TFM Sunrise Update 4-19-2022


Corn futures probed higher into new highs overnight before turning mixed.  Nearby May futures hit a new high at 8.19-3/4, but are down 2-1/4 cents this morning to 8.11.  July corn rose to 8.14 and December reached 7.55 before trimming gains.  Talking points for the bull corn market center around lower South America corn exports that could translate to increased demand for U.S. corn and the slow start to U.S. corn planting.  However, the U.S. Midwest 30 day forecast suggests farmers could get their intended corn acres planted on time.  Weekly Progress data on Monday afternoon showed 3% of the U.S. crop planted compared to trade estimates for 5%, 2% a week ago and 7% last year.  The average for this time of year is 6%.  Outside markets have the dollar firm, crude 1.30 lower and stock index futures mixed.


The soybean complex was mostly higher overnight again led by soy oil futures which made new highs on Monday and saw a test of those levels last night.  May beans are up a nickel this morning to 17.19-3/4.  July is up 2 to 16.95-1/4.  Nov is up 1-3/4 cents to 15.22-3/4.  Meal contracts are firm, too.  Soyoil futures tested Monday’s new highs overnight before slipping lower this morning on profit-taking.  The war in Ukraine continues to push soyoil higher on the reduction of Black Sea exports and Ukraine’s 2022 crop acres.  U.S. soybean planting progress was pegged at 1% versus trade estimates for 2%, 3% a year ago and the 2% average.  There is a hint of caution in the markets going into today’s trade due to China covid lockdowns that could slow their economy and commodity imports.  Weekly U.S. soybean exports were 35 mil bu versus 8 last year, but season-to-date exports are 1.689 bil vs 2.028 last year.

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Wheat futures are slightly lower this morning with July  Chicago and KC down 2 to 4 cents to 11.25-3/4 and 11.86-1/2, respectively.  July MPLS is down 2 to 11.76.  Spring wheat is 8% planted versus trade estimates for 9%, 6% a week ago and 18% a year ago.  The average is 9% for this time of the year.  Winter wheat weekly crop ratings showed 30% of the crop in good-to-excellent shape, down 3 points from the trade estimate of 33% and 2 points lower than last week.  53% of the crop was rated good-to-excellent a year ago.  7% of the crop is headed compared to 5% a week ago, 9% last year and the 12% average.  There is a wide range of guesses for this year’s 2022 wheat crop from 1,810 to 1,960 vs USDA 1,910 suggesting a carryout from 450 to 815 versus USDA’s 731.  Meanwhile, the Ukrainian war underpins the markets should Black Sea and EU exports see a reduction and Ukraine’s 2022 winter wheat crop is also reduced.


The cattle market is called steady to lower despite the prospects of higher cash trade this week.  June cattle had a strong start to the week, but faded, posting a daily chart bearish reversal on the charts.  Prices challenged the strong resistance barrier will be at the 50-day and 100-day moving averages near $137.500.  The failure at this level led to profit taking.  The technical picture looks weak, and some additional selling pressure is likely going into today.  Monday’s slaughter totaled 118,000 head, 6,000 less than last week, and 1,000 below a year ago.  Slaughter trends being tighter could start the signal of a overall tighter cattle supply.  Beef cutouts were mixed at the close Monday (Choice 271.78 -1.54; Select 259.46 +0.56), with light box movement of 107 loads.  The feeder market saw strong triple-digit losses.  Apr feeders are likely tied to the index, which lost 1.33 to 154.62 but is running at a discount to front-month futures and could be a limiting factor.  With corn prices pushing through the $8.00 a bushel price level, feeders became the automatic sell.  The near-term trend looks softer, unless the cash market can help build some support.


The hog market is called to open mixed to higher on follow-through from Monday’s session featuring bull spreading leading to strength  in the front month contracts, as the market may be anticipating hogs supplies to begin to tighten seasonally.  Hog futures used the momentum for the strong close last week to trigger additional buying support to start this week.  June hog futures crossed the 20-day moving average and rallied through the price gap on the charts.  The strong close at the top of the range may support a challenge of the most recent high.   The Lean Hog Index was firmer, gaining 0.79 to 99.98.  The deferred futures premium over the index is concerning and could be a limiting factor, as May takes over the new front month and is trading at a 16.545 premium to the index.  The hog market numbers are still expected to tighten, and the rate of slaughter may be our first indicator of supplies tightening. Strong retail values should support the market, cash markets will still be the key.  Prices do seem poised to re-challenge the recent highs if follow through buying can trigger additional money flow.


Matthew Strelow

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