News Source: SPC

Top Farmer Closing Commentary 05-17-2022

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CORN HIGHLIGHTS: Corn futures ballooned higher today on the heals of limit higher wheat prices, strong energy, and on-going planting delay concerns. July futures gained 28-1/4 cents to end the session at 8.90-1/2 and December picked up 16-3/4 to close at another new contract high of 7.65-1/2. Export inspections at 40.8 mb were termed supportive, bringing the year-to-date total to 1.539 bb, or 61.5% of expected sales of 2.5 billion. Keep in mind that nearly a month of inspections were missed due to Hurricane Ida, so while the inspections lag a year ago, we are not concerned they are too slow. Some have suggested this to be the case.

India has indicated it will ban wheat exports, which sent wheat prices sharply to limit higher. The mess in Ukraine and lack of sources of wheat for some counties had prices skyrocketing today, as does continued concern spring wheat acres are well behind on the planting progress. The same hold for corn as rain in parts over the weekend (some areas of the Midwest 3 to 5 inches) suggest more delays, while other are moving swiftly to make up for lost time. The bigger implication is a crop that will push toward pollination and maturity all in one window, perhaps a boom or bust scenario. The futures look friendly, yet the Bollinger band is being tested as resistance, something that has held prices in check through most of this year’s rally.

SOYBEAN HIGHLIGHTS: Soybean futures closed higher today thanks to a boost in the entire grain complex from limit-up wheat. Soybean meal provided solid support too, closing up in July 4.3 at 413.6. July soybeans gained 10 cents, closing at 16.56-1/2, and Nov gained 13-3/4 at 15.12. In addition to the help from wheat and meal, export demand is very strong right now with China as an active buyer.

US soybeans should see record demand for the next 4-8 weeks with China continuing to buy despite their lockdown. There are rumors that they will lift these lockdowns on 5/20 and if true, this could boost demand even higher. Exports should pick up even more with Brazil out of the market by August 1. Incentives remain high for soybean processors with the Friday weekly soybean Crush report showing one bushel of $16.97 beans in Illinois could be crushed into $20.91 worth of meal and oil. The April NOPA crush could be a record high of 174 mb as a result. Friday’s CFTC data showed non-commercials in soybeans dropping 15,794 contracts, lowering their net long position to 174,068 contracts. Prices have held in an uptrend despite this fund selling, which is bullish.

WHEAT HIGHLIGHTS: Wheat futures front months finished limit up after news that India will indeed be banning wheat exports. July Chi gained 70 cents, closing at 12.47-1/2 and Dec up 69-1/4 at 12.54-1/4. July KC gained 70 cents, closing at 13.52 and Dec up 69-3/4 at 13.54-3/4.

All three classes of US wheat gapped higher and closed limit up on the July and September contracts (that is a 70 cent move for Chi and KC, and a 60 cent move for MPLS). Paris milling wheat futures also gapped higher and finished about 21-22 Euros per metric ton higher. These strong moves are tied to reported confirmation that India will ban wheat exports (with the exception being some nations affected by hunger). Reports suggest that current sales would be allowed to go through, but anything on the books can be cancelled and sellers can declare force majeure. This is an interesting turn of events as the WASDE report just last week expected exports of 8.5 mmt. This news (and the related market reaction) just goes to show how much concern there is over global wheat supply. Here in the US, there is still concern in both the northern and southern Plains due to wet conditions in the former and drought in the latter. In other news, it was reported that Russian ships full of grain stolen in Ukraine were turned away from Mediterranean ports. The war continues to go on and provides a bullish backdrop for wheat. It is also noted that wheat inspections were at 12.8 mb, with total inspections now at 712 mb. Tomorrow will also mark the start of the Wheat Quality Council Tour.

CATTLE HIGHLIGHTS: Live cattle futures finished with strong to moderate gains as short covering and some value buying stepped into the live cattle market.  The discount of the futures to the cash market helped support prices before cash trade has developed this week.  Feeder prices were lower, but resilient given the strength in grain markets on Monday. June live cattle gained 1.100 to 133.175, and August live cattle gained 1.550 to 133.950. In feeders, August feeder were .600 lower to 167.425.

