TFM Sunrise Update 6-17-21


Corn futures were down overnight, shedding as much as 16-1/4 cents in new crop Dec as rain develops over portions of Iowa.  A two-day spike in the U.S. dollar is also viewed as bearish for commodities. July  corn was down 17-1/4 cents to 6.55-3/4 while pushing below key 50-day moving average support and slumping to a fresh low for the month of June. Trade estimates for this morning’s  USDA Weekly Export Sales are 100,000 to 500,000 tons for the 2021-22 marketing year.  The weather map is still dry for much of the central U.S. with high temperatures for most of the corn belt.  The market is watching upcoming forecasts, though, that call for rain.  Heavy rains are expected to bring moisture to the eastern Corn Belt.  U.S. temperatures are expected to become more moderate by Saturday as well.  If rains fail to materialize, crop ratings next week could continue to slip and keep the market choppy.  Basis bids for corn shipped by barge to the U.S. Gulf Coast and loaded for export were flat to lower on Wednesday, with nearby prices easing from recent highs following a rebound in spot futures prices.  That may change today as futures turn lower.


Soybean futures, meal and soybean oil continued to slide overnight as momentum carries prices lower.  Nov beans were down 21-3/4 cents to 13.21-1/2, marking a fifth consecutive day of lower lows on the daily chart.  Nearby July beans fell to an overnight low of 14.33-1/2 on losses of 14 cents.  Expanded limits are in effect for the bean complex after soybean oil finished down the daily limit on Wednesday.  Chinese Sept bean futures were up 23 yuan ; Soymeal down 23; Soyoil down 136.  Malaysian palm oil prices overnight were down 43 ringgit (-1.26%) at 3361 fluctuating between gains and losses influenced by the production outlook in the world’s top growers, a drop in soybean oil and India’s move to cut its benchmark import prices.  Malaysia maintained its July export tax for crude palm oil at 8%, a circular on the Malaysian Palm Oil Board website showed on Thursday.  Trade estimates for this morning’s USDA Weekly Export Sales are 100,000 to 300,000 tons for the 2021-22 marketing year.  The weather models are mixed for next week’s U.S. weather.  the GFS model calls for rains across most of the Midwest.  The Canadian model suggests scattered showers favoring the east and south.  The EU model is dry.  Soybean prices may be undervalued if rainfall for the NW Midwest through mid-July are below normal.


Wheat futures saw two-sided trade overnight and are in the red this morning with row crops.  July CBOT wheat is down 7 cents to 6.55-3/4.  July KC is making a fresh low for the month on losses of as much as 11-3/4 cents to 5.99 where the 200-day moving average is acting as a strong support level.  July MPLS is off a penny to 7.59-1/4.  A rally in the dollar is adding overhead weight to seasonal harvest pressure.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 500,000 tons for the 2021-22 marketing year.  Rains across the U.S. SRW areas are favorable for above average yields, but could slow harvest.  Oklahoma harvest suggests above average test weight and yields and lower protein.  The HRW crop is shaping up to be above USDA’s latest size estimate.  For spring wheat, a dry and warm forecast could lower U.S. crop ratings further and final crop size.  Both HRW and SRW domestic feeding is also shaping up to be a record high.


Cattle market calls steady to higher as strong cash market and technical buying lifts the market.  August and deferred contracts posted new contract highs on Wednesday underpinned by cash, which has is working upward to $122-124, with whispers of $125 trade in the countryside trade.  This is $2-5 higher than last week.  The packer inquiry seems to have picked up, and this may be due to lots being more current, and impacts of hot weather across cattle country.  Carcasses are still historically strong, but trending lower.  Choice carcasses at the close were 5.26 lower to 329.17, and Select was down 8.32 to 289.96.  The load count was moderate at 141 loads.  Feeder cattle markets remain strong, supported by the live cattle market and weak grains.  The concern in the cattle complex is, have we gone too far too fast?  The strong drop in retail markets are a concern.


Hog calls are for a lower start lower after a hard landing on Wednesday.  Expanded limits of 4.500 are in effect for today.  Technically, hog charts received a lot of damage in the past couple sessions which could trigger additional long liquidation today.  The Chinese Ag Ministry stated the Chinese May hog herd was 23.5% above last year and back to pre-ASF levels.  This brings concerns on the demand side of the market in the longer-term.  The market may be setting up a forced slow down of slaughter lines due to a court ruling a couple weeks back.  That deadline of July 1st, if enacted, will back up hog supplies, which will weigh on cash markets.  Negotiations are on-going regarding this ruling, but no agreement has be made.  The cash market stays supportive, and the lean hog index keeps climbing, gaining .79 to 122.68, as the index has surged in recent sessions.  The index is at a $7.00 premium to the July board, and that should limit selling pressure in the front months.  Closing carcass values will be key for market direction today.  Retail carcass values gained 2.11 at midday but softened again at the close losing 1.99 to 120.52.  The load count was moderate at 378 midday loads.



Matthew Strelow

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