TFM Sunrise Update 3-26-21

CORN

Corn futures traded narrowly mixed overnight in quiet trade.  For the week, May corn, at 5.46 is down 11 cents and trading right around the contract’s sideways trending 20-day Moving Average.  Dec corn, at 4.66 did make a new 5-week low overnight at 4.63 and has lost about 8 cents on the week.  A lull in the corn market this week signifies trade positioning ahead of next week’s key USDA Prospective Plantings report.  The Energy Information Administration said on Thursday it will expand biofuels data in its monthly report to account for the growth in U.S. production of renewable fuels. Changes in the next report to be released on March 31 will include expanded coverage of production capacities for biodiesel, fuel alcohol and renewable fuels, the statistical arm of the U.S. Department of Energy said.  It will cover data for January.

SOYBEANS

Soybeans were mostly flat with a weak tone overnight.  Nearby May beans are down 2 to 14.12-1/4 and have given up 4 cents since last Friday’s settlement.  Nov is down a penny to 12.13-3/6 and off 7 cents for the week.  Chinese Ag futures (May) settled down 166 yuan in soybeans, down 2 in Corn, up 12 in Soymeal, down 374 in Soyoil, and down 332 in Palm Oil.  Malaysian palm oil prices were down 175 ringgit at 3,688 (basis June) following rival vegoils.  South American weather forecasts hold significant rain that will continue in Argentina through Saturday with the greatest new moisture totals expected in the north and southeast parts of the nation. A period of drier conditions will then benefit fieldwork advancement in Argentina before more rain arrives later in the first week of April.  Net drying in much of Brazil will continue to benefit fieldwork advancement. Some shower and thunderstorm activity is still expected to return to the drier areas of Brazil in early April but with resulting moisture that is below normal.  Overnight, S. Korea issued a tender seeking 12,000 tons of optional-origin soybeans.

WHEAT

Wheat futures were steady overnight after giving up ground this week.  May CBOT wheat is at 6.12-1/2, down 15 cents for the week.  The contract did slump to a fresh low for the year overnight.  May KC wheat is at 5.66 while also taking out this week’s new lows for 2021 and losing 20 cents on the week.  May MPLS is trading around 6.17, down a dime for the week.  The International Grains Council (IGC) on Thursday forecast global grain production would climb to a record 2.287 billion tons in the 2021/22 season, but expects the larger supply to be entirely absorbed by higher consumption.  In its first full assessment for the 2021/22 season, the inter-governmental body projected a balanced market, with stocks at the end of the period seen at 609 million tons, unchanged from a year earlier.  The IGC forecast that global wheat production would rise to 790 million tons, up from the prior season’s 774 million with larger crops expected in several countries including exporters France (37.3 million versus 30.4 million tons) and Argentina (20.3 million versus 17.2 million).  An expected drop in wheat production in Russia – to 76.9 million tons versus 85.4 million – limited the increase in global output.  In overnight tender activity, S. Korea feed groups bought 196,000 tons of optional-origin feed wheat.

CATTLE

Cattle calls are steady to higher after trading mostly higher on again on Thursday as the front end of the cattle market experienced a second day of bull spreading.  Some additional cash trade occurred, with a few groups at $116, keeping the trend higher from last week.  The April market is still holding some premium to the cash, and that could be a limiting factor.  Choice carcass values have been trending higher since last week, and the trend continued yesterday, gaining 1.61 to 236.45, and Select recovered 2.18 to 226.25.  Movement was light to moderate at 102 loads.  The money flow in the market was good to see, as Live cattle contracts work off recent lows.  June closed above the 10-day moving average, and over 121.00, which could open the door to retest last week’s high.  A weaker grain market and technical buying helped support the feeder market, as the May contract challenges the key $150 level.

HOGS

Hogs are called higher.  The USDA released the Quarterly Hogs and Pigs report on Thursday afternoon, and the numbers were: all hogs and pigs at 98% of last year; kept for breeding at 97%; and kept for marketing at 98%.  These numbers were below market expectations.  The nation’s swine herd was 2% smaller as of March 1 compared to a year earlier, surprising industry analysts who were expecting about the same number of pigs.  Most importantly, going forward, farrowing intentions with the March-May down 3% from last year, and June-August intentions down 4%.  A friendly report should bring additional buying into the market.  Cash is still red hot, and the Lean Hog Index gained .38 to 93.85, fueling the April contract on its push to challenge the $100 level.  Weekly export sales helped set the tone for Thursday as weekly sales were 38,700MT with Mexico and China the leading buyers last week.  Shipments stay aggressive at 38,500 MT last week.  Retail carcass values gained 3.41 to 113.88 at midday, but lost that steam on the close, losing 1.23 to 109.24 with moderate demand at 299 loads.  Despite the weakness, carcass value stays strong and demand very good.  Technically, hogs are over-bought, but the strong fundamentals and friendly Hogs and Pigs data should have the hog market looking for a top.

Author

Matthew Strelow

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