June live cattle still held above the most recent lows, holding support at $131.000, as the market saw strong price action, closing at the top of the trading range, held in by resistance at the 10-day moving average of 133.20. If prices can push through this barrier, further correction to the $135.500 resistance is likely.  The cash market was quiet this afternoon, with bids and asking prices not established to start the week. Significant trade volume will likely be delayed until Tuesday or later. The expectation is for cash market to remain mostly steady, comparable to last week.  The premium of the cash market supported the front-end of the futures market to start the week. Retail beef at midday, prices were mixed to firm with Choice gaining 1.87 to 260.82 and Select was unchanged to 243.90. Load count was light movement at 34 midday loads. With a USDA Cattle on Feed report out on Friday, the direction of cash and retail trade will have an influence on prices.  Feeders saw modest losses, despite a strong move higher in corn and wheat markets on Monday.  The strong tone in live cattle futures and the value of oversold feeder markets at least saw some buying support as prices worked off session lows. Feeder prices did break to a new low on the session, before some buyers stepped in. The premium of front month contracts to the feeder cash index looks concerning, with August trading at a $10 premium to the index. Feeder cash index was .36 lower to 156.00. The cattle market still looks concerning despite some buying support in the live market on Monday. The recent uptick in live cattle markets may be more a bounce than a trend change.  the cash market and the retail markets will be key to price direction as we look towards Friday's Cattle on Feed report.

LEAN HOG HIGHLIGHTS: Hog futures saw additional price recover to start the week on more short covering and value buying as the market finished with strong triple digit gains.  With May hogs expiring, June hogs now take the lead on the market and finished 3.075 higher to 103.825, August hogs added 3.600 to 104.800.

June lean hogs have added over $6.00 in the last two session as value buying stepped into the hog market, signaling another possible short-term low.  The June market gapped higher on the session open and closed back above the 200-day moving average, which improves the technical picture on the charts.  Additional money flow may have the hog market looking to recover back to a possible test of the 100-day moving average at $110.00.  Demand will still be a big concern as retail prices have struggled, pushing under the $100.00 level last week, only to see a firm Friday close.  Midday carcass values were 1.96 higher to 103.13. Movement was moderate at 202 loads. The CME pork cutout index has also been trending lower, reflecting last week's weakness. It lost .68 today to 100.73.  Midday cash market was firm in morning trade, gaining .04 to 101.31 and a 5-day average at 104.96. CME lean hog index was 0.55 lower at 100.49 on the day.  With the price strength in June futures, the premium of June futures to cash has grown back to 3.335, which could limit the market upside.  The hog market closing back above the 100-day moving average in June improves the technical picture and likely led to some short covering during Monday's session.  This may bring some optimism for additional short covering going into Tuesday.  The market will need to see the fundamentals of cash and retail demand to improve to help lift the market.

TFM Sunrise Update May 16, 2022

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CORN

Corn futures were up last night with the nearby July contract up as much as 22-1/2 cents to a two-week high of 8.03-3/4.  Dec gained as much as 17-1/4 cents to post a new contract high at 7.66.  Sharply higher trade in wheat is seen as spilling over into row crops, particularly corn.  U.S. corn planting could be near 42% complete.  USDA will release the weekly update today after the close.  The Midwest forecast is wet this week which could delay corn plantings.  Spot basis bids for corn were steady to stronger in the U.S. Midwest on Friday, underpinned by thinning farmer sales as many producers concentrated on field work and spring planting, grain dealers said.  U.S. stocks and crude are weaker this morning.  The dollar is lower.  Gold is lower.  Silver, copper, coffee, cocoa, sugar and cotton are higher.  Look for continued volatility at a timeframe where normally weather is the main market-driver, but this year, U.S. inflation, the war in Ukraine and slowing economies in the EU and China adds to trade uncertainty. 

SOYBEANS

The soybean complex traded higher overnight.  July beans gapped higher and then rose 14-1/2 cents to 16.68.  Nov was up 21 cents to 15.19-1/4.  July meal futures were up 7.50 to 416.80 while potentially establishing a near-term bottom.  July soy oil was up .32 to 84.11.  Chinese September bean futures were up 26 yuan; Soymeal up 89; Soy oil up 130; Palm oil up 24; Corn up 2.  Malaysian markets are closed for holiday.  This week's NOPA April soybean crush is expected to be a record 174.4 mil bu.  Total U.S. May-July soybean use will be a record.  U.S. soybean plantings could be near 31 to 32% completed.  Informa estimated U.S. soybean acres at 89.0 vs USDA's March estimate of 90.9 and 87.2 last year.  Double crop soybean acres are estimated at 4.5 vs 3.7 last year with Prevent plant 2.5 vs 1.9 last year and 9.4 in 2020 and 17.6 in 2019.

