TFM Sunrise Update 4-25-2022


Corn futures were weaker overnight with outside market pressure noted.  July corn was down 3 cents to 7.86 while dipping below 10-day moving average support.  Dec was down 5-1/2 cents to 7.19.  Prices continue to ease from overbought conditions slowing Global economies, even as Russia’s attack on Ukraine’s port cities point to a lack of corn exports.  Ukraine’s corn areas are seen shrinking 31% this year, as well as spring barley and sunflowers as the Russian invasion takes a toll on the country’s agriculture sector, according to estimates from Ukraine’s Club of Agrarian Business.  Weekly U.S. Export Inspections will be out later this morning.  The dollar is making a new high this morning, crude is sharply (4.24) lower and stock index futures are seeing follow-through weakness, down 240 points from Friday’s drop.  Nat gas is lower on warmer U.S. temps.  Gold, silver, copper, coffee, cocoa, sugar and cotton are lower as most commodities ease due to more China Covid lockdowns and concern their imports will drop.


The soybean complex was lower overnight including double digit declines in beans.  July futures fell 21 cents to 16.67.  Nov beans were down 17 cents to 14.88-1/4.  Meal is down 5.50 in the July contract to 446.60 and bean oil is off .89 to 79.62.  On Friday, Managed funds were net sellers of 14,000 soybeans, 8,000 soymeal and bought 4,000 soy oil.  They are estimated to be long 365,000 corn 166,000 soybeans, 95,000 soymeal and 106,000 soy oil.  Chinese Ag futures (SEP 22) Soybeans were up 13 yuan overnight; Soymeal down 77; Soy oil up 204; Palm oil up 386; Corn down 19;  Malaysian palm oil prices overnight were down 100 ringgit (-1.57%) at 6255.  Soy oil prices are still rising in both Brazil and the United States, reflecting the high world demand.  Despite the end of truckers’ strike in Argentina, the country is expected to produce a lower volume of soybean by-products this season because of the lower supply of soybean.

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Wheat futures were firm overnight despite new highs in the greenback.  July Chicago wheat gained a nickel to 10.80-1/4.  July KC wheat was up 9 to 11.58-1/2 supported by a forecast for drier and warmer U.S. weather.  July MPLS wheat was up 7 to 11.69-3/4 supported by wet and cool weather slowing planting.  KC and MPLS wheat futures are gaining on Chicago wheat and corn.  Chicago and KC contracts are consolidating after running into resistance rounded off at 11.50 and 12.00, respectively.  The next downside target for July Chicago is now near 10.50.  U.S 2021/22 wheat carryout is expected to be near USDA’s 678.  U.S. 2022/23 wheat carryout is estimated to be near 500-814 vs USDA 731.  The key is the final U.S./World 2022 supplies.


The cattle market is called mixed to lower.  Cattle on feed numbers were heavier than expected for the second straight month.  Total cattle on Feed totaled 12.1 million head as of April 1st, 102% of last year, and above market expectations.  This was the highest April 1 inventory since data was kept starting in 1996.  Placements last month were at 100% of last year, but nearly 85 above expectations.  Marketing totals were in line at 98% of last year.  First glance shows a heavier cattle supply than anticipated, and that should weigh on prices this morning.  The cattle market was building last week, fueled by the cash market.  The heavier than expected cattle on feed numbers will likely weigh on the market to start the week, but it will still be the development of the cash market and this Friday’s expiration of the April contract that could limit market weakness.  USDA cold storage showed some slight product build as total pounds of beef in freezers were up 1% from the previous month and up 11% from last year.  This reflects the above average carcass weight being processed, adding more pounds into the cooler as overall demand has been good.  Feeder cattle finished mixed to end the week, and Friday saw price supported by the softness in grain markets.  The heavier placement numbers on the Cattle on Feed report will be a limiting factor to start trade this week.


The hog market is called mixed.  Hog futures saw some end of the week recovery, as the cash market tried to find a little footing on Thursday and Friday.  June hog futures consolidated and held support at the 40 and 50-day moving averages.  This will set up an interesting scenario start to the week.  If prices break lower, there is additional downside room, with the next support at the $115 level.  Cash markets have been.  Friday’s closing direct trade was lower, losing -6.91 to 99.13, and the five-day average settle to 102.47.   The lean hog index gained .32 on the day to 101.25.   For the week, the index traded 2.06 higher.  The strong cash premium to the cash market is still a concern and will likely stay as a limiting factor to near-term rallies.  Pork retail values were 1.08 higher at the close on Friday to 111.28 on movement of 336 loads.  Pork carcasses were be $1-2 higher on the week.  The USDA released the Cold Storage report on Friday after noon and frozen pork supplies were up 2% from the previous month and up 8% from last year.  Stocks of pork bellies were up 13% from last month and up 60% from last year.  Growing pork supplies are likely a reflection of the heavier overall slaughter weights, and the slowing export demand seen for U.S. pork.  Lean hog charts looked cautious going into the end of the week, and growing pork supplies will be a concern.  The short-term path still looks lower going into this week.


Matthew Strelow

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