TFM Sunrise Update 6-30-2021


Corn futures were down overnight as the trade prepares for the 11 AM CT release of the Quarterly USDA Grain Stocks and Acreage report.  Analysts are estimating 2021 corn acres to come in at 93.8 million acres, up from the 91.1 million estimated in the March Planting Intentions report.  Quarterly grain stock estimates are at 4.144 billion bushels as of June 1st, this would be below last year’s 5.003 billion bushels if realized.  Nearby July was down 7 cents to 6.87-1/2, but up 50+ cents from last Friday’s closing range.  Sept corn was down 6-1/2 cents to 5.52-3/4.  The contract has is down 37 cents for the month of June.  Dec is down 8-1/4 cent this morning to 5.40-1/4, in the upper half of this week’s trading range between 5.17-1/2 and 5.59 and off about a nickel for the month.


Soybean futures traded two-sided overnight and are in the red this morning.  July is off a nickel to 13.55-1/4, Aug down 4 to 13.35-3/4; and, Nov down 4-1/4 to 13.08-1/4.  All three contracts are consolidating inside Tuesday’s trading ranges and well off of the May contract highs.  For the month, July has lost $1.68 per bushel and Nov 65 cents.  Meal contracts are firm, soyoil lower.  Soybean acres are expected to increase in today’s acreage report according to pre-report estimates.  Planted acres were pegged at 87.6 million in March, analysts estimate that number will climb to 88.95 million.  If realized, this would be nearly 6 million acres larger than the soybean area planted in 2020.  Those surveyed also expect tighter US soybean stocks than what was reported March 1st.  The average pre-report estimate is 787 million bushels down from 1.38 billion last year.  For the USDA monthly Crush report, traders see beans crushed in May near 5.202 mil tons, or 173.4 mil bu.  Oils stocks are estimated at 2.144 bil lbs as compared to 2.447 bil last year.  Overnight, Chinese September bean futures were up 51 yuan ; Soymeal up 16; Soyoil up 120.  Malaysian palm oil prices overnight were up 49 ringgit (+1.38%) at 3602 on optimism that a reduction in import tax by top world buyer India will boost demand for the tropical oil.


Wheat futures were weak overnight in light volume after a jumpy start to the week led by spring wheat.  MPLS July contracts are up 3 to 8.23 and a dollar higher for the month.  Sept is down 8-1/2 to 8.06 after reversing lower off of new contact highs posted Monday night/Tuesday morning.  Sept Chicago and KC contracts are down 3 to 4-1/2 cents to 6.43 and 6.22-1/2, respectively.   The Chicago contract is down 25 cents for the month, but KC is about even.  USDA is expected to estimate U.S. 2021 wheat acres near 46 mil vs 46.4 in March.  June 1 US wheat stocks are estimated near 861 mil bu vs 1.028 bil bu last year.  Stats Canada estimated 2021 All Wheat Acreage at 23.357 mil vs expected 23.3 and compared to 2020 24.982.


Cattle futures are called mixed.  Live cattle futures finished mixed with some profit taking on the bear spreads that have dominated the market recently.  June cattle expire today.  Like other markets, cattle are awaiting the USDA grain stocks and acreage report and the potential reaction from the grain markets.  Retail carcasses have sold off aggressively since peaking in early June.  At the close on Tuesday, Choice carcasses were 5.09 lower to 292.34, and Select lost 3.56 to 270.40.  Demand was light to moderate at 157 loads.  Since the highs on June 2nd, Choice carcasses have lost nearly $50.00 in value.  Despite the weakness, prices are still historically high, and that has supported the cash market.  Cash was firmer last week, but this week, trade is still mostly undeveloped.  Early indications are for steady to slightly higher trade overall, but countryside trade will take time to develop.  Feeders saw some buying strength with the market finishing mostly higher.  The feeder cattle market will be highly influenced by the USDA grain reports and the following reaction.


Hog futures are called mixed.  Technically, the market is building a bottom and is poised for some upside recovery.  The Aug chart has gaps to fill above the current price levels, and those could be targets.  A 50% retracement of the move lower for Aug futures would target the $108 area.  The cash market and the lean hog index is running a strong premium to the July board, adding to the buying strength today.  The index dropped 1.24 to 114.19, and still a $7.00 premium to the July contract, helping support the front month.  Pork retail prices have been trying to recover.  At the close, pork carcasses traded .91 lower, fading off midday positive trade.  Carcasses closed at 114.22. Prices have recovered from last week’s low at 107.82, but the soft close may pressure the morning open.  A large part in the turn in the hog futures may be tied to hog prices turning higher in China.  The Chinese government announced the buying of pork supplies for the government reserves, helping firm the Chinese domestic pork market. That has seemed to have a ripple effect to the U.S. hog market as well.


Matthew Strelow

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