TFM Sunrise Update 6-15-21


Corn futures were mixed overnight.  A 4 point decline in weekly crop ratings to 68% (good-to-excellent) versus market expectations for 69%  will allow fund managers who still hold about 275,000 long contracts to hold serve in this bull market.  High temperatures are projected this week for the western corn belt.  However, prices were unable to maintain a firm start to the overnight session and are slumping to the low end of yesterday’s trading ranges.  Dec corn is down 9-1/2 cents to 5.71-3/4.  Nearby July corn is down 2 to 6.57.  Basis bids for corn shipped by barge to the U.S. Gulf Coast were firmer on Monday, supported by good demand for grain to fill an active export loading pace and sharply lower futures prices.


Soybean futures are mixed this morning with nearby July up 8-1/2 cents to 14.80-3/4, and Nov down 7 cents to 13.88-1/4 as prices remain at a very high level.  Chinese  soybean futures were down 124 yuan ; Soymeal down 131; Soyoil down 502. Malaysian palm oil prices overnight were up 206 ringgit (+6.10%) at 3581 advancing after tumbling almost 20% in six days, with concerns about production due to a labor shortage in Malaysia prompting some investors to bet on a new rally in prices.  We’ll need a steady dose of bullish news to propel prices higher.  For now, weather forecasts are changing day-to-day keeping production estimates fluid.   Northern areas of the Midwest have been hot and mostly dry lately, stressing the developing crop.   Scattered showers will move through the region at times this week, but showers should be mostly light.  Better chances come this weekend into next week.  Favorable conditions in the Delta for developing soybeans are seen outside of some flood risks.  Technically, the major trend is on the brink of turning lower.  Nov beans need to stay above 50-day moving average support at 13.61.  Farther below, the contract’s 100-day MA sits at 12.82-1/4 and has not been seriously tested in almost a year.  The 200-day was resistance for the contract in August of 2020 before prices began their ascent.


Wheat futures traded lower overnight with July Chicago down 12-1/4 cents to 6.62-1/4 and July KC down 11 to 6.17, which is about where the contracts were trading 24 hours ago.  Winter wheat good-to-excellent conditions dropped 2% down to 48% overall.  4% of the crop was estimated to be harvested as of Sunday.  This is 10% behind last year’s harvest pace.  July MPLS is down 3-1/2 to 7.43.  Spring wheat was seen as 8% headed with 37% of the crop rated good-to-excellent.  This is way below the rating for the same week last year of 81% good-to-excellent.  The 5-day outlook looks relatively dry for much of the Plains; this should be conductive to wheat harvest, which has been delayed due to wet weather as of Sunday night’s price action.  In tender activity, Egypt set a tender on Monday to buy an unspecified amount of wheat from global suppliers for shipment from Aug. 21-31.  Japan Seeks 207,472 tons of milling wheat.


Cattle market calls are for firmer after the market saw some follow through buying on Monday from Friday’s friendly close.  Technically, charts are improved, but the August contract pushed to trend line resistance near 121.500, and failed to break through.  The session today may be key for this week, if prices can push through this barrier which would open the door for a test of the contract high.  Typical for a Monday, cash had bids and asks undeveloped.  Prices are likely to stay steady with last week, but late afternoon chatter had cash possibly trading higher.  Retail carcass values are a concern and a sign that demand may be peaking.  Carcasses trended lower last week, and were soft at midday Monday and closed even lower.  Choice carcasses dropped 2.09 to 335.47, and Select was down 1.80 to 303.41.  Demand was light at 80 loads.  A sell off in grains fueled a rally in feeder prices, gapping over resistance levels.  However, like live cattle, failed to push above the topside trend-line dating back to the April highs.


Hog calls are steady to lower after selling pressure to start the week with contracts ending the day with triple digit losses.  Technically, the front month hog charts look soft, with a price gap lower noted, though managing to hold support levels underneath the market.  June hogs finished their contract life yesterday, gaining .200 to a final trade of 122.875, nearly $54 or 79% above its contract lows.  The cash index is staying strong, pushing .93 higher to 120.84, and cash markets followed suit higher.  The July contract is running at a 2.62 discount to the index, and that could limit selling pressure, with the July now the new lead month.  Pork carcasses were mostly steady last week, and traded 3.86 lower yesterday softening further from midday weakness.  Carcasses broke back under the $130.00 to 128.68, as the upward momentum seems to be slowing.  Technically, the hog market looks weak, and due for a pullback.  It will be all about the demand to determine whether a top is in order this is just a correction for another move higher.


Matthew Strelow

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