TFM Sunrise Update 9-7-2021


Corn futures were mostly unchanged overnight following the 3-day Labor Day weekend.  The December contract is down a penny this morning to 5.23 while respecting Friday’s lower trading range.  Price action is expected to be choppy going into Friday’s September WASDE report, and with the markets closed yesterday, regularly scheduled weekly USDA reports, such as crop ratings, export inspections, sales and ethanol stats are all backed up one day.   For now, the market appears weighed down by normal seasonal pressure as harvest nears.  As of now, the bottom end of the range has held support, and until there is a break out of the larger trading range on the charts prices look to remain subdued.


Soybean futures were mixed overnight and are up 4-1/2 cents this morning.  Nov beans are at 12.96-1/2, mid-range of last night’s 16 cent trading range from 13.05-3/4 and 12.88-3/4. Soyoil contracts are also firm and soymeal futures are mixed after slumping to their lowest point last week since November of last year.  August weather was mostly friendly for soybeans, and it is possible the USDA will increase yield on Friday’s report.  For now, it appears the bears are in control of market direction, but prices are oversold enough that prices may stabilize, or improve ahead of the WASDE report.  There is fallout for American farmers far from the hurricane Ida-hit regions as China has started shifting October orders for soybeans to Brazil amid concerns over the reliability of U.S. export infrastructure in Ida’s wake.  South American planting progress will be monitored closely since early bean planting begins on September 13th in Prana and September 16th in Mato Grosso and other states in central Brazil.  Chinese Jan bean futures were down 4 yuan overnight; Soymeal up 27; Soyoil up 22; Palm oil up 38;  Malaysian palm oil prices overnight were up 61 ringgit (+1.41%) at 4392  as Malaysian production dropped and exports soared.


Wheat futures were firm overnight with Dec Chicago up a penny to 7.27-1/4.  CBOT prices have respected $6.00 per bushel on the low side and $7.50 at the top for much of 2021.  With higher input prices, lower world ending stocks, and continued inflationary concerns, could this higher range be the norm for CBOT wheat?  Dec KC is up 2 to 7.25 this morning and Dec MPLS up 1 to 9.13-1/2.  The dollar is rebounding 25 points this morning from last week’s drop, but the recent pullback was significant enough to keep the market underpinned.  Elsewhere, most of this year’s rain-affected French soft wheat crop was failing to meet a usual milling standard, initial quality results published by farm office FranceAgriMer showed.  Test weights have been the focus of concerns about damage from heavy summer rain, hampering efforts to export French wheat to major markets like Algeria.  In South America, wheat is filling grain in southern Brazil and the early wheat harvest begins in Parana.


Cattle are called steady to lower on follow-through from Friday’s strong selling pressure as long liquidation and profit-taking pushed prices to triple-digit losses.  Technical selling was driving the market lower, as the October contract closed at its lowest point since June.  The cattle markets can have waterfall price movements as money moves to the sideline nearby contracts look to be establishing its first correction since this rally began last October.  Seasonality, and softening of the fundamentals was a trigger to the break, but the premium in the futures market is the fuel.  The beef cutout moved lower last week with the Choice cutout decreasing $9.35 and Selects ending $14.62/cwt softer.  Seasonal decreases are expected as summer comes to an end and buying wraps up keeping pressure on the cattle market.  Cash trade was disappointing last week.  Light to moderate trade occurred in the North at mostly $125 to $127 live, and $197 to $204 dressed – steady to $2 softer than last week.  Light volumes traded in the South from mainly $122 to $124 – steady to $1 firmer than last week.  News over the weekend stated that Brazil would be suspending beef export to China due to two cases of “atypical” Mad Cow Disease.  The market is oversold, and this news could give some buying support, but the overall trend in the short-term is lower.


Hogs are called mixed to lower.  Prices are consolidating near the top of the trading range, and with some friendly news, could push higher.  However, pork carcasses finished 1.12 lower on Friday to 108.15 on a load count of 230 loads.  The weakness in the retail close will weigh on sentiment for today’s open.  The cash market was trending mostly lower. National Direct Daily Hogs prices were softer on Friday’s close, trading range of $86.00-$96.00, with weighted average at $88.85, $.06 lower. This trend is also limiting upside in the hog market.  The Lean Hog Cash index was 1.35 lower to 101.32 and is starting to narrow the premium over the futures.  That spread is trading at 11.745. For last week, The Lean Hog Index dropped 3.47.


Matthew Strelow

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