TFM Sunrise Update 5-25-21


Corn futures were choppy overnight, trading both sides of Monday’s settlement prices.  July corn traded an 11-1/4 cent range between 6.61-3/4 and 6.50-1/2.  The contract is down 3 cents to 6.53-3/4 this morning.  Dec corn is down 4 to 5.36-1/4, mid-range of the past week’s trading range, and below downward-sloping 10-day moving average resistance etched at 5.49.   Favorable Midwest weather continues to lean on new crop corn futures.  In addition, there was no new China buying of new crop corn announced to begin the week.  This week’s Crop Progress report showed that 90% of the corn crop was planted, up from 10% the previous week and 3% ahead of last year.  64% emergence was reported, up 23% from last week and 10% over the 5-year average.  The dollar is down 29 points and on the verge of making new 2021 lows while providing some outside market support.  All in all, however, bullish traders will need to see an aggressive switch from current weather patterns in order to bolster a market-friendly attitude toward price movement.


Soybean futures were firm overnight in uneven trade led by a 9 cent gain in nearby July to 15.31-3/4.  Nov is fractionally higher at 13.63.  Meal is down 1.50 a ton, and soy oil prices are firm.  July soybean oil appears to be stabilizing, but may have put in a top for now given that contract’s recent key reversal.  This could be a bell weather signal for the complex.  New crop beans gained on old crop yesterday amid talk that some ridging could develop later this summer across parts of the U.S. Midwest.  For now, weather forecasts remain conducive in the coming weeks.  U.S. soybeans were pegged at 75% planted and 41% emerged yesterday afternoon, well ahead of the five-year averages for both categories.  Overnight, Chinese soybean futures (SEP 21) were up 22 yuan; Soymeal up 22; Soyoil up 88; Palm oil up 32; Corn down 5.  Malaysian palm oil prices overnight were up 117 ringgit (+3.01%) at 4007 bouncing back after slumping almost 13% in four sessions, with a recovery in soybean oil prices in the U.S. and China prompting investors to resume purchases.


Wheat traded mostly unchanged overnight with 10 cent trading ranges in July CBOT and KC contracts.  July MPLS, is up 2 cents to 6.85-3/4 as the complex consolidates inside Monday’s ranges.  New multi-month lows in the dollar overnight, and mixed trade in row crops is leading to sideways action in wheat to begin the day.  Spring wheat conditions registered only 45% good-to-excellent in Monday afternoon’s weekly crop ratings report.  The trade was expecting closer to 57%.  Moisture is forecast in the next two weeks, but it may be too little, too late.  Winter wheat ratings came in at 47% G/E, down 1% from last week.  67% of the crop was headed, down 2 points from the average.  Ample moisture has led to green conditions heading into the summer months.  More rain could equate to quality issues.  Elsewhere, wheat has seen good soil moisture in Ukraine and Russia since the winter, but it is getting drier in Russia, which could use some more moisture.  Favorable conditions for planting winter wheat and early growth is reported in Australia.


Cattle futures are called mixed to firmer.  Live cattle saw modest selling pressure on profit-taking from Friday’s strong close before the COF report.  The data confirmed a still heavy supply of cattle available, keeping the pressure on the front end of the bear-spread market.  This market structure will likely continue until the market sees cattle numbers tighten, or a strong push in the cash market, bringing premium into the front months.  USDA cold storage report was released on Monday afternoon, and showed the stocks of beef were down.  Total pounds of beef in freezers were down 6% from the previous month, and 5% from last year, showing good product movement.  This should support prices on the open today.  Carcass values firmed into the close with Choice carcasses staying strong gaining 2.66 to 327.66, and Select up 1.08 to 303.39.  The load count was light to moderate at 99 loads.  The biggest concern with retail values will be the strength as the market moves past the Memorial Day retail buying window.  A slide in retail values could pressure the overall cattle market.  Feeders were mostly higher to start the week, with the exception of the front-month May contract. May futures expire on the 27th, and are trading well above the cash index, which is at 135.66, as the market tries to get these two inline.


Hog calls are for steady to firmer trade.  The USDA cold storage support verified the strong movement of pork products. Frozen pork supplies were up 1% from last month, but down 26% from last year, Pork belly stocks were down 3% from last month and 58% from last year.  The tight product picture should support hog prices today.  After strong closes in June and July contracts last week, gaining 5.500 and 7.550 respectively, the market took some profits to start the week.  The lean hog index lost .01 to 111.43, trading at a 1.92 discount to June, and even greater to July.  The cash market has cooled recently, adding some pressure or limits to the front end of the market.  Pork carcasses gained 7.43 at midday, but lost most of those gains on the close.  Pork carcasses finished 1.35 higher to 122.21, establishing a new all-time high close for pork carcasses.  Movement was light to moderate demand of 226.95 loads. The close on carcass values will be key and will likely influence price direction on the open.


Matthew Strelow

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