TFM Sunrise Update 8-11-2021


Corn futures were back up overnight as prices continue to chop sideways.  Dec is up 4-1/2 cents this morning to 5.57-3/4.  Brazil’s state-run agriculture agency Conab said in its 11th report for the 2020-21 crop that adverse weather conditions for the second corn crop decreased production estimates.  The agency matched the 86.7 mil ton average reported in a Bloomberg survey.  That is compared with 102.6 mil tons in 2019-20.  Second corn-crop harvest is seen at 60.3 mil tons, down from 67 mil estimated last month and 75 mil the previous season.  The WASDE report from the USDA is being released tomorrow and the market is likely to chop around until the report is released.  Analysts are expecting the USDA to lower U.S. corn yield from their July estimate.  The DTN yield tour has estimated corn yield at 188 BPA for Nebraska, 143 bpa for South Dakota, and 120 for North Dakota.  Weekly Ethanol Stats will be out today, then Weekly Exports tomorrow morning prior to the monthly USDA report.


Soybean futures contracts traded higher overnight along with gains in soyoil.  Nov rose to a 1-1/2 week high of 13.54-3/4 on gains of 18 cents.  Chinese Sept bean futures were up 28 yuan ; Soymeal up 5; Soyoil up 138; Palm oil up 226;  Malaysian palm oil prices overnight were up 261 ringgit (+6.21%) at 4461, the most since early 2020 after a report showed stockpiles for the second-biggest grower fell 7.3% to 1.5 mil tons in July from the previous month, confounding predictions for an increase.  In the U.S., this week’s U.S. crop rating was the third-lowest over the past twelve years.  The highest rate crops are in LA, MS, TN, IL, WI, KY and OH.  The lowest rated crops are in ND, SD, MN and IA.  USDA announced new U.S. soybean sales to unknown and China so far this week.  China has imported 83 mmt soybeans to date. They need to import 14 mmt for Aug-Sep to reach USDA goal.


Wheat futures were narrowly mixed overnight.  Nearby Sept Chicago wheat traded an overnight range from 7.26-3/4 to 7.18-3/4 and was down a nickel to 7.22-1/4 this morning.  The front month KC contract is down 2 to 7.12-1/4; and Sept MPLS spring wheat futures are quietly trading near unchanged at 9.15.  Lower ending stocks are predicted in tomorrow’s USDA report, while record production is expected to be confirmed.  Meanwhile, the dollar made a new high for the move overnight, eclipsing the highs from July 20 & 21 and putting pressure on upside potential for wheat prices.  Also, U.S. corn prices have dropped vs feed wheat lowering the feeding of wheat.  Talk that US/Canada/Russia crops will be lower offers support.  Plummeting spring wheat vegetation density and continued depletion of soil moisture in the Northern Plains will likely lower 2021/22 U.S. total wheat production by 2% to 46.9 million tons.  One current median estimate is below the USDA’s latest estimate (from July WASDE) of 47.5 million tons.


Cattle futures are called mixed to higher.  Futures failed to break out to the top side in trade on Tuesday following a strong start to the morning.   The surge in boxed beef prices has supported the cattle market, and brought some anticipation of higher cash markets.  Boxed beef trade closed higher, keeping the trend in order as Choice carcasses gained 5.52 to 305.32, breaking the $300 barrier, and Select was 3.80 higher to 284.61.  The Choice/Select spread has gone to 20.71 at the close, reflecting the strong bid for Choice beef.  The cash market remains quiet with asking prices $123-124, but bids are still undefined.  Packers still have control over the leverage in the cash market as the slaughter pace holds around an estimated 119,000 head.  The drop off early session highs looks difficult on the charts technically, but the market remains sideways overall, awaiting some positive news to push prices higher.  Feeders have been moving steadily higher, but seasonality could be a concern.  The September contract is trading nearly $20 higher off the May lows.


Hogs are called steady to lower for today.  Selling pressure resumed in the deferred contracts as the market finished with moderate losses for the second day this week.  The only exception was the August contract which expires on Friday.  The index lost 0.84 to 111.21 and still has a 1.50 premium to the August contract.  October hogs resumed the technical selling and long liquidation that started last week and accelerated on Monday.  Since posting a near-term high on August 4, the October contract has lost over $10.00 of value.  Technically, the market is weak, and the price action is poor with prices challenging a technical support level off a longer-term trend line at the 84.000.  If that level breaks, additional long liquidation will have October testing the June 24 low of 80.00.  Demand concerns are in the front of the market’s mind, whether domestically or on the export front.  Hog retail values have been extremely volatile and may be hitting a seasonal peak.  Pork carcass values were nicely higher at midday, gaining 3.75, but ended the day lower, dropping 1.84 to 122.40.  The load count was moderate at 363 loads.  The weak carcass close will pressure prices this morning.


Matthew Strelow

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