TFM Sunrise Update 4-6-2022


Corn futures traded in a tight 4 cent range overnight and are mixed this morning with the May contract 1-3/4 cents lower at 7.58, while the December contract is up 3/4 of a cent at 7.07.  The old crop May contract is trading at the upper end of the range that it has been in from the beginning of March and again above both the 10 and 20-day moving averages, while new crop December continues to make new highs.  The market continues to be supported on lower Ukraine export supply, lower US 2022 corn acres and higher global export demand.  Due to the Russian attacks, Ukraine may only export 765 mbu corn versus the USDA’s estimate of 1,080 mbu.  World traders are looking for more sanctions on Russia today, as many feel the current sanctions have not been effective. There are rumors that in order to replace supplies bought from Ukraine, China may have bought 80-115 mbu more US corn which may be reported later this week or next.  Daily volume has dropped in half, from 500,000 in March to 250,000, which makes for more volatile price moves.  We estimate managed funds were net buyers of 13,000 corn futures yesterday, and to be long 368,000 contracts.



Soybeans futures are trading higher this morning after trading both sides of unchanged overnight.  The May contract is up 5-1/2 cents at 16.36 and the November contract is up 3/4 of a cent at 14.56-1/2.  The products are also firmer this morning, with May soybean meal up 80 cents at 466.7 and soybean oil up 51 points to 72.92.  Both old crop May and new crop November are back trading above the key 50-day moving average but just below the 10 and 20-day moving averages which offer nearby resistance.  Talk of higher demand for US soybeans has been supportive to the market.  Brazil’s export pace for February through March was a record 21 mmt, though US soybeans are competitive with Brazil August forward.  Daily volume has dropped from 400,000 in March to 200,000, which makes for more volatile price moves.  We estimate managed funds were net buyers of 13,000 soybean futures yesterday, and to be long 156,000 contracts.


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The wheat complex is lower this morning after opening the overnight session steady to higher.  May Chicago is down 7 cents at 10.38-1/4.  May KC is down 6 cents at 10.76-3/4, and May Minneapolis is down 8-3/4 at 11.03.  Both Chicago and KC July contracts settled above their respective 10 and 20-day moving averages yesterday which should provide support to the market.  Minneapolis spring wheat is trading at the upper end of its range, established since the beginning of March, and above the 20-day moving average which should provide support.  The April/May forecast for the southern plains is warm and dry, and the 2022 wheat crop will need to see some good rains, otherwise some see the wheat crop closer to 1,810 mbu versus the USDA’s estimate of 1,940 mbu.  Some also think the KC May contract could trade as much as 60-80 cents over Chicago from the current 36.  Daily volume has dropped from 200,000 in March to 75,000. This decrease in liquidity makes price swings more volatile.  We estimate managed funds were net buyers of 16,000 Chicago wheat yesterday, and to be long 47,000 contracts.



Cattle (Mixed to lower):

Cattle futures another day of long liquidation as money flow continues to move out of the cattle market, fueled by high grain prices and concerns regarding the consumer spending ability. The cash market is still developing this week but has seen light trade. Some Nebraska trade was registered at $140, building a trade range of $138-140 on the week, steady to firm with last week. Today’s slaughter totaled 125,000 head, even with last week, but 5,000 greater than a year ago. This heavier slaughter pace is keeping pressure on the market in general. Boxed beef values have been trading higher into the with Choice gaining 3.49 to 271.53 and Select 1.20 higher to 262.90 on movement of 123 loads. Retailers may be looking to step in the market to secure beef supplies with May and the start of grilling season around the corner. Feeder cattle fell under the weight of corn prices again on Tuesday as the market continued to break technically lower. May feeders have dropped $10 in the last six trading sessions and posted its lowest close going back to the early life of the contract last June. The feeder market still has room to fall, possibly targeting the $155 area. The money flow is winning the battle in the cattle market, despite the optimism on retail demand, and forecasted tighter supply picture going forward. The cattle market is starting to look like a value, but still in search of a low at this time.



Hogs: (Mixed to lower)

Hog futures settled sharply lower as long liquidation continues for the 4th consecutive day and weak-looking charts may cause additional technical selling. The technical selling in the hog market continues to push prices lower. Price action on Tuesday was weak, as early session gains rolled over into triple digit loses by the close. June hogs closed below the 50-day moving average for the first time since December and keeps the door open for a test of the 100-day and trendline support as low at $104. The cash market has helped trigger this pull back as the trend has been softer. National direct afternoon values turned higher gaining 1.93 to 101.42, and the 5-day average is at 102.35. The firmer afternoon cash tone could support the market on the open Wednesday. Lean hogs index was lower, losing .22 to 102.41. April contract expires on the 14th, so the hog market may be looking at the premium of the deferred futures over the index, adding to the selling pressure. Pork carcass values were softer at the close, losing 2.75 to 103.60 Load count was light to moderate at 259 loads. Hogs are searching for a low, but the technical picture is weak, and prices are tending lower.



Scott Masters

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