TFM Sunrise Update 6-18-21


Corn futures are up 13-1/2 cents to 5.46 (Dec) this morning.  The price retreat this week has amounted to losses of around 60 cents for the new crop contract which may be viewed as ‘over done’ by many in the trade.  July corn is up 9 cents to 6.42 (July).  Expanded limits are in effect for today, widening the potential price move to 60 cents in either direction.  Weather forecasts are still all over the map with most holding much needed rain, but totals remain to be seen.  Dry and warm weather should drop ratings again on Monday after this week’s U.S. corn ratings dropped more in one week than ever.  Basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast and loaded for export firmed on Thursday after Chicago Board of Trade futures prices tumbled.


Soybean futures rebounded overnight after suffering record daily losses on Thursday.  Expanded limits are in effect across the bean complex for today.  Nov beans are up 40 cents this morning to 12.92-34 and back to the contract’s 100-day moving average.  This week’s trading range was 14.64-1/4 to 12.40-1/2.  Nearby July beans are up 50 cents to 13.79-3/4 with this week’s price activity ranging from a high of 15.51-1/4 down to yesterday’s 4-month low at 13.23-1/2.  Prices are correcting from a bad week led by limit-down trade in row crops and a spike in the greenback that sparks fears of higher interest rates that could slow the economy and demand for commodities.  Chinese bean futures were down 28 yuan ; Soymeal down 79; Soyoil down 202.  Malaysian palm oil prices overnight were up 69 ringgit (+2.04%) at 3446 but remain headed for a weekly slump, with expectations of record output in top grower Indonesia and a plunge in global crop prices on better expected weather across America’s farmlands prompting investors to flee the market.  Warm and dry weather this week is expected to drop weekly U.S. soybean crop ratings on Monday.  Besides weather influencing price activity, there are a number of other market factors at play from government policy toward biofuels, to high volatility in the dollar.


Wheat futures posted double digit gains led by a technical bounce in row crops overnight.  July Chicago wheat rose as much as 19 cents to 6.57.   For the week, the contract is down about 25 cents.  July KC wheat is up 13-1/2 cents this morning to 5.98-3/4 where the contract’s 200-day moving average support level resides.  Final wheat demand may be higher than USDA has projected, along with a lower final crop.  Weather is viewed as conducive for upcoming wheat harvest.  Over the next 2 weeks, parts of Russia could see hot and windy weather that could stress crops there.  MPLS spring wheat futures in the July contract are up 12 cents to 7.63-1/4 this morning.  Weather could continue to stress the spring and durum crop in the U.S and Canada.


Cattle futures are called mixed to possibly weaker on follow-through from broad-based selling pressuring the commodity markets.  Just one day after breaking to new contract highs, August cattle quickly fell back to an area of support, setting the stage for today’s price action.  Further weakness could be seen as a failed breakout, opening the door for further selling pressure into next week.  However, cash trade was relatively quiet on Thursday with the bulk of the activity likely completed.  Trade was $122-124 this week, trading $2-4 higher than last week, supporting the latest rally.  The most concerning fundamental has been the quick drop in retail values.  On the close, Choice carcasses were 2.92 lower to 326.25, and Select dropped 2.72 lower to 287.24. L The load count was light at 118 loads.  Since the close on Monday afternoon, Choice carcasses are down over $9.00, and select is priced $16.00 lower.  The weakness in live cattle spilled over into the feeder market, despite the strong drop in grain prices.  Trade was very unusual in the cattle market, but the price action today will be the key.  A firm close will keep the topside open into next week, but further selling pressure could rotate the market over for a test of the recent lows.


Hog calls are lower.  Hog futures finished sharply lower on Thursday as the front-end contract traded the expanded 4.50 limit lower, and the remainder of the hog complex finished with strong triple digit losses.  This will keep expanded limits in place for today.  Technically, the hog market has broken down, and will be open to more long liquidation.  For July hogs, the 100 day moving average is at $104, and could be the next downside target.  On last week’s commitment of traders report, Managed money was holding 84,621 long hog contracts, one of the largest long positions in years.  The Lean hog index traded slightly lower, losing .08 to 122.60, and a strong premium to the July contract.  This could limit selling, but probably not enough to reverse direction.  Weekly export sales saw some strength with new sales at 29,300MT for last week, up 49% over the previous week.  Mexico was the largest purchaser of U.S. pork on the week, but China was absent only listing cancellations of 400 mt on the week. Since last Friday’s close, pork carcasses are trading nearly $8.00 lower.




Matthew Strelow

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