TFM Sunrise Update 3-22-2021


Corn futures traded 3 to 5 cent ranges overnight with a weaker tone.  May was down 3 to 5.54-3/4 and Dec 2 to 4.69-1/2 while respecting Friday’s trading ranges.  The dollar has retreated to last week’s trading range after a breakout to the upside on Friday.  Crude is consolidating near mid-range of last week’s wide and lower trading range.  U.S. weather during the weekend was drier following recent moisture.  No precipitation fell in the Great Plains, Midwest, Delta or interior parts of the southeastern states.  Weekly Export Inspections will be out today on the heels of strong purchases from China.  This could force USDA to increase exports and lower corn carryout, making the agency’s estimate of March 1 stocks key to basis, spreads and market direction. 


Soybeans are mostly unchanged this morning with nearby May beans up fractionally to 14.17 and Nov down a penny to 12.19.  The market begins the week digesting last week’s negative weekly reversals in both beans and soyoil.  Some of the weakness was linked U.S. and China talks on Thursday that started off poorly with each side accusing the other of poor policies.  Overnight, Chinese Ag futures (May) settled up 5 yuan in soybeans, up 35 in Soymeal, down 6 in Soyoil, and up 64 in Palm Oil.  Malaysian palm oil prices were up 48 ringgit at 3,772 (basis June) at midsession supported by improving March export data.  China’s soybean imports from Brazil fell sharply in the first two months of 2021 compared to the same period last year, customs data showed on Saturday, as rain delayed some shipments from the top exporter.

In South America, Argentina remains favorable for late season crop development, although there will be a few pockets of moisture stress most likely in the southwest part of the nation.  Soil moisture will carry crops through the drier days and the lack of excessive heat will keep evaporation rates low enough to conserve that soil moisture. The worst of this year’s crop stress and greatest pressure to reduce production in 2021 has passed and crops will finish the growing season without much further decline in potential yield.  Concern will rise about long term soil moisture in Brazil especially if monsoonal rain withdraws normally in late April.


Winter wheat futures were down 3 to 4 cents overnight.  May Cbot futures, at 6.24 are testing Friday’s fresh multi-month, and 2021 low while having slipped below 100-day moving average support.  May KC wheat, at 5.82-1/4 is publishing a similar story, pressured by good rains across U.S. winter wheat areas and continued slow demand for U.S. wheat exports.  Overnight tenders showed South Korea buying 50,000 tons of Australian wheat and Pakistan sourcing 300,000 tons of optional origin wheat.  Technically, wheat contracts have fallen into oversold territory which would reinforce a price recovery if, and when fresh selling interest fades.  In Minneapolis, spring wheat contracts are feeling the pressure of lower winter wheat trade while trying to stay long-term rangebound as traders wage an acreage battle.   Nearby May was down 4 cents to 6.23.  Temperatures were unusually warm in the northern Plains during the weekend with highs in the 60s and lower 70s Fahrenheit.  Drought in these areas continues to be a great concern.  Some relief is expected later this spring, but dryness will likely return later this summer. 


Cattle calls are steady to higher.  The market saw early selling pressure on Friday, but managed to work higher from session lows, likely squaring positions in front of the Cattle of Feed Report released after the close.  The COF report was mostly in line with expectations. Total cattle on Feed at 102% of last year at 12 million head. Placements were at 98% of last year and slightly below expectations at 1.684 million head. Marketing was 98% of last year at 1.732 million head.  Carcass values closed higher Friday, as Choice gained 1.38 to 229.99, and Select was 1.84 higher to 219.95 on moderate demand of 108 loads.  Choice carcasses trended higher last week, and with demand staying firm, the market will have some cash optimism this week.  Cash trade did trend firmer into the end of the week. Packers are still making good margins, and the cattle market is a value at these levels.  Money flow will be key.



Hog futures are called steady to higher.  Despite the cash market staying strong, the loss of momentum during the week last week, and the premium of April over the cash, kept the front end of the market in check to end the week.. The lead hog index gained .68 to 91.24 while still trading a 3.00 discount to the April contract which expires on April 15.  We view that spread tightening over the next 3 weeks.  Carcass prices were softer to close the week, losing 1.80 to 105.00, on demand of 227 loads.  Despite the weaker close, retail values were trending higher through the week.  Estimated slaughter for Friday was to be bear 485,000 head with the weekly total trending well under the previous week’s level.  This tighter overall supply and strong carcass values have been the fuel in the cash market as packers bid up supplies to secure.


Matthew Strelow

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