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WHEAT

The wheat complex spiked overnight on India's ban of wheat exports.  Nearby July wheat gapped higher to an overnight high 12.47-1/2 on gains of 70 cents before easing.  July KC wheat rallied 68 cents to 13.52.  July MPLS Spring wheat hit a new peak at 13.85 on gains of 60 cents.  India's ban will allow sales on the books to be cancelled and sellers to be able to declare force majeure - circumstances that prevent them from fulfilling a contract.  Futures are also supported by dry US HRW, EU and Black Sea weather and wet US HRS and east Canadian weather.  Informa estimates the U.S. 2022 HRW crop at 590 mil bu vs 749 last year, SRW 354 vs 361 last year.  The firm estimated U.S. Wheat acres at 47.3 vs 46.7 last year and Spring wheat at 11.2 vs 11.4 last year.

CATTLE

Cattle futures are called steady to higher.  Fat cattle contracts finished last week mixed, to mostly lower as the cash market supported the front-end June contract, but demand concerns and available cattle supplies pressured deferred contracts.  Feeder cattle used a softer tone in corn and wheat markets supported feeder cattle futures on Friday.   For the second day, June live cattle still held above the most recent lows, holding support at $131.000, but deferred contracts broke to new contract lows as long liquidation and technical selling pushed the market.  The June contract is trying to build a "double-bottom", so price action early in the week will be key.  There was moderate to active fed cattle cash trade in the North in a full range of $139 to $148, with most sales at $144 live and $230 dressed. That is $2 lower compared to last week.  Moderate to large volumes traded in the South at mostly $140 live, steady with the previous week.  Warmer weather provided a lift to beef demand, especially for steak items and hamburgers for grilling.  Choice boxes were $2.02 higher last week and Select advanced by $1.45.  Load counts were moderate to heavy with good demand.  Strength in grains overnight will likely dictate the money flow in the feeder market.  The premium of front month contracts to the feeder cash index looks concerning, with August trading at a $10 premium to the index.  Feeder cash index was .25 lower to 156.36.  The cattle market still looks concerning despite some buying support in the feeder market on Friday.  The downside looks to be the easiest path in the near-term, until the market gets some news to turn the money flow.  The stronger demand tone may help prices recover, but the sellers are still in charge of market direction in the short-term.

HOGS

The hog market is called mixed to higher.  The technical picture is still weak, and buyers are still absent in the market despite the bounce on Friday.  This main bring some optimism for additional short covering to start the week.  Futures finally saw some buying strength with end of last week on headlines featuring a softening of the COVID restrictions in China.  June lean hogs are still showing a downward trend, though, and prices may still have more downside room while trading under the 200-day moving average at $102.000.  Demand is still a big concern as retail prices have struggled, pushing under the $100.00 level last  week.  Friday carcass values were 2.57 higher to 101.17.  Movement was moderate at 309 loads.  Friday's midday trade was nearly $3.00 under the close on Monday afternoon, showing the softening trend in pork values.  The CME pork cutout index has also been trending lower, down 1.56 to 101.41 on Friday, and down 3.99 for the week.   The cash market was weak with morning direct trade on Friday, dropping 3.68 to 101.27 and a 5-day average at 104.93. CME lean hog index was 0.22 lower at 101.41 on the day and traded .08 higher on the week.

Top Farmer Closing Commentary 5-13-2022

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CORN HIGHLIGHTS: Corn futures fell slightly today, while equities climbed higher. July lost 10-1/4 cents, closing at 7.81-1/4, and Dec was down 4-1/4 at 7.48-3/4. For the week, December corn added 28 cents, reaching a new contract high this morning at 7.58-1/4. It’s possible that there was some profit taking before the weekend followed by money injection into stocks, potentially coming out of commodities, corn included. May expiration, which stopped trading at 12:00, was a factor as well with the rest of the market trying to firm up. Markets are still digesting yesterday’s USDA report, which was mostly in line with estimates yet indicated carryout for the year ahead is now forecasted lower than the current year.

