons versus 329,000 tons last week.  Following the March 31 USDA report, April’s Monthly Supply/Demand report will likely see few changes to US/World wheat supply and demand.  Overnight, Japan bought 135,600tons of U.S./Canadian/Australian wheat.  South Korea bought 50,000 tons of U.S. wheat.


Cattle calls are steady to higher.  The money continues to flow into the cattle market pushing deferred contracts to new highs.  April posted a reversal off the most recent down trend.  The nearby contract saw support from the cash market showing some possible strength past the 6-weeks of trading $114/cwt.  The strong close on Wednesday should open the door for some follow through strength.  Wednesday’s Fed Cattle Exchange saw bids ranging from $114 to $115, with some trade at $114.25, and $114.50, firmer than last week.  Countryside trade did see some trade at $114, but talk was that afternoon bids did push as high as $115.  The tighter slaughter numbers, plus the recent drop in carcass weights will help support the cash market.  Retail carcass values were mixed at the end of the day with Choice gaining 1.54 to 228.47 but Select slipping 1.18 to 217.59 on moderate movement of 129 loads.  The Cattle on Feed report is tomorrow afternoon with expectations for total cattle on Feed as of March 1 at 101.4%, Placements at 97.6%, and Marketings at 98.1% of last year’s totals.


Hog calls are for higher ahead of Weekly export sales that should help set the tone for Today’s opening ranges.  We expect strong numbers of new sales and shipments to remain market-friendly.  Technical buying and strong fundamentals pushed the hog market higher on Wednesday and further into overbought territory.  With the strength, April through October contracts settled at new contract highs again, and summer months are all trading over the $100 barrier.  The cash market remains extremely strong, and talk of tighter supplies of market hogs are circulating in the market.  Estimated slaughter for yesterday was is 492,000, down 9,000 from last year, but steady with last week.  The Lean hog index traded .56 higher to 89.9, as the strong uptrend continues in the cash market.  The April contract is still holding a 3.765 premium to the index, which slows the upside, but the trend is still higher.  Retail values were firm again at midday as pork carcasses gained 1.91 to 102.81, but lost those gains to finish .10 lower to 100.80.  Demand was moderate at 289 loads.  Carcasses, at $100+ only help support the packer’s ability to bid for cash hogs.


Matthew Strelow

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