TFM Sunrise Update 4-15-21


Corn futures made new highs overnight with nearby May reaching 6.01-1/2 on gains of 7-1/2 cents.  The next objective is 6.10 as the market reaches overbought territory.  July was up 7 to 5.86-1/2 with index fund rolling now complete, though open interest is on the rise.  Dec rose 5 cents to 5.16-1/4.  Trade estimates for this morning’s USDA Weekly Export Sales are 500,000 to 900,000 tons for old crop, zero to 300,000 tons for new crop.  Historically tight ending stocks, combined with dryness concerns in Brazil and parts of the U.S. keep prices underpinned at the mid-point of this month.  Colder weather in the U.S. Midwest forecast could slow planting and early germination of the crop that is already planted.  U.S. 2021 corn plantings may not increase from USDA’s March guess due to higher input cost and trouble getting new seed supplies.


Beans were higher overnight, but still mostly sideways.  July was up as much as 9-3/4 cents to 14.12 where the contract’s lateral 10 and 20-day moving averages lie.  Nov beans were up to 12.70-1/2 on gains of 6-1/2 cents.  Trade estimates for this morning’s USDA Weekly Export Sales minus 100,000 to +200,000 tons for old crop, zero to 500,000 tons for new crop.   In today’s NOPA Crush Report, U.S. soy crush is seen at 179.179 mil bu.  The U.S. soybean processing pace jumped in March following a smaller-than-expected crush the prior month, propelled in part by strong demand for vegetable oils to make biofuel.  If realized, it would be the sixth-largest monthly crush on record and up significantly from February, when NOPA members processed just 155.158 mil bu, a 17-month low.  But it would be below the March 2020 crush of 181.374 mil bu, which is a record for the third month of the year.  Chinese Ag futures (September) settled up 8 yuan in soybeans, up 21 in Corn, down 20 in Soymeal, up 128 in Soyoil, and up 114 in Palm Oil.  Malaysian palm oil prices were down 21 ringgit at 3,705 (basis June) at midsession weakened by rising output, container shortage hampering exports.


Wheat futures were up a nickel on follow-through from yesterday’s breakout to the upside fueled by new highs in corn and a lower dollar.  The major trend looks more positive with MPLS spring wheat leading the charge for the wheat complex with new highs posted yesterday while breaching the a triple top formation on the charts.  This week, KC wheat, at 6.16 (July) reached a 50% retracement, and CBOT wheat, at  6.56 (July) a 68% retracement to the January highs on the continuous chart which may lead to choppy action into the weekend.  Forecasts for colder temps across the U.S. South Plains, long-term dryness in Canadian wheat areas, as well as the EU and parts of the U.S. will help keep prices underpinned going forward as some market participants position for any future global weather issues.  Paris wheat jumped 1.4% yesterday amid a dry European forecast.  Trade estimates for this morning’s USDA Weekly Export Sales are 50,000 to 200,000 tons for old crop, 300,000 to 550,000 tons for new crop.  In tender Activity, Philippines seek 380,000 tons of optional-origin milling/feed wheat, Japan bought 90,169 tons of U.S./Canadian wheat in a routine buy, Algeria bought 200,000 tons of optional-origin wheat.


Cattle calls are mixed.  Futures finished lower yesterday as sellers kept the pressure on the market while waiting for cash trade to develop. The Fed Cattle Exchange had bids ranging from $120.50 to $126, but no completed trades overall.  Countryside cash stayed quiet, as bids stayed undeveloped, but asking prices held firm around $125 and $200-205 for dressed trade.  Choice carcasses gained 2.80 to 272.91, and Select was .77 higher to 267.90 with a moderate load count of 108 loads.  The staying power of carcass values at these level should help maintain cash bids and keep the cash trend steady to higher.  Slaughter on Wednesday was estimated at 115,000 head, 5,000 less than last week.  The tighter cattle numbers should keep packer inquiry into cattle firm, especially given the value of carcasses.  The cattle market is suffering from overbought conditions and has quickly worked off that status.  Support here is key, so keep an eye on the cash market going into the end of the week.


Hogs are called steady to higher as buyers step back into the market, supported by ongoing strength on the fundamental side of things.  Estimated slaughter on Wednesday was at 480,000, down 14,000 head from last week.  The tighter run of hogs has helped keep a bid under the cash market.  The Lean hog index traded .49 higher to 102.38.  April is still at a 1.22 premium to the index, with contract expiration tomorrow limiting upside potential for the contract.  Retail pork carcasses were .76 higher to 113.25 at midday, but faded at the close, losing 2.40 to 110.09.  Movement was good at 174 midday loads.  The weak retail action may pressure the market on the open.  Weekly export sales this morning could help set the tone for the day.  Overall, the strong fundamentals are battling the technical picture, which turned softer this week.  June hogs need to push back above Monday’s high of 110.075 to break the reversal signal on the charts to start the week.



Matthew Strelow

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