TFM Sunrise Update 7-26-21


Corn futures were mixed overnight with a weaker tone as prices ease below last week’s trading ranges.  Weekend rains made their way across portions of the eastern Corn Belt, potentially improving an already decent looking crop condition.  Technically, the intermediate trend has turned lower in corn.  Scattered rain in this week’s forecast for widespread areas across the U.S. Midwest should prevent prices from making a significant run higher.  Dec corn is down 3 cents to 5.40 this morning while finding support at the contract’s 100-day Moving Average around 5.36.  Weekly Export Inspections and Crop Ratings will be out today.


Soybean futures were down overnight as bearish momentum carries prices through trend-line support.  Nov beans lost as much as 19-3/4 cents before trimming losses.  The move sent the new crop contract to a two-week low of 13.32 and within a nickel of its 100 day Moving Average.  USDA currently estimates U.S. soybean yield near 50.8 bushels per acre vs 50.2 last year.  Higher crops in east and south could offset lower crop in MN, ND and SD.  In South America, Brazil may be sold out of export soybeans.  Most look for China to begin to buy U.S. in August.  However, lower crush margins have many questioning whether, or not they will buy 35 mmt of U.S. supplies.  Flooding in China’s Henan province damaged crops including corn, peanuts and soybeans, and killed more than a million hogs and chickens, according to a local government official on Saturday.  Overnight, Chinese Sept bean futures were up 26 yuan ; Soymeal down 51; Soyoil up 16;  Malaysian palm oil prices overnight were up 120 ringgit (+2.81%) at 4391.


Wheat futures were down overnight.  Sept Chicago dipped to the contract’s 100-day Moving Average to 6.65-1/2 on losses of 18-1/2 cents, but is down 9-1/4 to 6.74-3/4 this morning.  Sept KC wheat was down as much as 15 cents to 6.31.  Sept MPLS Spring Wheat futures fell to 8.70, down 13-1/2 cents.  The spring wheat market and world fundamental news may help keep some support under prices, but the complex has run into technical resistance that is subduing upward price movement, particularly in the wake of a relatively strong dollar and weaker action in row crops.


Cattle futures are called mixed to higher.  Friday’s USDA Cattle Inventory confirmed what the market knew, that cattle numbers were tightening. Total Cattle and Calves as of July 1 were 99% of last year, down approximately 1.1 million head.  Beef cow numbers were 98% of last year, and at the lowest total over the past 5 years.  This was expected as the drought conditions in the west are having some impact on cow slaughter.  The COF data was mostly in line with expectations.  Compared to last year, total on feed was at 100%, Placements at 93%, and Marketings at 103%. Total cattle numbers at 11.699 million head was slightly above last year, and represents the current market, influenced by the steady slaughter pace.  Placements staying softer long term will keep support in the deferred contacts into 2022.  Cash trade last week saw moderate trade occurred in the North at $120 to $125 live, and $195 to $200 dressed, steady to $2 softer than last week.  Light to moderate volumes traded in the South at $118 to $120, fully steady with the previous week’s trade.  Due to seasonally lower demand, the cutout price continues to drop with Choice boxes decreasing by $3.73/cwt, and Selects moving $2.71 lower.


Hogs are called steady to higher.  Prices finished mixed with noted bull spreading in the market to end the week, as the front month strength saw buying support.  The strong technical close should open the door for a further test higher, but the fundamentals will need to stay supportive.  Friday morning cash hog trade was very quiet to end the week, but good strength earlier in the week helped support the market.  To end the week, the Lean Hog Index slipped .09 to 112.25, but did gain 91 points on the week, reflecting the early week strength in cash.  Retail demand will be key this week.  Technically, charts closed strong to end the week, and the premium in the front end is like to stayed supported to start this week.



Matthew Strelow

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