TFM Sunrise Update 5-27-21


Corn futures were mixed in quiet action overnight, posting modest 6 to 7 cent trading ranges around Wednesday’s settlement prices.  July corn is up 2 to 6.26-1/2.  Dec is up 4 to 5.24-3/4 ahead of this morning’s USDA Weekly Export Sales.  More cancelations are in the trade estimates for old crop ranging from minus (100,000) tons on the low end of trade estimates to a positive 400,000 tons.  New crop sales estimates are 5.90 to 7.0 mil tons.  Periods of showers across the Midwest are expected over the next week, benefiting developing corn.  Updated June weather and long-term forecasts fractionally decreased 2021/22 U.S. corn production to 15.4 billion bushels, despite recent favorable conditions and continued rapid plantings, according to Refinitiv Commodities Research.  Their current median estimate puts planted area at 94.1 mil acres, 3.2% above the USDA’s May 12 estimate of 91.1 mil. The latest Reuters Poll of Analysts (25 March) placed U.S. corn area at 93.2 mil acres.  The next USDA survey-based estimate of acreage will be released in its June 30 Acreage report.  Outside markets show crude off 40 cents while hovering near a ceiling of resistance, the dollar flat/weaker following a bounce this week; and stock index futures mixed.


Soybean futures are softer this morning after trading both sides of the $15 mark in nearby July beans overnight.  The contract is down 7-1/2 cents to 14.96 this morning.  Nov traded as high as 13.51-1/2 down to a session low of 13.37-1/4.  The contract is 6 cents lower at 13.41 this morning.  Meal and soyoil are also in the red this morning.  Trade estimates for weekly bean export sales are (200,000) tons to 200,000 tons for old crop; 225,000 to 600,000 tons for new crop.  Meal sales are seen at 100,000 to 300,000 for old crop, zero to 75,000 for new corp.  Soyoil sales are estimated from (10,000) to 25,000 for old crop, zero for new crop.  Chinese September soybeans were down 77 yuan ; Soymeal down 29; Soyoil down 72; Palm oil down 76; Corn down 24.  Malaysian palm oil prices overnight were down 122 ringgit (-3.03%) at 3902, dragged down by concerns over dwindling demand and improving production in the world’s top growers.  A nearly day-old port strike that snarled grains cargo traffic in Argentina was called off late on Wednesday after unions said they clinched a deal allowing them to be given priority in receiving COVID-19 vaccinations.  Argentine growers have sold 19.4 mil tons of soybeans from the current 2020/21 season, after clinching deals for 975,500 tons over the last week alone, the Agriculture Ministry said in a report on Tuesday.  With farmers hoarding soybeans as a hedge against an anemic local peso, this year’s sales rhythm is slower than last year’s when, by this point in May, farmers had sold 23.2 mil tons of the oilseed.


Wheat futures stabilized from a lower technical formation overnight.  The July Chicago wheat contract had finished lower 10 out of the past 11 sessions.  The contract is up 4 cents to 6.56-1/2.  July KC is up 5-1/2 cents to 6.04-1/4 and July MPLS is up 8 to 6.88-3/4.  All three contracts are finding support at their longer-term moving averages with CBOT and MPLS respecting 100-day and KC bouncing off the 200-day.  Trade estimates for Weekly Export Sales are (75,000) to 180,000 tons.  New crop sales are estimated between 200,000 and 600,000 tons.  Wheat tenders include: Tunisia seeking about 92,000 tons of optional-origin soft wheat.   Japan said it will seek 80,000 tons of feed wheat and 100,000 tons of feed barley to be loaded by Sept. 30 and arrive in Japan by Nov. 25, via auction that will be held on June 2.  Saudi Arabia seeks about 720,000 tons of wheat.  Periods of showers in the Central and Southern Plains will work through the region over the next week, benefiting developing to reproductive winter wheat.


Cattle futures are called steady to lower following selling pressure and weak prices action on Wednesday.  Price action the past couple of sessions has been disappointing, as the cattle market fails to hold early session gains.  Cash also disappoints as the majority of the transactions have yet to develop around $119 to $120/cwt.  Cattle numbers are still plentiful, and packers have little incentive to bid up for cash cattle, despite the box beef prices.  Carcass values were soft on the close, with Choice carcasses losing .43 to 329.49, and Select was .21 lower to 304.05.  Demand was improved at 119 loads. The market will be cautious if retail values start to pull back, as the demand for the Memorial Day buying is behind us.  Weekly export sales could help provide direction this morning.  The market will be looking for improved sales, especially given that Argentina has backed out of the export market to help fight food inflation.  Feeders continue to be guided by movement in corn.  The retreat in corn has resulted in a more than $17 move from recent lows.  So, should corn resume it’s uptrend, look for feeders to react with weakness.  May feeders expire today.


Hog calls are for steady to firmer trade.  Traders were very cautious on Wednesday, and saw some position squaring off this week’s push to new contract highs.  With the small gains on Wednesday, June hogs posted a new contract high and high close.  USDA weekly export sales today may have made the market cautious overall.  We’ll be closely watching if China is staying active in our export market.  The lean hog index traded .39 higher to 112.20, as strength moved into the index.  The countryside cash market has stayed soft, but still at a overall strong level.  Midday pork carcass values were slightly lower at the close on Wednesday, down .54 to 123.98. The retail market may be due for some softness now that the Memorial Day holiday buying is in the rearview, and this is a seasonal window to see some softness.


Matthew Strelow

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