TFM Sunrise Update 4-1-2022

CORN

After trading both sides of unchanged overnight.  The corn market is mixed this morning with the nearby May contract down 3-1/4 cents at 7.45-1/2 while new crop Dec is up 2-1/4 cents at 6.86.  For the week, May corn is 8-1/2 cents lower in contrast to the new crop December contract being up 17 cents.  Though the market reacted positively to yesterday’s Quarterly Stocks and Prospective Plantings report, it ran into bear spreading following the report due to the fact that though the Acreage numbers came in at 89.5 million, significantly below expectations (bullish), while the Stocks numbers came in neutral, near expectations.  There are thoughts that if this acreage number is realized, it could drop the 22/23 carryout to 770 mbu versus the USDA’s Outlook Conference estimate of 1,965 mbu. after factoring in a 1,120 mbu carryout due to higher exports for 21/22.  Managed funds reportedly sold an estimated 15,000 corn and are now estimated to be long 361,000 contracts.

 

SOYBEANS

Soybeans are trading lower this morning after being on both sides of unchanged overnight.  May soybeans are down 6 cents at 16.12-1/4 and November soybeans are down 8-1/2 cents at 14.12.  As for the products, May soybean meal is 467.0 down .50 and May soybean oil is 69.43 down .51.  For the week, the May soybean contract lost 98 cents, while the November soybean contract is down 84-3/4 cents.  While the trade was anticipating more 2022 soybean acres the USDA’s estimate set a new record high of 91 million, which implies that the high cost of fertilizer had a much larger impact than expected.  If realized, this increase in acres could potentially add 150 mbu to the USDA’s Outlook Conference 22/23 carryout estimate of 305 mbu.  The primary question for the market moving forward is export demand.  How strong will China’s demand for US supplies be with Brazil having limited supplies after August?  Managed funds reportedly sold an estimated 22,000 soybeans, 5,000 soymeal and 8,000 soybean oil contracts. They are now estimated to be long 141,000 soybeans, 99,000 meal and 64,000 soybean oil contracts.

 

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WHEAT

The wheat complex is firmer this morning, with the Chicago May contract up 17 cents at 10.23, May KC up 12-3/4 at 10.42-1/2 and May Minneapolis contract up 14-1/2 at 10.94.  All of the contracts are down on the week, Chicago 79.-1/4 cents, KC 68-1/4 cents and Minneapolis 10-1/4 cents.  Following yesterday’s Quarterly Stocks and Prospective Plantings report the wheat complex initially traded higher due to lower-than-expected US 2022 spring wheat acres, before sellers entered the market on a lack of any new news.  Managed funds were net sellers of an estimated 5,000 Chicago wheat and are now estimated to be short 24,000 contracts.

 

CATTLE

Cattle is called to open mixed to lower.

Cattle futures saw selling pressure as livestock markets were pressured in general by a strong move in corn prices after the USDA Planting intentions reports. Cattle futures posted moderate to strong losses during the session on Thursday.  April live cattle prices finished with weak price action, closing near the low end of the trading range on Thursday. Prices did hold support above the 20-day moving average, but the disappointing close could bring some selling pressure into the end of the week. The market may see some choppiness today, as April options are set to expire.  The cash market added more business on Thursday. Some bids prices did rise, supported by the firm retail market, and light northern dress trade was complete at $222-225, at the top end of the range. Trade will likely be wrapped up for the week but may see some clean up trade.  Beef retail values were higher with Choice carcasses gaining 1.35 to 268.39 and Select was 4.88 higher to 262.34 Load count was light at 95 loads.  Feeder cattle saw strong selling pressure with the move higher in corn prices, with multiple contacts posting triple-digit loses.  March feeders expired yesterday and closed at 155.900. The index gained .35 to 155.76, and the premium of futures to the index is a limiting factor.  The future direction of grain trade will likely have some impact on the cattle markets going into next week. Cattle price are still range bound, but live cattle are still building an uptrend in the near-term, on the prospects of lower production moving into the second quarter.

 

HOGS

Hogs are called to open mixed to lower.

Hog futures posted a strong open after the Quarterly hogs and Pigs report but selling pressure and technical selling pushed markets lower posting strong losses yesterday.  Most of the futures markets posted technical reversals on the daily charts with the negative price action. June hogs closed at the bottom of the trading range. This could set up the market for further long liquidation and a challenge of support levels below. The first target will be the 20-day moving average at the $119 level.  The cash market has been trending softer in the near-term, adding to the selling pressure. National Direct Trade at midday was unreported due to confidentiality, but the 5-day average softened to 104.98. The lean hog cash index was higher, gaining 0.10 to 103.66. The Apr contract is now trading at a discount to the index of 1.91, which could be supportive and help stabilize the front month contract.  Pork retail values were firmer on the close, gaining 4.00 to 107.72 on a load count of 358 loads. The strong retail close could limit selling pressure on the market open.  Buyers jumped into the hog market at the start of trade yesterday, but the sellers ended the day. This could be tied to profit taking from the end of the month and quarter trade on the last day of March. More selling pressure will likely start the day on Friday on technical weakness.

 

Author

Scott Masters

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