TFM Sunrise Update 7-7-21

CORN

Corn futures are firm this morning after seeing follow-through movement to the downside from Tuesday’s sharp sell-off.  The limit-down drop puts futures in an expanded limit for today.  However, after slumping to 5.43-1/2 (Sept) and 5.31 (Dec) overnight, prices are seeing a technical bounce of 3 to 4 cents to 5.55-1/2 and 5.43-1/2, respectively.  The corn crop is rated at 64% Good-to-Excellent this week, unchanged on the week.  We had an increase of one point to ‘Excellent’ from the ‘Good’ column this week, along with a 1 point drop from ‘Fair’ down to ‘Poor’.   Basis bids for corn shipped by barge to the U.S. Gulf Coast were steady to higher on Tuesday as solid demand from exporters and tumbling futures prices supported values.  Traders also stated that highly volatile grain prices kept some importers on the sidelines awaiting more price stability.  But the market’s drop on Tuesday is likely to attract inquiries from price-sensitive feed grain buyers like South Korea.  Weekly Ethanol Stats, normally scheduled for today, are moved back one day, as well as Weekly Export Sales scheduled for release on Thursdays.  Looking ahead, we’ll get a rare Monday release of the next USDA Monthly Supply/Demand report on the 12th that will take a stab at yield projections.

SOYBEANS

Soybean futures are higher this morning as the market digests yesterday’s steep price declines fueled by much needed rains in SD, North east NE, SW MN, NW IA and WI.   Aug beans are up 38 cents to 13.82-1/2.  Nov is up 35-1/2 cents to 13.40-1/2 after bouncing off of 100-day Moving Average support to get back to 10 and 20 day Moving averages.  Weekly Crop Ratings showed the soybean crop falling to 59% Good-to-Excellent this week, down 1 point on the week.  The trade  was looking for NASS to rate the U.S. soybean crop near 60% G/E vs 60 the previous week.  The percent of Poor-to-Very Poor increased 2 points to 11%.  The U.S. east Midwest soybean crop remains average, to above average.  Overnight, Chinese September bean futures were down 13 yuan ; Soymeal down 73; Soyoil down 148; Palm oil down 114.  Malaysian palm oil prices overnight were down 59 ringgit (-1.53%) at 3792 heading amid a broader slump in farm commodities and higher stockpiles of vegetable oils in India, which may curb demand from the world’s biggest buyer.

WHEAT

Wheat futures consolidated overnight after HRW and SRW prices fell to new multi-month lows to begin the holiday-shortened week.  Sept Chicago wheat is up 5-1/2 cents to 6.31-1/2.  The actively traded KC wheat contract is up 8 cents to 5.91-3/4.  Both contracts are now trading below their 200-day moving average support levels.  Sept MPLS Spring wheat is up 14 cents to 8.07-1/4.  Weekly Crop Ratings showed the Spring wheat crop dropping to 16% Good-to-Excellent, down from 20% previous week.  The trade was looking for 19% G/E.  This week’s rains won’t save this year’s crop with ND most at risk, along with Canadian Prairies.  In Oklahoma, harvest was mostly complete, but wet conditions following recent rains held up farmers’ attempts to finish up combining the remaining fields.  The overall winter wheat harvest was pegged at 45% vs 33% last week, and 54% a year ago. Winter wheat was rated 47% G/E vs 48% last week, and 51% a year ago.

CATTLE

Cattle futures are called steady to higher. The market remains choppy overall and working in a sideways fashion, awaiting news to break prices one way, or the other.  A strong move in feeders is supportive to the complex.  This week’s cash market activity will lend some direction.  Boxed beef values were mixed at the close with Choice gaining 1.24 to 286.68, but Select lost 1.10 to 363.31 on light movement of 120 loads. Technically, feeders are strong and should grains continue to weaken, feeders could test contract highs dragging live cattle with them.

HOGS

Hog futures are called mixed.  The front month contracts have been trying to build a bottom, and the most actively traded August contract saw good price action, following through from Friday’s strong close.  Lean hog futures finished mixed yesterday with buying support on the front end of the hog market.  The weakness was in the deferred contracts that saw modest losses.  Cash has stayed firm, as packers look to secure hog supplies.  Weekly slaughter, including Saturday kill ran 75,000 head over the previous week, influenced by the holiday slaughter pace.  With demand still strong, packers wanted to lock in those supplies.  The Lean hog index has been trending lower, and dropped an additional .51 to 111.26.  The index is still holding a premium to the July contract with expiration on the 15th.  This should help support the front month.  August is at a steeper premium, adding to the buying strength for the summer contract.  Pork carcasses have been trying to trend higher, and got some follow through at midday, but softened into the close. Carcasses lost 1.58 to 113.61 on moderate demand at 321 loads.  Softer retails may limit the market open.

Author

Matthew Strelow

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