TFM Sunrise Update 3-5-21


Corn futures were up 6 cents in the May contract to 5.38-1/2 overnight.  Dec corn traded 3-1/2 cents higher to this week’s new contract high resistance at 4.79.  For the week, the 2021 new crop contract is up 9 cents and May is down 9 cents while slipping into a lower near-term trend.  New highs in crude is helping offset the bearish impact of a rising dollar and lower stock market for corn.  USDA will release its March Supply/Demand report on Tuesday.  Trade estimates for U.S. 2020/21 corn carryout are near 1.470 mil bu vs USDA’s Feb estimate of 1.502.  Some private estimates are as low as 1.100.  Should demand near 15.200, U.S. 2021/22 carryout could be 1.210 to 1.50 bil bu.  World corn stocks are estimated near 284.1 mmt versus USDA 286.5.  Trade estimates for Brazil’s corn production is near 108.3 mmt versus USDA 109.0 and Argentina near 47.0 mmt versus USDA 47.5.  Overnight, Algeria is believed to have bought 30,000 tons of optional-origin corn.


Soybean futures were unchanged overnight.  May beans, at 14.15 gained 10 cents on the week, and Nov is at 12.30 versus last Friday’s settlement of 12.23.  The dollar is up 28 basis points this morning to a it’s highest level since the end of November.  This, combined with a retreat in the stock market looks to act as a wet rag over the bull trend in the bean complex ahead of the weekend and March USDA report.  Chinese soybean, soyoil and Malaysian palmoil futures continue to make new highs, supported by talk of Biden increasing soyoil use for jet fuel.  Meanwhile, mixed weather in South America featuring wet conditions in Brazil and the opposite in Argentina is providing underlying support.  In Argentina, dryness continues to be a serious concern and crop stress will continue until a generalized soaking rain occurs. Conditions in the nation will be notably dry through Tuesday before some opportunity for at least a little greater moisture.  According to the Buenos Aires Grains Exchange, just 10% of Argentina’s soybeans were in good or excellent condition as of Thursday, a shockingly low portion.  However, some 70% of the crop is in normal condition, meaning that 20% of the crop is in fair or bad condition, up from 15% last week.


Wheat futures were under pressure from a higher dollar overnight, but did manage to stay narrowly mixed.  May CBOT wheat is unchanged at 6.51, May KC down a penny to 6.20; And, May Mpls steady at 6.43-1/2.  U.S. weather maps hint of rains for parts of U.S. HRW wheat growing areas.  March winter wheat weather forecast calls for warm temps and normal rains in the east part of HRW and most of SRW areas.  April weather could see more of the same. Trade estimates for Tuesday’s USDA report show U.S. 2020/21 wheat carryout near 839 mil bu vs USDA 836.  World wheat ending stocks are estimated to be near 304.3 mmt vs USDA 304.2.  Tender Activity overnight included South Korea seeking 140,000 tons of optional-origin feed wheat.  Philippines bought 55,000 tons of optional-origin feed wheat.


Cattle calls are for steady to lower pressured by a steady cash market, and spillover pressure from a strong sell off in Equity markets.  Outside markets could help set the tone in cattle prices again today.  Cash trade is mostly complete for the week with live trade at $114, and dressed trade at $180, mostly steady with last week and a disappointment for the markets.  Retail carcasses have trended lower this week, possibly signaling a seasonal top in beef prices.  Prices closed mixed with Choice carcasses gaining .85 to 233.88, but Select was 2.56 lower to 221.68.  Product movement was good at 127 loads, but Choice carcasses are trading $7.00 under last Friday’s close.  Technical closes were weak on live and feeder cattle charts, thus opening the door for additional long liquidation as prices test key support levels.  For bullish traders, the setback could be viewed as an opportunity to buy value, particularly if the strength in the hog market offers support.


Lean hog calls are steady to higher.  Despite a strong week of export sales at 59,600 MT and shipments of 40,000 MT, April hogs failed to push higher and consolidated within Wednesday’s Trading range.  However, cash prices and the Lean Hog index stay strong with the index gaining .64 to 83.27, while trading a 4.00 discount to the April contract.  Pork carcasses finished 2.11 higher to 93.52 on moderate product movement of 319 loads. The strong demand tone continue to fuels the hog market.  Estimated slaughter at 497,000 head is strong.  Ongoing reports of AFS issues in China is helping support hog prices well into 2021 on the prospects of export demand and tighter supplies of U.S. hogs.  Deferred contracts from October and beyond stay in their strong technical trend, posting new contract highs again on Thursday.


Matthew Strelow

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