While yesterday’s report was mostly as projected, there was a bearish surprise with unexpected production increases in Egypt, Nigeria, and Pakistan. Traders were looking to see numbers potentially lower than analyst estimates, so the relative neutrality for corn along with that bump in production may have spooked some buyers today. The Buenos Aires Grain Exchange said 26% of corn has been harvested and 16% is rated good to excellent, which is down from 19% last week. Here in the US, strong winds of over 100 mph swept through the northwestern Corn Belt last night, damaging farm structures. Apart from some wetness in some northern states, planting weather looks favorable going into the next week. Yesterday’s export sales numbers were disappointing, but this morning a sale of 24.1 mb to China was announced, a reminder that China still needs corn.

SOYBEAN HIGHLIGHTS: Soybean futures closed higher with May expiring at 17.23-1/4, up 63 cents on the day. May expiration bolstered the rest of the contracts with July gaining 32-3/4 cents, closing at 16.46-1/2, and Nov gaining 17-3/4 at 14.98-1/4. July closed just 2 cents below the 50-day moving average. Both soybean meal and oil closed higher as well, providing a boost and showing the strength of demand. For the week November soybeans gained 27-1/2 cents.

Between a bullish USDA report yesterday, good demand, and a tightening world supply, soybeans are looking strong. The Buenos Aires Grain Exchange said 65% of soybeans have been harvested so far and only 10% is rated good to excellent. This morning, private exporters reported sales of 132,000 metric tons of soybeans for delivery to China during the 21/22 marketing year, again showing the strong demand. July soybeans on the Dalian exchange were up 1.8% today which is the equivalent of 20.93 per bushel. The combined crush values of meal and oil are 2.88 above the cost of soybeans, which is a generous incentive to keep processing soybeans. Technicals are showing strength with July just barely coming out of oversold territory, and a close above the 50-day moving average next week would add to bullish sentiment.

WHEAT HIGHLIGHTS: Wheat futures were a mixed bag with losses in Chi but gains in KC. After yesterday’s strong rally, profit taking today likely put the market under some pressure. July Chi lost 1-1/4 cents, closing at 11.77-1/2 and Dec down 1-1/2 at 11.85. July KC gained 12 cents, closing at 12.82 and Dec up 11-1/2 at 12.85.

Chi contracts September onward made new highs before setting back. Out of the three US classes, only Chi posted losses (with the exception of May KC which expired today). With May futures going off the board today, July will become the front month. Paris milling wheat futures also closed higher today, (but off from earlier highs). Yesterday’s report was supportive to wheat prices and is perhaps validates some of the concern on trader’s minds about not only US but world wheat supplies. The heat and dryness in the southern Plains and wet conditions in the northern Plains are still critical and should keep prices supported at a minimum. Globally, weather concerns exist as well, with heat waves in India and the EU potentially reducing their crops. Interestingly, the USDA estimated India’s wheat production at 108.5 mmt on the report despite some private estimates below 100 mmt. As we mentioned yesterday, not much has changed in the news – the Ukraine war continues, weather is an issue, and the high US Dollar may reduce upside movement of wheat prices.

CATTLE HIGHLIGHTS: Live cattle futures finished the week mixed to mostly lower as the cash market supported the front-end June contract, but demand concerns and available cattle supplies pressured deferred contracts. A softer tone in corn and wheat markets supported feeder cattle futures on Friday. June live cattle gained 0.425 to 132.075, but August Live cattle dropped 0.425 to 132.350. In feeders, August feeder were 1.500 higher to 168.025. For the week, June live cattle lost 0.675, and Aug feeders dropped 6.675, despite Friday’s gains.

For the second day, June live cattle still held above the most recent lows, holding support at $131.000, but deferred contracts broke to new contract lows as long liquidation and technical selling pushed the market. The June contract is trying to build a “double-bottom”, so price action early next week will be key. The cash market was quiet on Friday, and business was done earlier in the week. Cash prices traded mostly steady with last week. In the South, light $140, and the North saw $144 and $225-230 dressed trade, again, mostly steady with last week. The cash market tried to support the front-end of the futures market, given the premium of the cash market. Retail beef demand has seen Choice beef cutout values fall to nearly an 8-month low. At midday, prices were mixed with Choice gaining 1.23 to 258.43 and Select was 0.52 lower to 243.84. Load count was light movement at 59 midday loads. Choice carcasses trade was softer for the week after a strong start on Monday, closing at 258.29, but midday trade today was still $2.80 above last Friday’s close. Feeders found some footing, finishing with modest gains. he direction of grain prices will likely dictate the money flow into the feeder market, and the softer price action in the wheat and corn market triggered some buying into the feeder market on Friday. The premium of front month contracts to the feeder cash index looks concerning, with August trading at a $10 premium to the index. Feeder cash index was .25 lower to 156.36. The cattle market still looks concerning despite some buying support in the feeder market on Friday. The downside looks to be the easiest path in the near-term, until the market gets some news to turn the money flow. The sellers are still in charge of market direction in the short-term.

