TFM Sunrise Update 4-13-21

CORN

Corn futures were firm overnight with July up 3 cents to 5.59 and Dec up 3-1/2 to an overnight session high of 5.00.  Corn contracts are consolidating as long-liquidation keeps the recent rally in check heading into planting season.  The July/Dec is trading closer to next support near +64.  Planting progress was pegged at 4% completed in yesterday’s weekly USDA tally as of April 11, up 1% from the 5-year average.  This was below trade guesses of 5 to 6% complete.  Rains from the weekend low pressure system is wrapping up across much of the Midwest, and weather for the rest of the week looks to be fairly quiet and dry.  Last evening’s GFS model run was more aggressive with a weather disturbance April 22 – 24 in the central U.S. compared to the midday GFS model run.  This led to the precipitation increases in areas such as the Delta, West Texas, southwest Oklahoma, South Dakota, and the western Corn Belt such as Iowa.

SOYBEANS

Soybean futures are experiencing ‘turn-around Tuesday’ reversal strength this morning after rallying off of Monday’s lower closes overnight.  July beans are up 9 cents to 13.88 while attempting to regain 50, 20 and 10-day moving averages that are converging at and above 14.00.  Nov beans are up 8 to 12.58-1/4.  Negative reaction to the March 31 USDA report has had a lingering affect on beans the past week couple of weeks as the market gives way to an overbought condition.  Chinese Ag futures (May) settled down 42 yuan in soybeans, up 4 in Corn, down 62 in Soymeal, down 50 in Soyoil, and down 144 in Palm Oil.  Malaysian palm oil prices were up 25 ringgit at 3,675 (basis June) at midsession with gains limited by rising output and inventories.  A recent round of ASF outbreaks has wiped out at least 20% of the breeding swine herd in northern China, according to some estimates, curbing demand for soymeal.  Soymeal futures traded on the Dalian Commodity Exchange have fallen 10% since they hit record highs in January on worries over demand due to the outbreaks.  Overnight, Egypt tendered for 30,000 tons of optional-origin soyoil, 10,000t sunoil.

WHEAT

Wheat futures were firm overnight after slumping to begin the week.  The complex is settling into a consolidation pattern while potentially trading an ‘inside day’ for the second consecutive session.  July CBOT futures were up a nickel to 6.36-1/4, KC up 1-1/2  to 5.88-1/4; and, MPLS up 3-3/4 cents to 6.54.  Rain this month has eased drought concerns and helped keep the recent price bounce from getting out of hand.  Traders will now sit back and digest a second round of cold weather forecast for this upcoming weekend.  Temps are not expected to get cold enough to cause any damage to the greening-up wheat crop.  U.S. Winter Wheat headed was 5% versus 4% last week, 6% a year ago, 7% average, according to weekly USDA data.  U.S. Winter Wheat was rated 53% good-to-excellent, equaling the trade estimate and last week’s rating versus and 62% a year ago; 30% fair (31% last week, 28% a year ago); 17% poor to very poor (16% last week, 10% a year ago).  U.S. Spring Wheat planted was 11% (trade estimate was 8%) versus 3% last week, 5% a year ago, 6% average.  Tender Activity has Japan seeking 90,000 tons of optional-origin wheat; Algeria seeks 50,000 tons of optional-origin wheat; And, South Korea bought 66,000 tons of optional-origin feed wheat.

CATTLE

Cattle calls are mixed for today after the market finished mostly lower on Monday following Friday’s weakness.  Front month cattle fell to support at the 20-day moving average under the June contract and could face more downside to trend-line support near 120.  Cash trade was undeveloped to start the week, but is expected to stay firm this week.  The cash market may be slow to develop this week with the weakness in futures possibly causing some bids to soften from packers.  Carcass values closed mixed with Choice down .76 to 271.41, but Select was up 2.09 to 266.16.  Moderate demand was noted at 112 loads.  The strong retail values should help support the cash market.  Technically, the market was over-bought, and this correction could help set the stage for a push higher into spring as long as the fundamentals stay favorable.  In the meantime, look for choppy action until the cash market develops.

HOGS

Hogs are called steady to lower.  Bearish key reversals were posted to begin the week following four consecutive days of new contract highs.  With the market heavily overbought, prices have room to fall to value levels.  June hogs, at 106.15 may be targeting the price gap at 103.550 set on March 26, but could drop further with support near 100, and still keep the uptrend intact.  April hogs expire on Friday, and hold a 2.155 premium to the index, which could limit upside.  The cash index traded higher again on Monday, gaining .43 to 101.37, reflecting the still strong cash market.  Pork carcasses closed softer, losing 3.07 to 110.10, with large drop in belly prices.  The market is concerned that retail values, though historically strong, may have topped out.  Hog slaughter is still significantly running under last year, and with the strong demand, the trend will likely continue, keeping prices supported after this price correction.

 

Author

Matthew Strelow

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