TFM Sunrise Update 9-1-2021


Corn futures were down overnight as prices slump into the harvest timeframe.  Dec was down 4-1/2 cents to 5.29-3/4 in the absence of supportive market news.  Traders view August weather as beneficial to crop in the northern and western sections of the Corn Belt.  Yield could see an uptick in the Sept 10 USDA Monthly Supply/Demand report, as well as planted acreage.  Crop ratings improved in IL, MN and WI, but fell in IN, MI, OH and SD with the best crops in KY, OH and WI.  The lowest rated crops are in MN, SD and ND.  IA ratings are also below average.  We’ll get Weekly Ethanol Stats today with trade estimates for the week ending Aug. 27 seen lower for production than the previous week at 926,000 barrels per day.  This would be the eighth straight weekly decline.  Stockpiles’ average estimate is 21.146 mil bbl vs 21.223 mil a week ago.  Weekly Export Sales are on tap for tomorrow morning.


Soybean futures were down nearly a dime overnight to 12.83 (Nov) while slipping past Tuesday’s low of 12.83-1/4.  The next downside target is 12.77-1/4, the low from Aug 20 as damage to U.S. export facilities and crushing plants from Hurricane Ida impact short-term demand.  There were reports that power may not be restored in parts of New Orleans for 3 weeks.  August weather is also to blame for softer prices.  Some participants feel recent Midwest rains and new field data could suggest a higher yield.  Scattered showers moving through the Midwest over the next week will be beneficial for final stages of filling soybeans.  Crop ratings improved in IL, LA and TN, but fell in AR, IN, IA, MO,OH and SD. Best crops remain in LA, MS, TN and WI, and the lowest rated crops are in MN, SD and ND.  IA and MO ratings are also below average.  Meal futures have fallen to their lowest levels since December so far this week.  Attention will focus on South America and a la Nina pattern suggesting a 70% chance of affecting South American crops, particularly in southern Brazil and northern Argentina according to private weather forecasters.

Overnight, Chinese Jan bean futures were down 17 yuan ; Soymeal down 9; Soyoil down 74; Palm oil down 106;  Malaysian palm oil prices were down 68 ringgit (-1.60%) at 4186 on concerns that dwindling exports may boost stockpiles in second-largest grower Malaysia, and weaker soyoil will cut demand for the tropical commodity in food and fuel.


Wheat futures were narrowly mixed overnight and are mostly firm this morning.  Dec Chicago and KC futures are up 4 cents to 7.26-1/4 and 7.16, respectively.  Dec MPLS is up 6 to 9.09-1/2.  First notice day was Tuesday for September futures, meaning it will trade without limits until September 14.  A two-week pull back from new highs in the dollar is viewed as supportive for the wheat complex as prices try to recover from yesterday’s price drop that bruised the technical picture and may have left the markets oversold.  Global demand stays strong, even if US wheat continues to be left out due to being over-priced. As expected, spring wheat was projected to be close to 90% harvested here in the US, and on Monday USDA reported progress at 88%.  Newswires report Russia’s 2021 wheat harvest is now seen at 75.4 mil tons, down from a prior estimate for 76.2 mil, due to low spring wheat yields, according to consultant SovEcon.


Cattle futures are called steady to lower on follow-through from additional weakness on Tuesday as the front end of the market saw triple-digit losses.  August live cattle expired at the end of the session, and finished its trading life 1.300 lower to 118.950.  With the close, the technical picture in the October and December futures looks week, particularly at the start of the new month today.  October, at 126.90 closed below the 50-day moving average for the first time since mid-July, and may be poised for further long-liquidation.  The 100-day moving average may be the next support near the 126.000 price level.  The cash market has been slow to develop this week, looking for direction.  Bids and asks are still lightly developing with some asks at $125 in the south.  There is optimism that packers will still bid firmer especially with slaughter numbers tighter last week.  Estimated slaughter for yesterday was 121,000 head, up 1,000 head with last week.  With the holiday weekend coming, packers may have enough upfront cattle secured to limit cash market gains.  Retail values have been slipping as the buying for the labor day holiday has seemed to pass.  Midday did see a slight recovery in carcass values, but lost those gains at the close with Choice carcasses .67 lower to 342.11, and Select .52 lower to 312.03, but the load count was light at 89 loads.


Hogs are called weaker.  Futures finished mixed as the market was bear spread with the front months lower on moderate to sharp losses.  The strength in the market appeared in the summer deferred 2022 contracts.  After Last Friday’s strong close, October hogs failed at overhead resistance at $90.000 and took only two sessions to give back all of those gains.  Prices are now challenging support, and may be working back to the bottom of the range with support near 85.00.  The cash market has been weaker, and that has been the limiting factor.  National Direct prices for cash and carcass values have been trending lower, limiting the upside enthusiasm, but Tuesday’s cash close was 92.95, 2.23 higher with a range of $88-98, this could support the open on today.  The cash index is still trading $14.00 over the October contracts, which should be supportive, but the market seems content with the large discount at this time.  Pork carcass values have been choppy, and lost midday strength at the close, losing .07 to $109.01 on moderate load count of 357 loads.


Matthew Strelow

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