TFM Sunrise Update 6-11-2021

CORN

Corn futures were down a dime overnight.  July corn, trading near 6.90 is up 7 cents for the week and remains in a constructive pattern while holding about 10 and 20-day moving average support.  Dec corn is at 6.07-1/2 and is up 16 cents since gapping higher to begin the week.  Technically strong, traders did push prices lower mid-week to close that gap before buying ensued.  Last night, the contract was as high as 6.19-3/4 versus the contract high of 6.38 from May 7.  Prior to the release of the June USDA report, futures were trading over 19 cents higher on the day.  USDA lowered the 2021/22 corn carryout to 1.357 billion bushels vs. the average analyst estimate of 1.423 bil bushels and 1.507 billion bushels in May.  World ending stocks for 21/22 finished slightly above analysts’ expectations at 289.41 mmt.  The USDA also increased ethanol usage and exports by 75 million bushels.

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Basis bids for corn shipped by barge to the U.S. Gulf Coast drifted lower on Thursday in thin trade, with sluggish exporter demand anchoring basis bids for corn and soybeans as well, traders said.  Midwest grain and row crop weather forecasts for the western portion hold isolated showers north Thursday.  Scattered showers Friday.  Isolated showers south Saturday.  Then mostly dry Sunday and Monday. Temperatures above to well above normal through Friday, above normal Saturday through Monday.  The eastern portion has scattered showers through today then isolated showers Saturday through Monday with temperatures above to well above normal through Saturday, normal Sunday, and near to above normal Monday.  The 6 to 10 day outlook: Mostly dry Tuesday through Thursday. Isolated showers Friday and Saturday. Temperatures above normal west and near to below normal east Tuesday through Thursday, near to above normal Friday and Saturday.

SOYBEANS

Soybeans traded two-sided overnight within Thursday’s trading ranges.  July beans are 3-1/2 cents lower this morning to 15.40-1/2 and down 43 cents from last Friday’s settlement price.  Nov beans are 10-1/2 cents lower to 14.49 about 15 cents higher for the week.  Chinese September bean futures were down 32 yuan ; Soymeal up 23; Soyoil down 18; Corn up 25.  Malaysian palm oil prices overnight were down 203 ringgit (-5.28%) at 3641 dropping to the lowest intraday level since April 20 and headed for its longest daily losing streak in almost five months, as investors fretted about weaker demand from top importer India.  A warm and dry two-week weather forecast for the U.S. Mid-west will provide ongoing support now that the June WASDE report has been released. USDA unexpectedly lowered U.S. soybean crush and failed to increase exports.  USDA estimates U.S. 2020/21 soybean carryout at 135 vs 120 in May; 2021/22 155 mil bu vs 140.  Both are viewed as too high. The agency estimates World 2020/21 soybean carryout at 88.0 vs 86.5 in May and 2021/22 92.5 vs 91.1.   Brazil’s soybean crop was pegged near 137.0 mmt vs 136.0 in May;  Argentina’s 47.0 vs 47.0.

WHEAT

July winter wheat futures are 2 to 3 cents lower this morning to 6.81-3/4 and 6.37.  Prices have been choppy to sideways all week while consolidating within a dime of last Friday’s settlement closes, and around near & long-term moving averages.  July MPLS spring wheat futures are 6-1/2 cents lower to 7.69 and down 43 cents for the week. The USDA put the U.S. 2021 wheat crop at 1.898 billion bushels vs. 1.872 bil in May. The agency adjusted their 20/21 U.S. ending stocks estimates lower to 852 million bushels vs. 872 mil in May and lowered the world wheat carryout estimate to 293.4 mmt vs. 294.6 mmt in May.  Looking ahead, the approach of winter wheat harvest can be viewed as a seasonal negative factor for the Chicago and KC markets.

CATTLE

Cattle futures are called mixed.  Live cattle futures finished mostly higher on Thursday, as the price action at the end of the day lifted futures.  The past couple sessions has seen the cattle market attract buying into the bull spreads, thus supporting the entire complex.  The majority of cattle cash business is likely done for the week, but a few groups may capture some business.  The majority of trade was $119-120, steady with last week.  Talk of more packer interest is out there, which could be a reflection of an improvement in the supply picture, or concerns over the hot weather in cattle country.  Retail values were mixed at the close, reflecting midday values. Choice carcasses were firm, but lower, slipping .40 to 338.25 and Select was higher gaining 2.53 to 310.40.  Load count was light at 107 loads.  Feeder cattle fought off a higher corn market as prices rose from session lows to close with small gains.  Technically, cattle charts are still soft, but the recent price action is improved.  We view prices as challenging resistance, and may have to work hard to push higher through that barrier.

HOGS

Hog calls are steady to higher.  Hog futures finished mixed to mostly higher again on Thursday, supported by cash strength and the June contract.  July hogs have traded lower for the past three trading sessions, but have a combined loss that is less than 1.000, showing the resiliency in the market.  Such a tight correction could set the market up for a strong move next week.  The cash market stays supportive, and the lean hog index was .94 higher to 118.71, as the index holds its strong uptrend this week.  Estimate daily hog slaughter was 482,000 head, as slaughter pace is strong this week. The expected trend is for those slaughter numbers to decline, helping support the market overall.  Pork carcass values have quieted down, but were firm as carcasses, experienced small losses dropping .33 to 134.05.  The load count was moderate at 305 loads.  At 134.00 and higher levels, pork prices are historically strong, only last year’s COVID-19 plant issues have pushed hog retail prices higher.  Weekly export sales were softer this week, but still at 19,700 MT.  China was the top buyer last week at 8,100MT.  Export shipments were a market year low, 27,500MT, but still an overall good product movement pace.  The hog market stays fundamentally supported, as some prices have consolidated this week while in search of a top.

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Matthew Strelow

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