TFM Sunrise Update 8-19-21


Corn futures were down 6 to 7 cents overnight to a session low of 5.58 in the December contract.  New highs in the dollar overnight is pressuring the grain and oilseed complex ahead of this morning’s USDA Weekly Export Sales data.  Trade estimates for 2021-22 corn sales are 300,000 to 930,000 tons, with some potential cancellations for 2020-21.  Yield potential for corn was above average in the far western part of top-growing state Iowa, according to scouts Wednesday on the 3rd day of the Pro Farmer Midwest Crop Tour.  While much of the state was at least abnormally dry, according to the U.S. Drought Monitor, sufficient rains during the past few months boosted crop potential.  Yields averaged 207.7 bu/acre after eight stops in Iowa counties of Fremont, Mills, Pottawattamie, Harrison and Shelby.  In Argentina, planting for the upcoming season is seen increasing by 7.5% y/y to 7.1m hectares (17.5m acres), from last season’s 6.6m hectares, according to the Buenos Aires Grain Exchange.


The soybean complex traded lower overnight with Nov beans posting losses of as much as 18-3/4 cents to 13.34-1/2.  Soyoil contracts are trading at a one-week low after losing 1.00 overnight.  Technically, prices are still generally sideways, but have shown a proclivity to weaken on any price strength.   A spike in the dollar and a sharp break in Malaysian palm oil is helping pressure the complex this morning.  Malaysian palm oil prices overnight were down 64 ringgit (-1.49%) at 4237.  Chinese Jan bean futures were unchanged; Soymeal down 34; Soyoil down 54; Palm oil down 78;  Trade estimates for Weekly Export 2021-22 bean sales are 1.0 to 1.8 mil tons with some potential cancellations for 2020-21.  Soybean meal sales are seen coming in between 50,000 and 250,000 tons.  Soyoil sales are seen from zero to 10,000 tons.  Ten consecutive days of export announcements by USDA have buoyed prices leading up to last night’s price drop.  Soybean pod counts in 3-by-3-foot squares averaged 1,295.7 pods in parts of IA, the 2nd biggest soy-producing state, during day 3 of the Pro Farmer Crop Tour.  That’s up from 1,164 pods last year and the three-year average of 1,276.7. (The crop tour doesn’t project soybean yields).   There were instances of white mold and Japanese beetles reported in the soybeans, although the issues didn’t appear significant enough to drastically impact fields.  Scattered showers in the Midwest last week has largely benefited filling soybeans.  Another beneficial system is forecast late this week.


Wheat futures were down again overnight.  Dec Chicago wheat fell 8-3/4 cents to 7.42-3/4.  Dec KC wheat hit 7.25 on losses of 11-3/4 cents; and, Dec MPLS was off a nickel to 9.06.  Momentum studies have weakened for the complex, augmented by strength in the dollar.  Support levels are being breached which could accelerate a move lower should neighboring row crops continue to weaken and the dollar strengthen.  Favorable conditions for filling spring wheat is advertised for most of northern and eastern Europe with some disruptions to harvest noted.  Underlying market support stems from Russia’s short wheat crop and rumors of the region limiting exports.  Egypt bought 180,000 tons of wheat in their recent tender from Romania and Ukraine.  Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 500,000 tons.


Cattle futures are called steady to higher as prices challenge the top of the trading range.  The concern is that prices have failed at the most recent highs.  It will most likely take some news to push futures prices through this barrier.  The monthly Cattle on Feed report will be released tomorrow at 2 pm cst.  The trade estimates are looking for on feed supplies at 98.2%; placements at 92.9% and marketings at 96.4%.  Cash trade is still relatively quiet.  On Tuesday, some light cash trade occurred in the North at $127 cash and dressed at $204-205, mostly higher than last week’s trade.  The southern trade remains quiet overall.  Choice carcasses broke higher again at midday, gaining 2.24, holding most of those gains into the close, finishing 2.02 higher to 340.08, and Select added 3.03 to 309.80.  Demand was moderate at 112 midday loads.  Choice carcasses are now challenging the spring retail high, and could be getting towards a top.  Retailers have stayed active and stepping in the Choice market.  The Choice/Select spread is trading at $30.28, reflecting the strong Choice bid.  Some of the strength on Wednesday may be tied to this morning’s export sales numbers and positioning for Friday’s USDA Cattle on Feed report.


Hogs are called steady to higher.  Technically, hog market is trying to work higher, but has consolidated the past couple of sessions.  Hogs looks like a value compared to the cattle market at this time, and that may keep some value buying in front of the market.  October futures made it back above nearby moving averages which may attract some additional money flow today.  We may see good Weekly Export Sales data today considering the weakness in recent retail values.  The strong surge in the beef market is also bringing some optimistic buying into the hog market on the prospects that retail demand may pick up.  Cash hog markets traded steady on Wednesday on the heels of the firmer tone on Tuesday.  The lean hog index was .03 higher to 109.64, but still trading at a 20.540 over the October futures, supporting the front month.  Pork carcass values have been volatile, and holding mid-day strength has been a difficult task.  Yesterday, carcasses gained 3.27 and finished 2.49 higher to 120.61.  The load count was moderate at 349 loads.


Matthew Strelow

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