TFM Sunrise Update 5-13-2022


Corn futures were firm overnight while respecting Thursday’s trading ranges.  July is up 2 cents this morning to 7.93-1/2 while situated between 10 and 20-day moving averages.  Dec corn is up 2 to 7.55.  On Thursday, Managed funds were net buyers of and 8,000 corn raising their estimated net long position to 346,000 contracts.  USDA bowled over the trade with a 177.0 U.S. 2022 corn yield equaling last year’s record.  Given the lower South American supplies and lower Ukraine exports, U.S. final corn exports could be 200 mil bu higher.  This suggests a lower U.S. 2021/22 corn carry-in of 1.240 bil bu vs USDA 1.440 and lower U.S. 2022/23 carryout.  This could suggest a US 2022/23 carryout closer to 750 with USDA estimate of U.S. 2022/23 total corn demand 250 mil bu too low.  Current corn futures  prices, arguably are not yet rationing demand which supports the current trend.

In outside markets, U.S. stocks and crude is higher. The dollar is mixed.  Silver, cotton, coffee and sugar are higher.  Gold, copper and cocoa are lower.



Soybean futures were firm overnight.  July beans are up 11 cents to 16.24-3/4 this morning, mid-range of last night’s trading range from 16.37-3/4 to 16.14.  Nov beans are up 9 to 14.89-1/2.  July meal is up 4.40 to 44.40 and  July soy oil unchanged at 82.52.  Soybean futures price reaction to USDA numbers were mixed with soybean futures higher and soymeal and soy oil lower.  Managed funds were net buyers of 3,000 soybeans, even 4,000 soymeal and sold 2,000 soy oil.   Heading into last night’s trade, they were estimated be long 158,000 soybeans, 53,000 soymeal and 93,000 soy oil.   USDA raised U.S. 2022/23 soybean crush 40 mil bu to a new record and exports 60 mil bu.  Still the 51.5 yield increases U.S. 2022/23 carryout to 310 mil bu.  There is already talk of lower U.S. acres due to wet weather increasing U.S. north plains prevent plant acres 1 to 2 million.

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The wheat complex was mixed overnight.  July Chicago wheat is down 7 cents this morning to 11.71-3/4.  July KC wheat is down 54 to 1266.  July MPLS wheat is up a nickel to 13.20-3/4.  The contract posted a new high last night at 13.35-3/4 and session low of 13.10-1/2.  Yesterday, the July, September and December Hard Red Spring Wheat futures contracts settled up the 60 cents price limit, so, the price limits for all non-spot contract months will be expanded to 90 cents effective last night and into today’s trade.  The daily price limits shall revert back to 60 cents the next trade day if no HRS futures contracts settle at the expanded limit bid or offer.  The big USDA surprise yesterday was U.S. and World wheat numbers.  US 2022/23 wheat carryout was down for the 6th straight year.  The agency’s estimate of U.S. 2022 wheat yield could be too high given HRW dry weather forecast and wet U.S. north Plains weather that could lower U.S. final HRS crop.  Their estimate of India’s wheat crop at 108.5 mmt appears to be high.  Talk of Lower Ukraine exports suggest USDA’s estimate of Black Sea wheat exports could be 20 mmt or 735 mil bu too high.  With most exporters maxed out, this leaves U.S. a residual exporter with a carryout of only 619 mil bu.  Higher World freight costs, U.S. Dollar at 20 year highs and talk of even higher wheat prices spells problems for World wheat buyers.


Cattle futures are called steady to lower after prices broke to new lows on strong technical selling.  The downside looks to be the easiest path in the near-term.  Additional losses may be viewed as a value, especially in deferred futures given the overall supply numbers and trend seen in cattle supplies, but the money flow and the sellers are still in charge of market direction in the short-term.  June live cattle still held above the most recent lows, holding support at $131.000, but deferred contracts broke to new contract lows as long liquidation and technical selling pushed the market.  The USDA weekly export sales report posted new sales of 28,400 MT for 2022, a marketing-year high, were up 95% from the previous week and from the prior 4-week average.  South Korea, Japan, and Mexico were the top buyers of U.S. beef last week.  Cash markets were quiet on Thursday and looks like business was likely done for the week.  In the South, light $140, and the north saw $144 and $227-230 dress trade, again, mostly steady with last week.  Retail beef demand has seen Choice beef cutout values fall to nearly an 8-month low.  On Thursday prices firmed, gaining 2.12 to 257.20 and Select was 2.18 higher to 244.36.  The load count still shows good movement at 137 loads.  The firmer retail tone could support prices on the open today.  The premium of front month feeder contracts to the feeder cash index looks concerning, with August trading at a $10 premium to the index.  The Feeder cash index was .37 higher to 156.61.


The hog market is called mixed to lower.  The technical picture is still weak, and buyers are still absent in the market.  The trend  is lower in the near-term and the hog market is oversold, but the triggers to bring money flow back into the hog market are still lacking.  On Thursday, futures closed sharply lower as technical selling broke hog prices to new near-term lows as grain price surged after the USDA Supply/demand report was released on Thursday morning.   June lean hogs closed under the $100.00 level for the first time since January 13th earlier this year.  This price move has mostly eliminated the entire 2022 price rally.  Prices may still have more downside room as prices while prices are trading under the 200-day moving average at $102.000 above the market, the first top-side resistance barrier.  Demand is still a big concern as retail prices have struggled.  Retail values have trended lower throughout the spring as grilling demand and export demand has been lacking.  Midday carcass values were 1.23 higher, but closed .89 lower to 98.60, as prices struggle to hold the $100.00 level.  Movement was good at 336 loads.  The CME pork cutout index has also been trending lower, down .80 to 102.97 on Thursday.  USDA announced weekly export sales with new net sales of 26,300 MT for 2022 were up 10% from the previous week and 14% from the prior 4-week average.  Top buyers of U.S. pork on the week were by Mexico, China, and South Korea.  Export shipments were strong at 33,100 MT, a marketing-year high.  Midday cash markets were weak with morning direct trade, dropping 7.41 to 104.95 and a 5-day average at 104.54.  CME lean hog index was .17 higher at 101.26 on the day.


Matthew Strelow

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