TFM Sunrise Update 6-1-21


Corn futures rallied overnight to a fresh two-week high in the December contract to 5.63-3/4 on gains of 18-1/4 cents.  July corn was up as much as 15 cents to 6.71-3/4 before trimming gains.  The USDA is scheduled to release its April Grain Crushings report today at 3pm.  Corn used in ethanol production is seen up 69% year/over/year to 414 mil bu.  Weekly Crop Ratings will be released at that time, too.  Outside markets are seen helping corn as new highs in crude oil and a technical failure in the dollar to start the week and new month are registered amid news headlines out of China over the weekend.  China will allow all couples to have a third child, a surprise move aimed at slowing the nation’s declining birthrate as risks to the economy’s long-term prospects mount because of a rapidly aging population.  With inflationary concerns knocking on the door of a year-long bull market in Ag prices, the news sparked a demand chord for the market, along with summer weather uncertainty.  Midwest forecasts hold isolated showers with below normal temperatures over the next couple days.  Then, mostly dry Thursday through Saturday with temps above normal north and near to below normal south Wednesday before rising to above normal Thursday, Friday and Saturday.


The soybean complex begins the new month and holiday-shortened week on a strong note.  Nearby July beans advanced 16-3/4 cents to 15.47-1/4 while staying inside last Friday’s range.  Nov beans got to 13.91-1/2 on gains of 19-3/4 cents to test Friday’s intra-day high.  Chinese Soybean futures (SEP 21) were up 26 yuan ; Soymeal up 20; Soyoil up 36.  Malaysian palm oil prices overnight were down 20 ringgit (-0.51%) at 3899 extending losses toward a one-week low as traders weighed signs of deteriorating demand for the tropical oil.  Bean oil futures are firm, but rangebound. The USDA is scheduled to release its April Fats and Oils report along with the Grain Crushings report today at 3pm.  Soybean crush is seen at 170.9m bu in April, a 6.8% drop from year ago.  Crude and once-refined soybean-oil reserves at end of April are seen at 2.178 bil lbs, down from 2.601 bil.


Winter wheat futures eclipsed last week’s highs overnight led by a steep rise in Spring wheat.  Nearby July CBOT and KC contracts rose just over 19 cents to 6.83 and 6.32-1/2, respectively on the heels of a gap higher jump in July MPLS wheat, which rallied 41-1/2 cents to 7.77.   The contract high from Map 7 is 8.07-1/4.  An overnight depreciation of the U.S. dollar makes wheat imports from Argentina and Paraguay more attractive to Brazilian purchasers than buying the product in the domestic market.  Signs of inflation, and the opening-up of the U.S. economy as Covid infection rates drop is seen helping boost markets, including  wheat.


Cattle futures are called mixed to lower.  Late Memorial Day purchases and continued buying from food service pushed carcasses higher last week, as Choice boxes rose $5.80, while Selects advanced by $3.04, but, the market had a softer undertone.  Live cattle futures had a quiet session and prices in the front end of the market drifted lower into the close while failing to find any footing.  August cattle drifted under key moving average support on the close, which may open the door for additional pressure to start the week.  That softer tone in retail could add additional pressure, as cash remains lack luster.   Trade in the south was at $116 to $120, mostly $119 to $120, steady to $1 higher than the previous week’s weighted averages.  Northern dressed deals had a range of $187 to $192, mostly $191, generally steady with the previous week.  Feeder cattle ended the week soft, and could be pressured by strength in the grains.


Hog calls are steady to higher after ending higher last week with the front month prices making new contract high closes on Friday.  Australian and North American units of the world’s largest meat works were hit over the weekend by an organized cyber attack on its information systems, Brazil’s JBS SA said in a statement.  The attack caused its Australian operations to shut down on Monday. The company said it was working to resolve the incident.  According to the meat producing company, the attack, which they became aware of on Sunday, affected some of the servers which support its North American and Australian IT systems. 

Last week, June hogs gained 1.525 to 117.250, and July Hogs were 2.650 higher to 119.350.  On the close Friday, June through August contract finished with new contract highs.  Strong retail values ushered in buying optimism in to Friday’s session and allowed June to gap higher.  The retail strength held into the close as pork carcasses gained .22 to 126.59.  Movement was moderate at 319 loads.  Carcass values were higher all week, trading nearly $4.00 higher than Monday’s settlement at 122.21.  The cash hog index traded .58 higher to 113.08, finishing the week with gains of 1.64, for the 16th consecutive week of higher trade.  Technically, the hog market and product market are strong, and despite being over bought, are still looking for a top.


Matthew Strelow

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