TFM Sunrise Update 6-16-21


Corn futures were mixed overnight.  Dec corn traded a high of 5.81-1/2 and low of 5.66 while consolidating inside Tuesday’s range above 50-day moving average support drawn at 5.58.  The contract is down 2 to 5.71-3/4 this morning.  July is up 2 to 6.69-1/2.  The 50-day has acted as an area of support for much of the rally.  A close below that level would really dampen the technical view of the market and possibly trigger some long liquidation.  However, with dry conditions dominating many areas as the new crop struggles to gain traction, we expect volatility to remain high for prices.  Much will depend on whether, or not expected rains actually materialize and alleviate crop stress next week.  Some rain is forecast for IA and MN through the weekend.  The 6 to 14 day model holds above normal precipitation for the entire corn belt, but there is concern that the northern and western sections of the belt might miss out.  Weekly Ethanol Stats will be out today with production seen lower than last week at 1.063 mil barrels per day.  The average stockpile guess is 20.149m bbl vs 19.96 mil a week ago.  Exports will be out tomorrow.  Basis bids for corn shipped by barge to the U.S. Gulf Coast were steady to higher on Tuesday on weaker futures prices and strong demand from exporters.


Soybean futures continued to slide overnight despite dry conditions across much of America as a very docile radar map greets the U.S. row crop region mid-week.  November beans fell 22 cents to 13/51-12 and below 50-day moving average support for the first time since March 30.  July was down 13.22 to 14.53-3/4.  The rest of the bean complex is in the red as well.  Chinese September bean futures were up 24 yuan ; Soymeal down 25; Soyoil down 22.  Malasyian Palm is down 132. Malaysian palm oil prices overnight were down 132 ringgit (-3.69%) at 3448 tracking losses in rival soy, while investors weighed the tropical oil’s production outlook amid labor constraints.  The U.S. soybean crush in May fell short of market expectations for a fourth straight month, rebounding only slightly from a sluggish April pace blamed largely on processing plant downtime, according to NOPA data released on Tuesday.  There is rain in the short-term forecast for Iowa, and still rain in the 6 to 14 day models for the entire corn belt.  One variable lies within how far east the tropical storm drives most of that moisture out of IA and MN next week.


Wheat futures were firm overnight with July CBOT up 3 to 6.64-1/2 as the contract oscillates around 100-day moving average support.  The next level of support is at the 200-day MA situated near 6.30.  July KC is up a penny to 6.13-3/4.  Seasonal price pressure can be expected to linger over the market as harvest approaches.  Favorable conditions for maturing and harvesting wheat in the Central and Southern Plains.  Price action has been mostly negative the past few weeks led by topping action in row crops.  July MPLS spring wheat futures are up 6-1/4 cents this morning to 7.54 with crop ratings slumping to 37% in the good-to-excellent category vs. 81% last year.  Recent showers are providing some benefit to drought-stressed wheat in the Northern Plains, but drought continues and only isolated showers are forecast this week.  Better chances come this weekend but amounts will be light.  Temperatures will fall below normal, easing some of the stress.  Elsewhere around the world.  Conditions for spring wheat in the Canadian Prairies have improved recently.  Favorable conditions are seen for maturing and harvesting winter wheat in southern Europe and developing spring wheat in northern and eastern Europe.  An upper-level low in the Black Sea region will continue to produce showers through the week in Ukraine and southwest Russia, being favorable for developing spring wheat and reproductive to filling winter wheat.  Some dryness would benefit winter wheat that is closer to maturity.  Heat and dryness stressing developing spring wheat in Kazakhstan and eastern Russia.  Favorable conditions for developing winter wheat in Australia.  Soil moisture is favorable for winter wheat planting and early growth in Argentina and southern Brazil.


Cattle market calls are higher on follow-through from Tuesday’s push through overhead resistance.  August live cattle are looking to challenge the recent contract highs, and deferred contracts established new highs.  The market looks technically strong and also seeing good money flow, evident in the strong bull spreading action.  The cash market is still developing, but early trade is higher than last week with $122-124 capturing most early deals, up $2-4 from last week.  Talk of this trade was in the market yesterday, and likely helped fuel the rally in live cattle.  Cutout values are still overall strong, but the market is starting to soften. at closing, choice carcasses were 1.04 lower to 334.43, and Select lost 5.13 to 298.28. Load count was improved, but light at 128 loads.  Feeders followed suit to the live cattle strength.  Since turning higher on June 10th, the August contract has now gained $10 as ongoing weakness in grain and the strong live cattle market offer support.


Hog calls are steady to lower while correcting from a long rally.  We expect weak retail values to keep pressure on the market.  Contracts finished mostly lower yesterday, with the exception of the new lead contract month July that is supported by the discount to the cash index.  The index has been moving steadily higher lately, and gained an additional 1.05 to 121.89 yesterday.  Cash markets were mostly steady in direct trade.  Hog prices found support at early session lows, fueled by the strength in the retail market at midday.  Midday pork carcasses gained 3.58 to 132.26, but failed to hold those gains into the close, dropping sharply lower (6.17) to 122.51 on a moderate load count of 357 loads.  This should pressure prices on the open. Daily hog slaughter was estimated at 484,000 head, down 1,000 head from last week.  Week to date, slaughter is down approximately 5,000 head from last week.



Matthew Strelow

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