TFM Sunrise Update 6-10-2021


Corn futures were mixed overnight with a firm tone ahead of today’s USDA June Supply/Demand report scheduled for release at 11:00 AM CT.  July and Dec futures are firm this morning with July up as much as 8-3/4 cents to 6.9-1/2 and Dec peaking at 6.15-1/2 on gains of 5-3/4 cents, supported by limited rain potential for the central Corn Belt and hot temperatures.  Weather concerns in Brazil, where production is expected to drop about 10-12 mmt from previous estimates is also noted.  July tested the 10-day moving average yesterday and the December contract nearly filled the gap left Sunday night.  Nearby spreads moved further inverted as the July contract will go into the delivery in a few weeks where hedgers roll their positions.  Trade estimates for this morning’s USDA Weekly Sales for 2021-22 marketing year crop is 200,000 to 600,000 tons.  September through April U.S. corn exports are running 150 mil bu above inspections to date. This could suggests USDA could increase US 2020/21 export demand in today’s WASDE report.  The agency usually does not make changes to production estimates on this report but could adjust demand numbers.  The average trade estimate of analysts polled by Reuters is for ending stocks of 1.207 billion bushels, down 50 million from the May estimate.  For a FREE 30 to 40 minute ZOOM meeting recap tomorrow at noon CT on today’s report, click the following link to register.


The soybean complex is higher this morning.  July and Nov beans are up a dime to 15.72-1/2 and 14.58-1/4, respectively.  Chinese Bean futures (SEP 21) were down 77 yuan ; Soymeal down 12; Soyoil down 82;  Malaysian palm oil prices overnight were down 30 ringgit (-0.78%) at 3841.  Trade estimates for today’s U.S. 2020/21 soybean carryout is near 122 mil bu vs USDA’s May guess of 120. Trade estimates for this morning’s USDA Weekly Sales for 2021-22 marketing year crop is 100,000 to 400,000 tons.  With the slower export sales pace, the USDA could keep demand steady for the 2020/2021 crop year.   In cash markets, basis bids for soybeans shipped by barge to the U.S. Gulf Coast slipped on Wednesday as demand from exporters continued to ebb, traders said.


Winter wheat futures were down 7 to 8 cents in Chicago overnight to 6.75 (July) and 3 cents in July KC to 6.32-3/4.  July MPLS Spring wheat was firm at 7.65.  Most analysts polled expect the USDA to raise winter wheat production estimates on today’s supply and demand report.  Trade estimates for the U.S. 2021 wheat crop is near 1.892 bil bu vs 1.872 in May.  One private group is near 1.924 with HRW near 759 vs 659 last year.  SRW is estimated near 335 vs 266 last year.  They estimate spring wheat near 505 vs 530 last year, but that could shrink.  Locally heavy rains in some areas of North Dakota so far this week has sent spring wheat prices lower.  In a weather rally, futures contract price swings will be volatile and often top out long before the crop is made.  Still, this is the worst rated spring wheat crop since 1988 and more rain is needed to keep it from getting worse.  Trade estimates for this morning’s USDA Weekly Sales for 2021-22 marketing year crop is 200,000 to 450,000 tons.


Cattle futures are called mixed for today after some bull spreading returned to the market mid-week.  Recent sessions have seen buying strength in the deferred live contracts, and yesterday’s saw some unwinding of those spreads.  If bull spreading can continue, front end contracts will rise versus the deferred positions, and lift the cattle market higher overall.  Cash trade is still being developed, with $120 catching most of the business, steady with last week, but the futures are at a discount to the cash, and that has supported the front end.  Carcass value saw some strength this afternoon, as Choice carcasses gained .04 to 338.65, and Select was 1.69 higher to 307.87. Load count was lights at 102 loads.  Daily slaughter has been running strong this week, and Wednesday’s estimate of 120,000 head maintains that pace. There has been some talk that the packers are getting more current, and that would be supportive.  Feeder cattle charts look weak with yesterday’s close, opening the door to technical selling pressure.  USDA supply/demand data could be a market mover, and a strong move higher in grains on Thursday would put pressure on the feeder cattle market.


Hog calls are steady to higher.  Futures ended mostly higher on Wednesday, led by strength in the June contract with a new contract high.  Deferred contracts were firmer, and October and later contracts also closed into new contract highs.  The June contract expires on the 14th, so traders are rolling some short June contracts into July.  The cash market and the cash index has surged this week.  The index gained 1.26 to 117.77 yesterday.  The retail market stays supportive, but Pork carcasses softened off midday strength, losing .56 to 134.38.  The load count was moderate at 262 loads.  Weekly export sales on Thursday have been market movers, and could set the tone into the weekend.  Technically, the hog market is still strong, underpinned by the fundamental structure.


Matthew Strelow

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