TFM Sunrise Update 4-27-2021


Corn futures continued to trek higher overnight.  Nearby May futures needed the expanded limits to make room for the parabolic move upward.  The contract, as of this morning is sitting at it’s new high of 7.20-1/2, up 40 cents.  July is up 26-1/2 cents to a new high of 6.84, and Dec rose to a new high of 5.93 on gains of 25 cents.  Heading into today, Managed Money was net long an estimated 536,000 contracts.  USDA said U.S. farmers were able to plant 17% of their intended corn acres as of Sunday, in line with the average estimate in a Reuters poll of analysts.  In a report released on Monday, the USDA said corn planting progress was up from 8% a week earlier but behind the five-year average of 20%.  Pre-report trade estimates from 11 analysts surveyed by Reuters for the week ended April 25 ranged from 14% to 21%.  Spring rallies hardly ever cause U.S. farmers to significantly increase their corn acreage plans between March and June, but this year could be different given the scope of the price rally and how early it is.


Soybean and soyoil futures made new highs overnight again.  Nearby May beans went to 15.98 on gains of 29 cents.  July was up 27 cents to a new high of 15.66-1/4.  Nov was up 17-1/2 cents to 13.79-1/2.  Nearby May bean oil gapped higher, adding 2.50 to establish a new high at 67.71.  Soybean planting was 8% complete by Sunday, the USDA said, matching the average analyst estimate and ahead of the five-year average of 5%.  Chinese Ag futures (September) settled up 46 yuan in soybeans, up 14 in Corn, up 33 in Soymeal, up 8 in Soyoil, and down 18 in Palm Oil.  Malaysian palm oil prices were up 118 ringgit at 4,012 (basis July) at midsession following rival vegoils.  Managed Money is net long an estimated 223,000 soybeans; 58,000 soymeal, and; 118,000 soyoil.

Higher U.S. domestic basis and concern about summer weather is helping push futures to new highs.  Fundamentals for beans and soyoil support the trend.  There is talk that Brazil soybeans may now work into the US. US 2020/21 soybean carryout could conceivably fall below USDA’s 120 mil bu forecast.   2021 acres times trend yield suggests a 2021/22 soybean carryout near 25.  Summer weather will need to be perfect.


Wheat futures rose sharply overnight while posting more than 20 cent gains in Chicago and KC.  July CBOT futures hit 7.62-1/2 on gains of 23 cents.  Managed Money was net long an estimated 48,000 contracts of SRW wheat heading into today.  KC wheat was up 28-3/4 cents to a new high 7.37-1/2.   July MPLS wheat was up 14 cents to 7.62-3/4.  The USDA rated 49% of the winter wheat crop in good-to-excellent condition, a drop from 53% the previous week. Analysts on average had expected a smaller decline of 1 percentage point.  For spring wheat, the USDA said the crop was 28% planted, in line with trade expectations and ahead of the five-year average of 19%.  Concern remains for West TX and the southwestern part of the HRW wheat Region due to the potential for very little rain in the next two weeks.  Last evening’s GFS model run suggested greater moisture in the southwestern part of the HRW wheat Region, such as the TX Panhandle and western OK, May 6 – 8.


Cattle futures are called steady to firmer after starting the week on firm footing while working off early session selling pressure.  Cattle on Feed data at the end of last week was slightly under expectations, but still keeps the front month supply of cattle relatively heavy.  The cash market was quiet to start the week, typical for a Monday.   We look for a steady to higher cash trade, but the packers seem to still have the leverage.  Carcass values are historically strong, and maintained that strength to begin the week.  Choice carcasses were sup 1.43 to 285.20 and Select was up 2.22 to 274.35 on light movement of 87 loads.  Choice carcasses at $280+ should support the cash market as packer margins remain strong.  In feeders, strong grain markets will limit upside, and could keep pressure on the entire cattle market.


Hog calls are mixed to higher as the market looks to re-challenge contract highs.  The strong demand tone and prospects for longer-term demand in the wake of tighter hog numbers should help the cause.  Cash remains strong, as the Lean Hog Index continues to climb.  The index gained .52 to 106.51, and is at a 2.74 discount to May futures, limiting the front month.  The strength in the market is the retail demand.  China is still dealing with ASF issues, and the hog market is expecting the Chinese and global demand for U.S. pork to continue.  Pork carcasses were 2.64 lower to 109.30, but trading at all-time high values with the exception of last year’s COVID aided price rally. The softness in retails on Monday my limit upside prices.  The strong rally in grain markets may support the deferred futures contract, as December hogs made new contract highs yesterday, slow expansion and possibly further tightening the U.S. hog herd.


Matthew Strelow

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