TFM Sunrise Update 8-16-21


Corn futures were mixed overnight while trading in their new higher post USDA report trading ranges.  Dec is off a penny to 5.72 with an overnight high at 5.76 and low at 5.68-1/2.  The market reacted favorably to the USDA report on Thursday by initially trading more than 30 cents higher before trimming gains and finishing 14 higher, breaking a lengthy holding pattern for the market.  Day four of the DTN yield tour pegged yield in IL at 203.50, Indiana at 190, and Ohio at 187.  The breakout to the upside could signal a move higher if resistance levels continue to be tested, but the coronavirus delta variant is a concern for demand moving forward.  Weekly Export Inspections will be out today, as well as updated weather forecasts.  Scattered showers in the Midwest over the last week has largely benefited filling corn.  This week, weather in the western Midwest is looking mostly dry through Wednesday.  Isolated showers are seen in the southern part of the region Thursday and Friday.  Temperatures look to be above normal north and near to below normal south today, then near to above normal Tuesday through Friday.  The eastern portion of the Midwest is forecast to see isolated showers through Friday.  Elsewhere, dryness and frosts have created irreversible damage for filling corn in Brazil where the harvest continues.  Recent flooding rain likely caused damage in central and northeast China.


Soybean futures are firm this morning and took out last week’s highs overnight.  Nov beans are up a nickel to 13.70 with an overnight and two-week high etched at 13.78.  Last week’s USDA data was not overly bullish, however, renewed Chinese buying is helping buoy prices mid-month.  Chinese Jan bean futures were up 53 yuan overnight; Soymeal up 75; Soyoil up 176;  Malaysian palm oil prices overnight were up 54 ringgit (+1.20%) at 4565 amid a global oilseed supply shortage and weakness in the Malaysian currency.  Spot basis bids for soybeans were sharply lower at river terminals, processors and elevators around the interior of the U.S. Midwest on Friday, grain dealers said.  Scattered showers in the Midwest over the last week has largely benefited soybeans.  Showers moving through the Delta are helping fill soybeans though more showers would be beneficial.


Wheat futures trade higher overnight near the top of Friday’s contract high trading ranges.  Dec Chicago wheat is up 9-3/4 cents to 7.84.  Dec KC is up 6 cents to 7.61; And, Dec MPLS spring wheat futures are up 6-3/4 cents to 9.36-1/4.  USDA, on Thursday released U.S., Russia and Canada’s wheat crop prospects with the Russian wheat crop estimate holding the biggest surprise.  The lower World wheat supply outlook could continue to support prices.  Tight U.S. supply suggests U.S. 2022 wheat acres need to increase or U.S. 2022/23 wheat carryout could drop below 500 mil bu.  Dryness in the Northern Plains is aiding harvest ahead of rainfall causing delays next week.  Favorable conditions are expected to fill spring wheat for most of northern and eastern Europe while also disrupting some harvest.  Ukraine is experiencing mostly favorable conditions as periods of showers move through, but more adverse conditions in western Russia are noted as showers will continue to be less plentiful and temperatures above normal.  Isolated showers in central Russia will miss most of the eastern FSU suffering from drought stress for filling to maturing spring wheat.  Favorable conditions for vegetative winter wheat are reported in Australia.  In Argentina and southern Brazil, dryness and cooler conditions are slowing growth on vegetative winter wheat, though soil moisture is mostly adequate.


Cattle futures are called firm in a bid to move up and out of the recent pattern.  Oct cattle, at 128.12, are stuck in a consolidation phase awaiting cues from the cash market.  Sales volumes remained light for the week with most regions in decline.  Prices firmed in the south with a few trades in KS at $125 leaving the bulk of trades $121-122/cwt.  Northern live trade was mostly $125-126.  Carcass weights continue to run well below last year, and there is no incentive for processors to hold back on slaughter volumes, although there continue to be physical and labor restraints. They can be expected to process all they can each week, although this past week was 639,000 head, under the previous week’s 641,000 head and certainly well under optimum plant potential.  The USDA report revised expected beef production for the balance of this year and next.  The downward revision was consistent with lower carcass weights and a declining cattle herd.


Hogs are called mixed.  Oct and Dec futures traded lower on Friday before ending the session well above the lows for the week.  Nearby October hogs, at 86.52, could see a test of the contract’s 20-day moving average up at 89.11 by week’s end after rising up off of oversold levels in last week’s action and becoming a ‘buy’ for traders.  However, headwinds are noted from the cash index which lost 2.29 last week.  In addition, we’ll need some spark from the Weekly Export Sales data on Thursday.  last Thursday’s USDA report showed pork production for 2021 down 1.2% compared to the July report.  Exports were also trimmed 143 mil lbs.  Per Capita, pork production is seen increasing from 50.2 lbs in 2021 to 50.9 in 2022.


Matthew Strelow

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