TFM Sunrise Update 7-1-2021

The CME and Total Farm Marketing offices will be closed Monday, July 5, 2021, in observance of Independence Day


Corn futures were mixed overnight with a firm tone after a strong week of trading fueled by bullish USDA acreage data.  The outlook for this year’s crop yield is up from previous forecast of 174.90 bu/acre, according to data issued by Planalytics on Thursday.  Yield in key states versus previous Planalytics forecast (in bu/acre): Iowa 193.40 vs 193.70;;Illinois 196.20 vs 194.70; Indiana 183.70 vs 181.20.  On Thursday, StoneX reduced Brazil’s corn crop estimate to a total of 87.93 million tons for the 2020/2021 corn harvest, down from a previous forecast of 89.68 million.  The second corn crop in Brazil, which is battling drought and now frosts, is now seen at 60.45 million tons, compared with a previous estimate of 62 million ton.  July corn was up a penny overnight to 7.20-3/4 and has traded to a contract high of 7.44-1/2 this week, up $1.08 from last Friday’s settlement.  Sept corn is up 4 to 6.05-3/4 and is up 75 cents for the week.  Dec is up 2-1/2 cents to 5.91-1/2, up 72 cents for the week.  The Independence Day holiday schedule will keep the markets closed until 8:30 AM CT Tuesday, and back-up regularly scheduled USDA reports one day next week.  The weather forecasts for the Western and Northern sections of the corn belt remains a concern, but there are chances of rain and cooler temperatures entering the 6 to 10 day models.


Soybean futures are higher this morning with nearby July trading at its 100-day Moving average, up 15 cents to 14.62, Aug up 13 to 14.42-3/4; And, Nov back above its 50 day MA, up a dime to 14.05-1/2.  For the week, the new crop contract is up $1.35 per bushel.  Chinese soybean futures were up 96 yuan; soymeal up 96; soyoil up 162.  Malaysian palm oil prices overnight were up 79 ringgit (+2.13%) at 3789 heading for its biggest weekly advance since early May on expectations of a boost in exports and stronger soybean oil amid concerns about tight global vegetable oil supplies.  On Thursday, Planalytics kept soybean yield unchanged from their previous forecast of 50.10 BPA with the key “I” states: IA 56.00 vs 56.10; IL 59.20 vs 58.90: IN 56.40 vs 56.00.


Wheat futures were mixed overnight with a firm tone led by Spring wheat.  Sept MPLS is up 9 cents this morning to 8.45-3/4, within a stone’s throw of Wednesday’s contract high set at 8.59-3/4 as area experiencing moderate to intense drought rose 4 percentage points from the previous week to hit its highest mark of the season.  For the week, the contract has traded a 63-3/4 cent range.  Sept CBOT wheat gained 4 cents overnight to 6.69-1/2 and 29 cents this week.  Sept KC is up 1-1/2 cents to 6.39-3/4 and up 30 cents this week.  Strength in the dollar this week is creating some headwinds for the wheat market.  Yield outlooks from Planalytics keeps U.S. winter wheat forecast unchanged at 52.70 BPA.  The yield in key states versus previous Planalytics forecast: Kansas 52.20 vs 51.10; Oklahoma 39.10 vs 38.90.  The firm’s outlook for spring wheat is down to 45.20 BPA from its previous forecast of 45.70.  Yield in key states versus previous is: North Dakota 44.10 vs 44.50; MN 60.00 vs 62.00; MT 32.90 vs 33.10.


Cattle futures are called mixed to higher.  Live cattle futures finished higher on Thursday with modest gains across the board as a steady to firmer cash and a recovery in the feeder cattle market helped boost the market.  Countryside cash remains fairly quiet, but more deals are getting put in place ranging from $122-126.50, and even some regional $127 trade has been established.  This has been running slightly higher in some area.  The stronger cash market has helped pull futures prices higher.  Meanwhile, the retail market stays on the defensive.  At the close Choice carcasses trended 3.64 lower to 28.65 and Select lost .88 to 268.39.  The load count was light at 137 loads.  The drop in retail values has been aggressive, but are still historically strong and can support the current cash prices.  Estimated slaughter for Thursday was 119,000, even with last week, and week to date, cattle slaughter is running 2,000 head over last week.  Cattle numbers should stay healthy in the near-term, and could limit upside.  Both live and feeders had positive closes technically with good price action, and could be poised to move higher if conditions dictate.  The close today and the response next week off the 3-day weekend will be key going forward.


Hog futures are called mixed to lower on follow-through from yesterday’s lower action.  Selling pressure had the market testing limit down during the trading session. August hogs did trade the 3.00 limit down during the day, and found enough support to tick higher at the close.  Concerns of slowing the slaughter line to start July helped weigh on the market. Daily hog slaughter was 458,000 versus 473,000 last week as the holiday weekend in here.  Backing up supplies will limit the cash market.  The lean hog index is trending lower, losing .82 to 112.18 on Thursday.  The index is still holding a premium to the July futures, which is limiting selling in the lead month.  Carcass values have turned more stable, and were firmer at midday but faded those gains into the close.  Pork carcasses were .06 higher to 113.90 on moderate demand of 269 loads.  Weekly export sales failed to support the market as net sales of 28,600 MT reported for 2021 were unchanged from the previous week, but up 12% from the prior 4-week average.  Mexico , Japan and Canada were the top buyers of U.S. pork.  China was in the market, but at a low 1,500 MT, which would be deemed as a disappointment, adding to the selling pressure today.  The hog market is in the bottoming process, and will likely stay volatile.  Technically, a reversal off the session highs is alarming that a true bottom is still not in place.


Matthew Strelow

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