TFM Sunrise Update 4-4-2022


Corn futures were up overnight, and this morning are trading 8-3/4 cents higher in the May contract at 7.43-3/4.  While the December contract is up 7-1/2 cents at 6.95-1/2, with a key support area of 6.80 to 6.72 being just below.  This morning, the market appears to be adding war premium after Russia’s targeting of a key Odessa port over the weekend.  On Friday, the USDA announced that there was 132,000 mt sale to Unknown, and there was talk that China’s Sino Grain may be buying US corn through Cofco.  Managed funds were sellers of an estimated 4,000 contracts of corn and are estimated to be long 355,000 contracts down about 4,000 from the previous week, according to the CFTC.  Weather in Brazil is forecasted to be warm and dry which could stress the Safrina crop.



Soybeans are trading higher this morning after trading on both sides of unchanged overnight.  The May is up 7 cents at 15.89-3/4, while the November contract is up 6 cents at 14.12-3/4.  With key areas of support just below the market at 15.75 in the May and 14.00 in the November contracts.  As for the products, soybean meal is higher this morning trading around 453.90, but soybean oil is lower this morning, trading near 71.10.  Demand from China will be key moving forward, as their zero tolerance on COVID raises concern about energy and commodity imports. Though the USDA will not estimate 22/23 supply and demand until the May, based on their acreage estimates, some in the market fear that carryout may be as high as 450 mbu.  There has also been talk that due to vessel congestion in Brazil, China may be purchasing US soybeans for April and May slots.  Managed funds were sellers of an estimated 14,000 soybean contracts on Friday, and the CFTC estimates them to be long 156,000 contracts down about 14,000 from the previous week.

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The wheat complex is firmer this morning, as it appears the market is adding war premium.  The May Chicago contract is up 9 cents at 9.93-1/2, May Kansas City wheat is up 12-1/4 cents at 10.25-1/4, and May Minneapolis wheat is up 11-1/2 cents at 10.76-3/4.  There have been rumors of increased Russian and EU exports which have added resistance to the market and offset the warm and dry forecast for the US southern plains.  It’s been reported that Australia may be sold out of wheat in the first half of 2022 as buyers from SE Asia and the Midde East look to replace supplies from the Black Sea region.  Similarly, India’s exports may surge as buyers from north Africa look to do the same.  Managed funds were sellers of an estimated 3,000 Chicago wheat contracts on Friday, and according to the CFTC, they are estimated to be long 19,000 contracts.



Cattle is called to open mixed to lower.

Cattle futures saw more selling pressure to end the week, as long liquidation and technical selling pushed the market to a disappointing close for the week.  April options expired on Friday, and that may have added to the selling pressure in the market. Regardless, it was a difficult close with prices breaking below the 10 and 20-day moving averages, failing to hold the $140 level. June cattle were also disappointing but held the bottom of the trading range and the 20-day moving average, but the weak price action will likely weigh on the market going into today’s trade.  There was moderate cash trade in the North this week at $138 to $140 live and mainly $222 dressed, steady to $2 higher from last week. Moderate to active trade developed in the South at $138 live, steady with last week.  The Choice cutout moved $5.98 higher this week, while Select added $9.75/cwt. The seasonal price advance is expected to continue with warmer weather and spring grilling demand on the horizon.  Feeder cattle saw strong selling pressure except for the front month April contract. Strength seen in deferred corn futures pressure the back end of the feeder market on Friday. Closes were technically soft and turned the charts more negative. This will likely lead to additional selling pressure next week, especially if the corn market remains strong.  The Feeder cattle index gained 0.35 to 155.76, and the premium of futures to the index is a limiting factor.  The future direction of grain trade will likely have some impact on the cattle markets going into this week. Cattle prices are still range-bound, but the soft closes have the markets testing the bottom of those ranges.



Hogs are called to open mixed to lower.

Hog futures saw mixed trade to end the week as bear spreading was noticeable in the market. Front month contracts saw selling pressure due to weakening cash markets, but deferred futures traded higher after the lack of expansion being noted in last week’s hogs and pigs report.  Friday ended a tough end of the week for hog futures after the bullish Hogs and Pigs report on Wednesday. The price reversals of Thursday saw additional follow through into the end of the week. Weekly charts look weak overall, and more long liquidation will be likely to start the week.  The cash market has been trending softer in the near term, adding to the selling pressure. National Direct Trade at midday was unreported with no comparison to Thursday, but the 5-day average softened to 103.69.  The Lean Hog Cash Index was higher, lost .53 to 103.13 and did finish the week 1.63 higher. The Apr contract is now trading at a discount to the index of 1.83, which could be supportive and help stabilize the front-month contract.  Pork retail values were softer on the close Friday losing 4.12 to 103.60 on a load count of 207 loads as hog carcasses closed nearly $4.00 lower than Monday’s close.  Estimate slaughter for Friday was 467,000 head, and for the week, 2.381 million, which is running nearly 25,000 under last year.  Selling pressure stayed in the front end of the market to end the weak, as the technical picture softened and opened the door for long liquidation in an over-bought market. More selling pressure will likely start the week on Monday


Scott Masters

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