TFM Sunrise Update 7-22-2021

CORN

Corn futures were down overnight while trading inside this week’s nearly 30 cent trading ranges.  Sept corn shed 14 cents to 5.57-3/4.  Dec was down as much as 15 cents to 5.53-1/2. The entire grain and oilseed complex is in the red this morning ahead of what looks to be a round of disappointing Weekly Export Sales.  New crop corn sales are estimated to be 100,000 to 400,000 tons.  Old crop may see some negative sales figures.  Spot basis bids for corn shipped by barge to the U.S. Gulf Coast continued to strengthen in thin trading on Wednesday, dealers said.  China will auction 23,488 tons of corn imported from Ukraine at an auction on July 23, according to the country’s grain stockpiler Sinograin.  Fund managers may be reluctant to add to long corn positions until new crop corn sales improve.  Weather-wise, the 11 to 14 day forecast, though warm and dry may be prolonged by cool Pacific sea surface water temps that may extend the ridge into August.  However, traders do not view the forecast as bullish enough to challenge the series of lower highs etched on the daily charts.

SOYBEANS

The soybean complex retreated overnight, giving up more ground after a strong start to the week.  Aug beans gave up as much as 28 cents overnight to 14.11-1/4 before trimming losses.  Bean oil is leading the complex lower while posting the most significant chart damage.  Canola futures are falling apart which is adding pressure to the oil markets.  Momentum studies are now trending lower from overbought levels which is reinforcing selling pressure.  Chinese Sept bean futures traded down 33 yuan ; Soymeal down 39; Soyoil down 72;  Malaysian palm oil prices overnight were down 28 ringgit (-0.67%) at 4121 on losses in soybean oil and concerns about weaker exports from second-biggest grower Malaysia.  Trade estimates for this morning’s USDA Weekly Export Sales for beans are -50,000 tons to +200,000 tons for old crop, 100,000 to 200,000 tons for new crop.  Meal sales are expected between 75,000 to 300,000 tons for old crop, 100,000 to 200,000 tons for new crop.  Soybean oil sales are expected from -20,000 tons to +20,000 tons.

WHEAT

Wheat futures are down 10 to 20 cents this morning.  Chicago Dec wheat is down 18 cents to 7.02-3/4, effectively closing a small chart gap on the contract at 7.03 left from Sunday evening’s higher start to the week.  Dec KC wheat is down 12 to 6.67-34.  Dec MPLS is down 20 cents to 8.67-1/4 after already falling 45 cents from Monday’s contract high as of yesterday’s close.  Much of the back peddling is due to an overbought market leaving prices vulnerable for a set back.  Spring wheat weather for the Northern Plains and Canadian Prairies is still supportive, but increased price volatility is common for commodity markets searching for tops and bottoms in the market.  Severe drought has slashed expected U.S. spring wheat output to a three-decade low and across the border on the Canadian Prairies, crops are in similarly tough shape.  With little relief in sight, production forecasts should fall, and other global export markets will likely have to pick up Canada’s slack.  A significant amount of Canada’s annual wheat and canola output go to exports, and those products are important on the world stage.  Top customer China is among those that may need to seek supplies elsewhere, and trade rival Australia could be a good candidate to help fill that gap.  Trade estimates for this morning’s USDA Weekly Export Sales are 350,000 to 600,000 tons.

CATTLE

Cattle futures are called mixed for today.  The market saw two-sided trading yesterday, finishing with moderate gains and some positive reversals on charts.  Price action was very good as the 100-day moving average held support under the October contract which finished at it’s highest point since last week.  Cash trade is slowly developing as a light trade in the South at mostly $119, roughly $1 lower than last week’s weighted averages.  Only a few light scattered deals were reported in the North.  More business will need to take place today and/or tomorrow.  A rebound in both choice and select values provided underlying support at midday.  Prices stayed firm into the close with choice gaining .36 to 265.24 and select adding .19 to 248.77.  Demand was light to moderate at 161 loads.  USDA releases the July Cattle on Feed numbers on Friday afternoon, so the cattle market will likely stay choppy going into that report.  The U.S. cattle herd as of July 1 is seen falling by 443,000 head from the same time a year ago, according to the average in a Bloomberg survey of three analysts.

HOGS

Hogs are called steady to higher following a higher close on Wednesday amid a strong demand tone and firming carcass values.  Pork cutouts total 261 loads as cut out values were higher on the day, gaining 1.75 to 122.09.  The stronger demand tone should support the market, but weekly export sales this morning could set the direction for the remainder of the week.  The lean hog index gained 0.07 at 1112.33.  National Hog prices are lower, down 0.71 with a weighted average of 106.36 on 4,220 head and a five-day rolling average of 106.88.  Hog futures are technically strong with prices supported by short covering.  However, we’ll still need an improved fundamental market to maintain strength.

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