TFM Sunrise Update 8-13-2021


Corn futures were mixed overnight after falling back into the mid-range of yesterday’s wide post- USDA report trading ranges.  Dec corn is down 3 to 3.70 this morning and up 15 cents on the week, as well as above the recent sideways trading pattern.  The breakout to the upside could signal a move higher if resistance levels continue to be tested.  USDA lowered the U.S. corn crop more than expected, and futures ended higher yesterday, but off session highs.  USDA raised U.S. 2020/21 carryout due to lower exports, and also lowered U.S. 2120/22 corn exports and feed use to help offset the lower crop.  Farmer selling increased near session highs.  Some locations may now be sold out of old crop corn and near 60% sold on new crop.  End users remain uncovered for 2022.  Old crop ending stocks came in at 1.1117 bil bu which was above the 1.096 bil bu estimate and up from 1.082 bil in July.  Nearby Sept corn got to within 11 cents of the $6 mark during yesterday’s post-USDA report price action.  The contract is down 2 this morning to 5.65.


Soybean futures are firm this morning while still rangebound.  Nov beans are up a nickel to 13.46.  For the week, the contract is up about 15 cents.  Nearby August beans are up 12 this morning to 14.13-1/2 and down 11 cents on the week.  USDA lowered the U.S. 2021 soybean crop, but dropped demand even more.  They lowered the U.S. crush, but also lowered U.S. soyoil and soymeal demand.  The 2021 soybean crop is pegged near 4.339 bil bu on a 50 BPA yield.  The trade will need to see lower U.S. 2021/22 crop/carryout to trade over Thursday’s high of 13.69-1/2 in the November contract.  Farmer selling increased near those session highs.  Last night, Chinese Sept bean futures were down 47 yuan ; Soymeal up 3; Soyoil down 34;  Malaysian palm oil prices overnight were up 31 ringgit (+0.69%) at 4505 amid pressure from weakening prices of soybean oil and concerns about sluggish demand.


Wheat futures were firm overnight with the nearby Sept contract in Chicago up 7 to 7.60-1/2, KC up 5 to 7.43-3/4; and, MPLS up as much as 11-1/4 cents to within a fraction of the contract high of 7.44-1/2 from July 19.  For the week, the contracts are up 43 cents, 38 cents; and, 24 cents, respectively.  U.S. farmer selling was active for new crop wheat when July 2022 Chicago wheat was etching new contract highs above 7.40 yesterday.  That contract is down a penny this morning to 7.38-1/2.  The same can be said for the HRW wheat farmer when July 2022 KC wheat reached a new high at 7.33-3/4.  MPLS July 22 futures peaked at 8.85-1/2.  USDA estimated the U.S. 2021 wheat crop at 1.697 bil bu vs their latest guess of 1.746.  Spring wheat came in at 343 vs 345.  U.S. wheat 2021/22 carryout was 627 mil bu and World wheat ending stocks at 279.0 mmt vs USDA 291.2.  USDA estimated Canada’s wheat crop at 24 vs 31.5 and Russia saw a steep decline to 72.5 vs 85.0.  Technically, prices have reached overbought territory which could lead to some back tracking if additional buying interest fails to materialize.


Cattle futures are called firm following a higher finish on Thursday as prices reacted to the grain market.  Heading into the weekend, the technical picture is still cloudy as cattle trade in a sideways pattern.  The live cattle market is still drawing its strength from the retail market, though, as boxed beef values keep climbing.   Choice carcasses were higher at the close, gaining 7.13 to 317.93, and Select was 2.32 higher to 290.31.  The bid is prevalent in the Choice beef, widening the spread between Choice and Select to 27.62, reflecting that strong demand.  The most recent load count was light at 97 loads.  Weekly export sales relating to retail demand were lack luster at 13,600MT of new sales, down 9% from last week, as Japan, South Korea and Mexico were the top buyers of U.S. beef.  Weekly inspections were 18,600MT of shipment, also down 9%.  The cash market is looking for an additional bid, given the strong retail prices, but overall is still disappointing.  Light trade occurred in Nebraska yesterday occurred at $123 live and $198 dressed, mostly in line with last week.  In the south, deals are ranging from $119-122, with $121 catching most trade, again steady, which limits the upside in the market.  Cash trade is mostly complete for the week, with the exception of some clean up trade into the weekend.  Slaughter numbers are still trending lower.  The tighter kill numbers could bring some optimism for a strong push by packers in the cash market going into next week.


Hogs are called mixed.  Futures finished mostly higher yesterday, seeing some follow through from Wednesday’s strength.  August hogs hit expiration today and at 110.12, has now pulled about even with the Lean hog index with the spread at .325. The Index was .32 lower to 110.45.  Technically, prices have had a nice recovery off the recent low, but the $87-88 window can hold the October contract in the short-term.  With August going off the board, the discount futures have to the index is very wide, and it will be interesting to see if the futures move to the index, or the index stays soft.  On Thursday’s close, October is historically wide at 23.975 under the index.  Adding strength has been a move higher in carcass values at midday when pork carcasses gained 3.40 before tumbling into the close, losing 4.59 to 119.37 on moderate demand of 279 loads.  The weak close will likely pressure prices on the open.  Weekly export sales lacked fire with new net sales at 14,600 MT, down 62% from last week as Japan and Mexico were the top buyers.  China was quiet in the market only picking up 600 MT, which could make the market cautious.


Matthew Strelow

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