TFM Sunrise Update 3-29-21


Corn futures were down 2 to 4 cents overnight as the market continues to trend sideways into month end.  May corn is off 4 cents to 5.48-1/2 and Dec is down 2 to 4.64-1/2.  However, new crop continues to hold a deep discount to nearby futures amid ideas of big 2021 planted acreage versus bullish tight corn stocks leading to strong U.S. cash basis.  Wednesday could be a volatile trading day as the quarterly stocks data will be published along with U.S. planting intentions, which are highly anticipated this year since the last two corn and soybean harvests came up short of expectations.  Trade estimates for 2021 corn acres are near 93.2 mil within a range of 92.0 to 94.5 vs 90.8 last year.  U.S. Quarterly stocks are estimated to be 7.767 bil bu versus 7.952 a year ago, and 11.322 on Dec 1, 2020.  The Energy Information Administration said last 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 Wednesday 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.  Weekly Export Inspections will be out later this morning. 


Soybeans traded two-sided overnight.  May traded and overnight high of 14.02-3/4 and a low of 13.94-1/2 and was recently down 2 to 13.98-1/2.  Nov is up 3 cents this morning to 12.10-1/4.  Soybean oil was also mixed overnight after seeing May trade limit down on Friday while cutting into the rally and showing signs of a top.  Chinese Ag futures (May) settled down 24 yuan in soybeans, down 41 in Corn, down 9 in Soymeal, down 168 in Soyoil, and down 180 in Palm Oil.   Malaysian palm oil prices were down 46 ringgit at 3,646 (basis June) at midsession following rival vegoils.  A steep drop in global vegoil demand has triggered massive long liquidation in soyoil futures.  Managed funds have also reduced their net grain longs due to better global weather and before USDA report.  It appears buying interested has been tabled for now until there is a good reason from either tight U.S. supplies or weather.  For now, U.S. Midwest spring weather is favorable.   In South America, Argentina’s bottom line looks quite favorable for crops and fieldwork during the next two weeks.  Brazil should be mostly very good as long as rain resumes late next week and into the following weekend as advertised.  On Wednesday, USDA the 2021 soybean acreage number is shaping up to come in just under 90.0 mil with a range from 86.1 to 91.61 vs 83.1 last year.  U.S. Quarterly stocks are estimated to be 1.543 bil bu vs 2. 255 bil a year ago, and 2.933 on Dec 1, 2020.


Wheat futures were mostly steady overnight after giving up ground last week.   May CBOT wheat is at 6.14-1/4, up a penny.  May KC is down 1-1/2 cents to  5.66-3/4.  May MPLS is up 1-1/4 cents to 6.15-1/4.  The nearby winter wheat contracts are now below their 20, 50 and 100 day moving averages while having lost nearly $1.00 per bushel since the Feb 24 highs.  Managed money has taken their net long SRW wheat position from long to an estimated 3,000 short as weather turns more favorable.  Dry U.S. north plains and a warm start to April could begin to dry U.S. HRW soils.  The market is showing signs of being technically oversold on the pull back which could lead to end user buying interest.  The blockage of the Suez canal is slowing the flow of goods and raising World ocean freight values.  China sold 1.03 million tons of wheat, or 25.75% of the total on offer, at an auction of state reserves last week, the National Grain Trade Center said.  Chinese feed makers have been scooping up wheat from reserves to substitute for more expensive corn.  USDA’s March report has the trade estimating wheat stocks at 1.278 bil bu vs 1.415 last year and 1.674 on Dec 1, 2020.  The trade also estimates U.S. 2021 all wheat acres at 45.0 vs 44.3 last year.


Cattle calls are steady to higher with the majority of last week’s cash trade at $115 to $116, $1-2 higher than last the previous week supporting the market.  Boxed beef trended higher during the week, too with choice carcasses gaining 8.84 and Select finishing 8.14 higher on the week.  Retail markets are moving to a more spring-time demand tone and growing domestic consumer demand supporting retail values.  Strong retail values should bring follow through in the cash market, keeping optimism of higher cash trade again this week.  Feeder cattle had a strong week, but will be watching the grain markets this week for price direction.  Wednesday’s Acres and Grain Stocks report will be volatile for prices, and should set the tone for the feeder market by the end of the week.  Front month contracts have been closing with a premium to the deferred contracts as the market has been bull spreading with the strong cash as support.


Hogs are called higher.  Cash markets stay strong and supportive for the front month April contract.  April closed over the $100 level, and is showing no signs of a top, as tighter hog supplies strengthen the cash market.  Weekly hog slaughter estimates with Saturday’s kill were 2.551 million head, down 220,000 head from last year, but slightly above last week.  Carcass cutout values closed Friday down 1.71 to 107.53.  Despite the soft Friday close, hog carcasses and demand stay strong, supporting the hog market overall.  Technically, the path and momentum is still higher while the market probes for a top, and the fundamentals are supportive, but the market is extremely over-bought and due for some form of correction .


Matthew Strelow

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