TFM Sunrise Update 7-23-2021


Corn futures stayed choppy overnight and are down 2 cents in Sept to 5.62-1/2 and 4 cents in Dec to 5.57-1/4.  Outside markets are strong, overall, with stock index futures back on the rise after a brief fallout.  The same can be said for crude oil; and, the dollar is staying strong, albeit rangebound for the week.  Technically, corn prices have posted modest gains this week while generally trading rangebound.  This is an indication that most, if not all of the market factors are priced into current price levels.  Moving averages, both short term and long term lines are converging during a key development stage for this year’s U.S. crop.  USDA estimates U.S. 2020/21 corn carryout near 1.082 bil bu vs 1.919 last year.  2021 acres are estimated near near 92.7 mil acres vs 90.8 last year.  Yield is estimated near 179.5 bpa.  The first farmer yield survey is August 12.  2021/22 demand is estimated near 14.840 vs 15.045 this year.  This leaves a carryout near 1.432.  Most private analysts estimate demand near 15.265 and carryout near 930.


The soybean complex is mixed this morning with beans and meal in the red, and soy oil firm.  Nearby Aug and Nov beans are down a dime to 14.06-1/4 and 13.52-1/4, respectively.  Sept is down about 50 cents for the week; Nov about 40.  Both contracts are testing trendline support heading into the weekend, awaiting direction from weather.  Chinese Sept bean futures were up 12 yuan ; Soymeal down 72; Soyoil up 6;  Malaysian palm oil prices overnight were up 134 ringgit (+3.25%) at 4255 for its longest streak of weekly gains in a year amid concerns about declining production in the world’s biggest growers.  Soybean traded lower.  Talk of chance for U.S. Midwest rains days 11-14 of the long range forecast and a lack of new U.S. new crop soybean export sales is seen weighing on futures.  China has not bought U.S. new crop soybeans since June 24 when Sept futures were near 12.50.  The contract is at 13.60 today.  The trade is still wondering if China will take 35 mmt next year.  Their soybean imports are set to slow sharply in late 2021 from a record first-half tally, confounding expectations for sustained growth from the top global buyer and denting market sentiment just as U.S. farmers look to sell their new crop, according to a newswire story.  A collapse in hog sector profitability and a sharp rise in wheat feed use are crimping demand in China, where imports this year may now be less than 100 million tons, compared with a recent U.S. forecast of 102 million tons.


Wheat futures were unchanged overnight in light volume.  Dec Chicago futures, at 7.01-1/4, are trading close to where they closed last Friday at 6.99-3/4.  Dec KC wheat, at 6.66, too, is up 4 cents for the week.  Dec MPLS wheat is up 1-1/2 cents to 8.98.93-1/2 and is down 12 cents since last Friday’s settlement.  The contract posted it’s contract high of 9.31-1/2 at the beginning of this week.  Nearby Sept wheat is inching higher this morning, up 3-1/2 cents to 9.07-1/2 as U.S. weather maps reduce north Plains rains on days 11-14 in the forecast.  Key support is 8.50.  This weekend and next week should be warm and dry across U.S. HRS area as harvest wraps up.  For now, prices are in the stages of correcting from higher trade leading to an overbought technical position.  Corn is viewed as a market leader, too.  Wildfire smoke provided a reprieve from heat stress on crops in the Canadian Prairie province, but any rain received now will only maintain yields, not increase them, Saskatchewan government said Thursday.  Crops remain extremely stressed from lack of moisture and are advancing quickly due to the heat, according to a weekly crop report.


Cattle futures are called mixed for today.  Live cattle futures finished with moderate gains on follow through buying from yesterday’s session.  Buying strength in the feeder market, and some position squaring before this afternoon’s Cattle on Feed Report on Friday helped push cattle prices higher.  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, so expectations are to start reflecting a tighter cattle supply.  Pre-report estimates are for total cattle on feed to be 99% of last year, Placements being the key number at 94.2% to see if the longer-term cattle numbers will be there; And, Marketings at 102.3% of last year.  The cash market this week stays very lack-luster.  Cash trade from $119 in the south to $125 in the north seems to be catching most trade. This is steady to lower with last week.  Carcasses values are starting to show some stability and where firm at the close. Choice carcasses were .90 higher to 266.14, and Select gained 1.00 to 249.77, following through on Wednesday’s firmer close. Demand was light at 118 loads.  Weekly export sale were improved at 25,100 MT, which south Korea, Japan, and China were the top buyers of U.S. beef last week.  That strong demand tone was reflected in the afternoon cold storage report.  Total pounds of beef in freezers were down 4% from the previous month and down 7% from last year.  These numbers should help support the market into the COF report.


Hogs are called steady to higher.  Like beef, the USDA cold storage reflected good product demand as frozen pork supplies were down 4% from the previous month and down 4% from last year.  Stocks of pork bellies were up slightly from last month but down 32% from last year.  The August contract was the only one to finish slightly higher.  The national Cash market averaged $104.53, down 1.83, putting some pressure on the futures market.  The Lean Hog Index traded .01 higher to 112.34 while holding an 8.36 value over top the August market, providing some support to the front month.  Midday carcass values were 1.60 softer but rallied into the close gaining .22 on moderate demand of 279 loads.  Weekly export sales were improved after last week’s weakness.  New sale totaled 24,500 MT with Mexico, Japan and Canada to top buyer.  China was missing from the export sales list, which was a disappointment to the market.  Shipments were strong at 30,800 mt.


Matthew Strelow

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