TFM Sunrise Update 9-22-2021


Corn futures saw a mild bounce of 2 to 4 cents overnight after trading lower the past 4 days.  Dec corn is trading an inside session so far for today with last night’s 6-1/2 cent range between 5.16 and 5.22-1/2.  Traders are balancing early harvest results and harvest expectations ahead of next week’s Quarterly Grain Stocks report.  A fungus is plaguing corn fields in the U.S. Midwest, resulting in “significant yield loss,” according to Purdue University.  An epidemic of so-called tar spot disease is showing up on infected plants as raised, black circular spots on leaves and husks.  Weekly Exports will be out tomorrow morning.  The fact that there have been few purchases of Chinese corn recently is a negative factor for the corn market.  Season-to-date exports are currently only at 23 mil bu vs. 78 mil last year.  With delays from Hurricane Ida, some are thinking that China will prioritize bean exports over corn with the limited capacity available.  Weekly Ethanol Stats will be out today.  Production is seen higher than last week at 941,000 barrels per day.  This would be the third straight weekly increase in production.  Stockpiles average estimate is 20.014 mil barrels vs 20.01 mil last week.


Soybeans are flat this morning.  Nov beans are up a penny to 12. 75 and resting on 200-day Moving Average support.  Yesterday marked the first weekly close below that level, which is a warning shot across the bow of technical traders for more potential weakness.  Meal is down slightly this morning; oil up 50 cents per contract.  Overnight, Chinese Jan bean futures were up 2 yuan ; Soymeal down 28; Soyoil down 88; Palm oil down 84; Corn up 14;  Malaysian palm oil prices overnight were up 124 ringgit (+2.96%) at 4316 bolstered by strong exports and lower production from Malaysia as well as a rebound in soybean oil prices.  China’s imports from the U.S. hit the halfway mark of the $200 billion worth of additional goods and services it promised to buy under a phase-one trade deal reached last year.


Wheat futures are higher this morning.  Dec Chicago wheat rose as much as 9-1/2 cents to 6.99-3/4 before trimming gains to 6.96.  Dec KC wheat hit 7.02 and is up 7-1/4 cents to 6.97-3/4.  Dec MPLS wheat followed suit with gains of 7 cents to 8.96-1/2.   All three contracts are consolidating around their nearest whole numbers with little substantial market-moving news to jar them loose from either 50-day, or 100-day Moving averages.  Strength in the dollar could weigh heavy on U.S. export possibilities.  Meanwhile, most U.S. winter wheat areas remain dry.  22% of the winter wheat crop is planted compared to 12% last year.  Around the globe, isolated showers in the Pacific Northwest, but not enough, delay winter wheat establishment.  Dry and hot conditions in the Central and Southern Plains delays winter wheat planting and establishment.  Favorable conditions for harvesting spring wheat and planting of winter wheat for most of northern and eastern Europe.  Mostly favorable conditions for winter wheat planting and establishment in Ukraine, but more moisture is needed for Russia.  Favorable conditions for reproductive to filling winter wheat in Australia, though more showers would be beneficial in New South Wales and Queensland.  Recent showers are benefiting reproductive to filling winter wheat in southern Brazil and reproductive winter wheat in Argentina. Favorable conditions are reported for planting winter wheat in China.


Cattle futures are called steady to lower.  Technically, the picture still looks weak as prices may still be in search of a fall low.  In the short-term, prices are looking to consolidate, and maybe be waiting for strong fundamentals to move higher.  Futures finished mixed on Tuesday, as early session strength faded amid softer fundamentals.  The opposite price action took place on Tuesday versus Monday, as early session strength gave way to late session weakness.  The market looks to be building a trading range, and possibly is squaring up positions before Friday’s monthly Cattle on Feed report.  The Sept. 1 herd is seen falling year over year to 11.19 mil head, according to a Bloomberg survey of ten analysts.  That would be the fifth straight month that the feedlot herd declined y/y.  August placements are seen down 0.9% y/y.  Marketings are seen mostly unchanged at 1.89m head.

The cash market is still undeveloped as bids and asking prices are undefined.  Most trade will occur later in the week, and expectations are for mostly steady trade.  After catching a small bid on Monday, midday prices traded lower on Tuesday with Choice carcasses dropping 4.29 to 311.37, and Select lost 2.74 to 278.01.  Load counts were light/moderate at 175 loads.  The weak close will pressure prices to start the session today.  The spread between choice and select boxes is still extremely wide at 35.44, reflective of the demand seen for choice quality beef.  September feeders may be more tied to the feeder cash index, which traded .02 higher to 153.77, ahead of expiration at the end of the month.


Hogs are called mixed.  Futures consolidated on Tuesday and finished with moderate losses.  October hogs are tied to the 10-day moving average, and held that support for the 3rd consecutive day, meanwhile, July has had a second day of selling pressure to start the session, holding the 72.00 level, before pulling off early session lows.  The cash market remains a concern in a lower trend.  Direct cash trade was mixed on Tuesday.  Carcass base prices finished 1.18 lower to $78.14, but Live prices were stronger, gaining $2.13 to 62.99.  The trend is still softer overall, and this is reflected in the cash index, which traded 0.22 lower to 94.04.  Retail values have been trying to find some footing and were higher midday.  The pork carcass cutout was 4.03 higher, but lost those gains into the close, dropping .13 to 102.76 with moderate movement at 466 loads.  The hog market looked poised to work higher this week, but is moving more into a consolidation pattern.  For the moment, the downward momentum has slowed, but the fundamental picture will need to help determine if a low is in place.


Matthew Strelow

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