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 up overnight on follow-through from a bullish event on Wednesday.  Sept and Dec futures gapped higher on upward momentum while posting gains of 10 to 11 cents before stalling.  Later this morning, buying interest ensued carrying prices to new overnight highs on gains of 14-3/4 cents to 7.34-3/4 in July, 17-1/4 cents to 6.16-1/2 in the September contract; And, 13-3/4 cents to 6.02-1/4 in new crop Dec.  The September through May contracts settled on Wednesday at their daily trading limit of 40 cents, leading to expanded limits for today.  The Quarterly Stocks  report held no surprises with stocks as of June 1st estimated to be 4.112 billion bushels, slightly lower than the average estimate of 4.144 bb and down from 5.003 bb in June of 2020.  However, prices rallied on planted acres, which were pegged at 92.692 million.  This is up from the March 31st report planting intentions number of 91.144 million, but beneath the average estimate of 93.787 million.  With a continued eye on weather, the fundamental focus will shift to average yield now which will get its first update on the July 12th WASDE report.  Trade estimates for this morning’s USDA Weekly Export Sales are 150,000 to 650,000 tons for 2021-22 crop.  Basis bids for U.S. corn shipped by barge to the Gulf Coast softened on Wednesday as Chicago Board of Trade (CBOT) corn futures soared and exporter demand cooled, traders said.


Soybean futures were choppy overnight while trading beneath Wednesday’s intra-day highs.  Aug beans traded a 46-1/4 cent range between 14.09 and 14.45-1/4 and are up 13 to 14.43 this morning.  Nov beans are up 6-1/2 to 14.05-1/2. Nearby July is up 15 to 14.65.  USDA stocks as of June 1st came in at 767 million bushels, lower than the average estimate of 787 mil and down from 1.381 billion bushels in June of 2020.  Similar to corn, acreage was a bullish surprise for soybeans as the USDA estimated 87.555 million acres were to be planted.  This number is down slightly from March’s estimate of 87.6 million but 1.4 million acres under the average estimate of 88.955.  Trade estimates for this morning’s USDA Weekly Export Sales are 1.0 to 2.0 mil tons for 2021-22 crop.  Later today, USDA will release it’s May Fats and Oils report along with Grain Crushings.  Soybean crush is seen coming in at 173.4 mil bu in May, a 3.4% drop from a year ago.  Chinese Ag Sept bean futures rose 86 yuan ; Soymeal up 116; Soyoil up 156.  Malaysian palm oil prices overnight were up 112 ringgit (+3.11%) at 3711 headed for its highest close in three weeks, with concerns about tight global supplies of edible oils and a move by top buyer India to lift a ban on refined palm imports boosting sentiment.


Winter wheat futures are down slightly this morning, easing from a strong outing yesterday.  September Chicago, down 8 cents to 6.71-1/2, has gravitated back down to the contract’s 20-day moving average.  Sept KC wheat is off a dime to 6.49, and Sept MPLS wheat is up a fraction to 8.50 versus yesterday’s new contract high etched at 8.59-3/4.  All wheat planted acreage was pegged at 46.743 mil acres, exceeding trade guesses of 45.840 mil and the March estimate of 46.358 mil.  Though not a big market mover, wheat prices got caught up in the corn and bean rally allowing for a breakout to the upside in HRW and SRW contracts.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 500,000 tons for 2021-22 crop.


Cattle futures are called mixed to higher.  June cattle contracts went off the board yesterday, completing trade at 122.500, down .050.  August cattle, at 122. 72 is the new lead month and is holding on to support levels.  Late buying led to a higher close.  Cash trade is building in a range from $122 to 126.  This is trending steady to slightly higher than last week, pulling the August contract in line.  A concern has been the weakening retail values.  After being firmer midday, prices drifted into the close.  Choice carcasses were 1.05 to 291.29 and Select 1.13 to 269.27 with a load count light to moderate at 131 loads.  Feeder cattle market succumbed to selling pressure during the day, closing with triple digit losses as a friendly USDA grain stocks and acres report saw limit up moves in corn futures, bringing selling pressure into the feeder cattle market.  Technically, Live cattle prices are holding support levels, and feeder charts look concerning.  The action in the grain market will be key in the weeks ahead.


Hog futures are called mixed to lower after an uneven close Wednesday.  The August contract, at 103.25 saw some price consolidation, holding support above the 10-day and 100-day moving averages.  The volatility and strength in the grain markets led to some pause in the hog markets on Wednesday afternoon.  The lean hog index is still trending lower, losing 1.19 to 113.00, but is still holding a 5.50 premium to the July futures, helping support the front month contract.  In the countryside, cash hog prices trended relatively steady in key markets.  Retail values have seen strong selling pressure, but have been trying to build a recovery.  Midday pork values were 1.02 higher, but faded into the close, losing .38 to 113.84 on moderate movement of 272 loads.  The hog market will be keeping a close eye on export sales numbers this morning as the overall actions of the Chinese have a direct influence on hog market on the open.  Technically, hogs look to be building a bottom, but will need some additional fundamental strength to build the recovery further.


Matthew Strelow

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