TFM Sunrise Update 7-29-21


Corn futures were choppy again overnight and are weaker this morning.  Sept corn traded a 3-3/4 cent range between 5.57-3/4 and 5.54 and is down 4 cents sitting on that low this morning.  For the week, the contract is up 7 cents while having straddled it’s 50-day moving average all week.  Dec is down 4-1/2 cents this morning to 5.52 and is up 9 cents for the week in a sideways consolidation phase.  Record yields for this year’s collective U.S. crop are unlikely this year, particularly with the dry two-week forecast, and net corn export sales need to improve considerably to reach the USDA forecast.  However, according to data issued by Planalytics on Thursday, the outlook for this year’s crop yield is 175.30 bushels per acre (BPA) up from previous forecast of 175.10 BPA, and has risen for a fourth consecutive time.  Yield in key ‘I’ states versus previous Planalytics forecasts are: Iowa 194.10 vs 193.90; Illinois 197.30 vs 196.80; And, Indiana 185.90 vs 185.00.  Look for more sideways price action to finish out the week.


Soybean futures are down 8 cents across the board, except for the lead month August contract which is fractionally lower to 14.33-1/2.  For the week, the contract is 32 cents higher than last Friday’s settlement price near 14.00.  Nov beans are at 13.70 this morning, up about 17 cents this week while completing a pennant formation on the daily chart which will lead to an eventual break out either higher, or lower.  For now, scattered rains are seen limiting upside price potential heading into the key pod-setting month of August for the U.S. crop as tight supplies keep the market supported.  The  outlook for this year’s crop yield is down to 50 BPA from previous forecast of 50.10, according to data issued by Planalytics on Thursday.  Yield in key ‘I’ states versus previous Planalytics forecasts are as follows:  Iowa 56.60 vs 56.60; Illinois 59.60 vs 59.40; And, Indiana 57.00 vs 56.80.  Grain dealers said the CIF market for soybeans and corns loaded onto barges and shipped down Midwest rivers was strong on Thursday, supported by tight supplies at grain terminals.  Chinese Sept bean futures were down 29 yuan ; Soymeal up 40; Soyoil down 16;  Malaysian palm oil prices overnight were down 39 ringgit (-0.88%) at 4388 heading for a sixth week of gains amid mounting concern about lower production in Malaysia, the second-biggest grower, and the effect of dry weather on soybean crops.


Wheat futures were mixed overnight and are in the red this morning.  Sept Chicago wheat eased 5-1/4 cents to the 7.00 mark, but did rise to a new high of 7.10-1/2 for the week last night on gains of 5 cents.  For this week, the contract has gained as much as 25 cents to make a run at the July 20 high of 7.18.  Sept KC wheat is off 4 cents this morning to 6.81-1/2, but did get within a penny of the 6.90 high from May 14.  The contract posted a gain of 24 cents this week.  Up in Minneapolis, Sept Spring wheat is down 7 cents to 9.11-1/2 and is up 28 cents this week while helping lead the complex in the black.  North Dakota’s spring wheat yield was estimated at 29.1 bu per acre, according to the final assessment of Wheat Quality Council’s crop tour.  That’s slightly above USDA’s estimate for the top U.S. producing state of 28 BPA versus last year’s yield of 49 BPA.  The tour was based on studying 257 fields over three days.  A downward move in the dollar was also a noted outside-market factor for gains in the wheat complex this week.  A government agency in Pakistan is believed to have bought about 220,000 tons of wheat in an international tender for up to 500,000 tons which closed this week.


Cattle futures are called steady to weaker after sliding below Wednesday’s lows yesterday.   The softer close was a disappointing technically, and could open the door for additional liquidation going into the weekend.  The lack-luster tone in the cash market is what brings caution to the cattle market.  Some light cash sales started Wednesday from $121-$123 in Kansas, Iowa & Nebraska, but southern trade was ranging from $118- $119.  Additional trade in the south Thursday at $120, keeps the market mostly steady to lower on the week.  Most trade is likely complete for the week, with the exception of some clean up sales.  The premium of the futures market to the cash market limited the upside in cattle.  Retail values are seeing some seasonal strength as retailers are locking in Labor Day supplies. Closing higher on the day, Choice carcasses gained 2.06 to 275.22 and Select was .70 higher to 256.82 buying strength maintained. Load count was moderate at 112 loads.  Weekly beef export sales stayed consistent at 22,500MT, down 11% from last week.  South Korea, Japan and China were the top purchasers of US beef last week.  Weekly exports were softer at 19,1000 MT.  Feeders felt pressure from an uptick in grain markets.  Triple digit losses in feeders was technically disappointing heading into today and the weekend.


Hogs are called mixed to lower.   Futures saw some rebound from Wednesday’s selling pressure to finish mixed on the day.  The most actively traded October contract was softer, but the remaining deferred contracts saw positive trade on Thursday.  News breaking on Wednesday into Thursday about a case of African Swine Fever in the Dominican Republic helped with the selling pressure on the market on Thursday.  In most contracts, selling appeared to dry up as prices climbed off support levels.  The lean hog index, which holds a premium to the August futures, was .11 lower to 111.94.  That premium should help support the August contract.  Retail values were firmer at midday, but faded into the close as carcasses losing 1.10 to 123.87 on movement of 275 loads.  Weekly export sales were strong on the week, and may have added to the buying support.  New sales were at 38,500 MT, up 57% from last week.  Mexico, Chile, and Japan were the top customers of U.S. pork.  China was absent this week as they are working through their pork supplies.  Prices on Thursday held support on the uptrend, but the price action this week is concerning.  The close this afternoon could be key from the next couple of weeks.




Matthew Strelow

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