TFM Sunrise Update 6-21-21


Corn futures were lower overnight, but within Friday’s ranges.  July fell to 6.36-1/2., down 18-3/4 cents before trimming losses to 13 cents.  Dec corn was down as much as 26-1/4 cents to 5.40.  The new crop contract is down 15 to 5.51-1/4 this morning pressured by shower activity over the weekend.  Scattered rains in the Midwest were helpful for many areas, but more are needed to end drought for developing row crops.  Another chance for widespread showers comes late this week and weekend.  Friday’s low at 5.30-1/2 is a bearish target for the contract this week as line of support forms on the daily chart from the end of March.  The contract’s 100-day moving average is down at 5.15.  50-day MA resistance is near 5.60.  Weekly Export Inspections and Crop Ratings today should offer support.  China imported 1.89 million tons of corn from the U.S. in May, the highest amount in data going back to 2009, according to customs data released today.  Meanwhile, the bull market debate continues into whether it is a reflection on inflation and the Fed, or simply scarcity and strong physical demand.  Grain dealers on Friday said, spot basis bids for corn were weaker at U.S. river terminals and elevators serving the rail market.


Soybean futures eased overnight led by new crop contracts.  July futures got to 13.71, down 25 cents.  Nov beans are down 24-1/2 cents to 12.88-1/2 with an overnight low in at 12.85-3/4 in place.  Futures recovered a large chunk of Thursday’s losses to close out last week, and appear to be consolidating to begin this week ahead of updated weather forecasts and crop ratings.  Chinese bean futures were up 35 yuan ; Soymeal up 16; Soyoil up 48.  Malaysian palm oil prices overnight were down 45 ringgit (-1.31%) at 3379 on a rising production outlook and concerns that Indonesia’s plan to change its levy will hurt Malaysian exports.  Soybean oil is weaker this morning after a sharp retreat last week.  After cooking oil prices hit record highs last month in India, the Ministry of Consumer Affairs, Food, and Public Distribution on Wednesday informed that edible oil prices in India are showing a declining trend across a wide array of oils.  Weekly Export inspections and crop ratings will help set the tone for this week.  Chinese state-owned importers bought at least eight cargo shipments of U.S. soybeans on Friday, or at least 480,000 tons, the country’s largest U.S. soybean purchases in 4-1/2 months.


Winter wheat futures were down 7 to 9 cents overnight, taking cues from weakness in row crops to start the week.  July Chicago wheat, at 6.55-1/2. is treading water just beneath 100-day moving average support that was tested overnight at 6.55-1/4.  KC (July) is down 9 to 5.97-1/2.  Despite the price recovery at the end of last week, traders are exposed to a weaker trend that could reinforce a lower move if last week’s lows are tested.  Much will depend on how well those support levels hold. The Dollar ended last week after moving higher for three days in a row, which could add resistance moving forward though.  The currency is weaker this morning.  Wheat could also remain under pressure from a mostly favorable weather forecast for winter wheat conditions outside of the US.  July MPLS wheat is off 6 cents this morning to 7.56-1/2 as a pennant begins to form on the daily chart setting up a potential break-out in either direction.


Cattle futures are called mixed.  Live cattle recovered some of Thursday’s losses to end the week, as prices consolidated, setting up a key week for price trends.  Cash markets traded higher last week. Northern dressed deals have had a range of $192 to $200, mostly $195, $4 higher than the previous week’s weighted average basis from Nebraska.  Southern live business has had a range of $120 to $124, mostly $122, generally $2 higher.  The higher cash trend may be key for this week’s futures prices.  Retail carcasses traded lower, and may have limited gains on seasonal demand concerns.  Choice carcass stayed soft at Friday’s close losing 2.97 to 323.28, and Select was 3.63 lower to 283.61.  Weak carcass values may limit strength to start the week.   The sharp drop in retail values is concerning but the driving factor for strength may be cash market.


Hog calls are mixed.  The hog market saw some strong bear spreading to end the week as the value in the front end maintained a strong premium to the deferred.  That trend may continue, especially if the cash market looks weaker.  Deferred contracts saw some recovery on Friday from Thursday’s weakness, but front month contracts saw additional selling pressure.  It was a tough week for the July and August hogs, losing 11.300 and 10.300 respectively.  This was a 9% drop in value for the week.  The cash market cooled off as the week progressed with the lean hog index finishing .92 lower on Friday to 121.86.  The index gained 1.77 for the week, but off the high from earlier in the week.  The cash market is concerning due to the possible court ruling  that would slow slaughter at major packing plants beginning July 1.  This could back up the cash market and hog supplies.  Retail values trended lower last week, but found some stability at the end of the week.  Carcasses closed higher on Thursday, and were 2.75 higher at midday on Friday but fell apart, losing 4.18 to 120.65.  The weak close will weigh on prices this morning.




Matthew Strelow

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