TFM Sunrise Update 7-28-21


Corn futures were choppy overnight, consolidating at, or above 50-day moving average support levels within a weaker trend for the month.  Sept corn is down 1-3/4 cents to 5.47, Dec is off 2 to 5.44-1/4.  Sept corn, down 2-3/4 cents to 5.46 this morning, had a range yesterday from 5.44 to 5.64.  The contract has found support near 5.40 but needs to trade over 5.79 and fill the 5.88 gap to turn market into a rally instead of a correction in a bear market.  Dec is also down 2-3/4 to 5.43-1/2.  Open Interest remains near season lows on a slowdown in new U.S. export demand as domestic users have coverage and the U.S. farmer is not selling.  Corn futures also could see some pressure if weekly U.S. corn export sales tomorrow are low.  There is talk that China may have bought 1.5 to 2.0 mmt of U.S. Dec-Feb corn.  There is also some talk that Managed money funds are bearish corn futures now that a majority of the U.S. corn crop is pollinated and can no longer be hurt by bad weather.  Meanwhile, support stems from lower crop ratings this week.  The U.S. CIF market for corn and soybean barges was firm for spot loadings on Tuesday, dealers said.  In Brazil and Argentina, the combined corn crop could be closer to 134 mmt vs USDA’s 141 and 153 last year.


Soybean futures, as well as meal and oil contracts are down slightly this morning in light volume.  Nov beans are down 4-1/2 cents to 13.55;  Nearby Aug futures are down 3 to 14.15-1/4 after posting a wide range on Tuesday.  Talk that China bought soybean futures ahead of U.S. soybean purchases in new crop, and a 10 day drier-than-normal U.S. Midwest forecast offers support while open Interest remains near season lows.  The 11-14 day maps are cooler and wetter for much of the upper U.S. Midwest.  One crop watcher estimates U.S. soybean yield near 50.0 bpa compared to USDA’s 50.8 projection.  They also estimate Brazil and Argentina combined soybean crops near 179 mmt vs USDA’s 185 and 177 last year.  The key will be China demand for U.S. soybeans.  Overnight, Chinese Sept bean futures were up 9 yuan ; Soymeal up 43; Soyoil unchanged;  Malaysian palm oil prices overnight were down 89 ringgit (-2.01%) at 4333 slipping from a two-month high amid a drop in soybean oil and deteriorating growth prospects for India and emergence in Asia.


Wheat futures rebounded overnight from a lower close on Tuesday.  Nearby September contracts posted double-digit gains while trading inside yesterday’s ranges.  Sept Chicago wheat advanced a dime to 6.84-1/2.  The KC contract was up as much as 13-1/2 cents to 6.54-1/2.  Sept MPLS wheat rose to 8.97 on gains of 18-3/4 cents.  The market is showing some reaction to the spring wheat tour taking place up north and weekly crop ratings.  The nearby contract in MPLS will need to trade over 9.09, 9.17 and then 9.44 to turn market into a bull rally.  USDA dropped weekly U.S. spring wheat crop ratings to only 9 percent Good-to-Excellent vs 70 last year.  Initial Wheat Quality Council spring wheat tour wheat yields in SE ND are better than expected.  A yield estimate of 29.5 BPA was released on the first of a three-day crop tour across the number one producing state.  On the first full day of the tour in 2019, overall yield est. avg. was 45.6 bu/acre, based on 153 stops.  There is no 2020 figure due to lack of data gathering amid the global pandemic.  The tour will conclude tomorrow.  Russia spring areas remain dry with estimates of the crop size now near 80 mmt vs USDA’s 85.  Canada’s crop could be 21 mmt comparted to USDA’s estimate of 31. WU ended near 6.74. Range was 6.71 to 6.90. Open interest remains near season lows. KWU ended near 6.42. Range was 6.35-6.55. Open interest has been going up since the season low on June 29 low. USDA est that 84 pct of the US winter wheat crop was harvested. MWU ended near 8.78. Range was 8.75 to 8.97. Fact US exports are running behind last year and pace to reach USDA goal offers resistance to wheat futures. Egypt bought Ukraine and Romanian wheat in their tender. Like corn,


Cattle futures are called steady to lower after some profit-taking pressure on Tuesday.  The softer closes added a weak technical reversal on the front months of the cattle charts.  Feeder cattle also saw some profit taking losses, but unlike live cattle, feeders consolidated within Monday’s trading range, and charts are looking for more upside potential.  The cash market has stayed quiet and slow to develop for the week, likely holding off until the end of the week.  Bids are still very undefined, and what light trade that has occurred is holding steady with last week.  With futures prices at a strong premium to the potential cash, Futures prices upside may be limited in the near-term.  The fundamental highlight recently has been retail boxed beef values where prices have trended higher, as Choice carcasses gained 1.80 to 269.73 and Select was 3.02 higher to 253.94.  The load count was light to moderate at 157 loads.


Hogs are called mixed.  October hogs, at 92.52 have rallied more than $10, and may be due for some profit taking.  Carcass values were firm at midday, as pork carcasses gained 2.82 before evaporating, but carcasses were still .55 higher to 123.49 on moderate demand of 339 loads.  Cash markets have been quiet to start the week, and looking for strength.  The Lean Hog index was quiet, gaining .01 to 112.22.  The index is still holding a 4.75 premium to the August contract (107.475), which has helped support prices of the front month on a daily basis.  Daily slaughter has been running heavier this week, with total estimated slaughter yesterday at 474,000 head, up 5,000 head from last week.  The heavier runs could keep the cash market under pressure in the near-term.



Matthew Strelow

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