TFM Sunrise Update 5-16-2022


Corn futures were up last night with the nearby July contract up as much as 22-1/2 cents to a two-week high of 8.03-3/4.  Dec gained as much as 17-1/4 cents to post a new contract high at 7.66.  Sharply higher trade in wheat is seen as spilling over into row crops, particularly corn.  U.S. corn planting could be near 42% complete.  USDA will release the weekly update today after the close.  The Midwest forecast is wet this week which could delay corn plantings.  Spot basis bids for corn were steady to stronger in the U.S. Midwest on Friday, underpinned by thinning farmer sales as many producers concentrated on field work and spring planting, grain dealers said.  U.S. stocks and crude are weaker this morning.  The dollar is lower.  Gold is lower.  Silver, copper, coffee, cocoa, sugar and cotton are higher.  Look for continued volatility at a timeframe where normally weather is the main market-driver, but this year, U.S. inflation, the war in Ukraine and slowing economies in the EU and China adds to trade uncertainty.


The soybean complex traded higher overnight.  July beans gapped higher and then rose 14-1/2 cents to 16.68.  Nov was up 21 cents to 15.19-1/4.  July meal futures were up 7.50 to 416.80 while potentially establishing a near-term bottom.  July soy oil was up .32 to 84.11.  Chinese September bean futures were up 26 yuan; Soymeal up 89; Soy oil up 130; Palm oil up 24; Corn up 2.  Malaysian markets are closed for holiday.  This week’s NOPA April soybean crush is expected to be a record 174.4 mil bu.  Total U.S. May-July soybean use will be a record.  U.S. soybean plantings could be near 31 to 32% completed.  Informa estimated U.S. soybean acres at 89.0 vs USDA’s March estimate of 90.9 and 87.2 last year.  Double crop soybean acres are estimated at 4.5 vs 3.7 last year with Prevent plant 2.5 vs 1.9 last year and 9.4 in 2020 and 17.6 in 2019.

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The wheat complex spiked overnight on India’s ban of wheat exports.  Nearby July wheat gapped higher to an overnight high 12.47-1/2 on gains of 70 cents before easing.  July KC wheat rallied 68 cents to 13.52.  July MPLS Spring wheat hit a new peak at 13.85 on gains of 60 cents.  India’s ban will allow sales on the books to be cancelled and sellers to be able to declare force majeure – circumstances that prevent them from fulfilling a contract.  Futures are also supported by dry US HRW, EU and Black Sea weather and wet US HRS and east Canadian weather.  Informa estimates the U.S. 2022 HRW crop at 590 mil bu vs 749 last year, SRW 354 vs 361 last year.  The firm estimated U.S. Wheat acres at 47.3 vs 46.7 last year and Spring wheat at 11.2 vs 11.4 last year.


Cattle futures are called steady to higher.  Fat cattle contracts finished last week mixed, to mostly lower as the cash market supported the front-end June contract, but demand concerns and available cattle supplies pressured deferred contracts.  Feeder cattle used a softer tone in corn and wheat markets supported feeder cattle futures on Friday.   For the second day, 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 June contract is trying to build a “double-bottom”, so price action early in the week will be key.  There was moderate to active fed cattle cash trade in the North in a full range of $139 to $148, with most sales at $144 live and $230 dressed. That is $2 lower compared to last week.  Moderate to large volumes traded in the South at mostly $140 live, steady with the previous week.  Warmer weather provided a lift to beef demand, especially for steak items and hamburgers for grilling.  Choice boxes were $2.02 higher last week and Select advanced by $1.45.  Load counts were moderate to heavy with good demand.  Strength in grains overnight will likely dictate the money flow in the feeder market.  The premium of front month contracts to the feeder cash index looks concerning, with August trading at a $10 premium to the index.  Feeder cash index was .25 lower to 156.36.  The cattle market still looks concerning despite some buying support in the feeder market on Friday.  The downside looks to be the easiest path in the near-term, until the market gets some news to turn the money flow.  The stronger demand tone may help prices recover, but the sellers are still in charge of market direction in the short-term.


The hog market is called mixed to higher.  The technical picture is still weak, and buyers are still absent in the market despite the bounce on Friday.  This main bring some optimism for additional short covering to start the week.  Futures finally saw some buying strength with end of last week on headlines featuring a softening of the COVID restrictions in China.  June lean hogs are still showing a downward trend, though, and prices may still have more downside room while trading under the 200-day moving average at $102.000.  Demand is still a big concern as retail prices have struggled, pushing under the $100.00 level last  week.  Friday carcass values were 2.57 higher to 101.17.  Movement was moderate at 309 loads.  Friday’s midday trade was nearly $3.00 under the close on Monday afternoon, showing the softening trend in pork values.  The CME pork cutout index has also been trending lower, down 1.56 to 101.41 on Friday, and down 3.99 for the week.   The cash market was weak with morning direct trade on Friday, dropping 3.68 to 101.27 and a 5-day average at 104.93. CME lean hog index was 0.22 lower at 101.41 on the day and traded .08 higher on the week.


Matthew Strelow

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