LEAN HOG HIGHLIGHTS: Hog futures finally saw some buying strength with end of the week profit taking, and optimism on softening of the COVID restrictions in China. May hogs lost 0.100, closing at 100.000, staying tied to the cash markets, but June hogs jumped 3.275 higher to 100.750, closing back above the $100.00 level. For the week, May hogs were 2.200 lower, and June hogs dropped 3.350, but finished 3.650 off the week’s lows.

June lean hogs are still showing a downward trend as prices on Friday traded within the trading range of Thursday as prices consolidated. The more favorable price action to close the week bring some optimism. Prices may still have more downside room as prices while prices are trading under the 200-day moving average at $102.000 above the market, the first top-side resistance barrier. Talk of softening the COVID restriction in China may have helped bring buying support into the hog, soybean, and crude oil markets on Friday, but that may be a headline driven type trade. Demand is still a big concern as retail prices have struggled, pushing under the $100.00 level this week. Midday carcass values were 0.39 lower to 98.21. Movement was moderate at 175 loads. Friday’s midday trade was nearly $6.00 under the close on Monday afternoon, showing the softening trend in pork values. The CME pork cutout index has also been trending lower, down 1.56 to 101.41 on Friday, and down 3.99 for the week. Midday cash market was weak with morning direct trade, dropping 3.68 to 101.27 and a 5-day average at 104.93. CME lean hog index was 0.22 lower at 101.41 on the day and traded 0.08 higher on the week. The technical picture is still weak, and buyers are still absent in the market despite the bounce on Friday. This main bring some optimism for additional short covering to start the week, but the trend still looks lower in the near-term.

Top Farmer Midday Update 5-13-2022

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CORN

  • Jul corn down 10 @ 7.81
  • Corn is lower today after yesterday’s report showing higher than expected estimates of world ending stocks for 21/22 at 309.39 mmt
  • There were unexpected production increases in Egypt, Nigeria, and Pakistan
  • US farm structures were damaged last night by high winds upwards of 100mph from Kansas to Wisconsin
  • The Buenos Aires Grain Exchange said 26% of corn has been harvested and 16% rated good to excellent, down from 19% last week

SOYBEANS

  • Jul soybeans up 23 @ 16.37
  • Soybeans are higher this morning with support from yesterday’s USDA report estimating old crop ending stocks will total 235 mb at the end of August, the lowest surplus in six years
  • Soybean meal is working higher along with slight gains in soybean oil which are providing more support
  • The Buenos Aires Grain Exchange said 65% of soybeans have been harvested and only 10% is rated good to excellent
  • Private exporters reported sales of 132,000 metric tons of soybeans for delivery to China during the 21/22 marketing year

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WHEAT

  • Jul wheat down 9 @ 11.71, Jul KC down 2 @ 12.68, & Jul MNPLS down 2 @ 13.15
  • Wheat is lower this morning likely due to some profit taking after yesterday’s move higher following a friendly USDA report
  • The USDA’s 590 mb estimate of new HRW crop was especially bullish for KC wheat
  • While Ukraine is still estimated to export 367 mb of wheat, there are continued concerns about the world’s wheat supply with the ongoing conflict
  • North Dakota and Minnesota are still dealing with weather troubles for planting spring wheat with high winds last night and more rain predicted in the seven-day forecast

CATTLE

  • Jun LC up 0.250 @ 133.025 & May FC up 1.125 @ 158.000
  • June live cattle closed at their lowest level since Oct 6, 2021, but are higher on today’s open
  • Live cattle and feeders are both in oversold territory, but a boost from cash or an increase in demand may allow potential to the upside
  • Lower corn is giving a boost to feeders this morning
  • The packer remains well bought and will continue to run plants through Saturdays to get through their supply
  • Choice cuts up 2.12 and select up 2.18
  • Cattle slaughter projected at 117K
  • CME Feeder Cattle Index for 5/12: up 0.37 @ 156.61

HOGS

  • Jun hogs up 2.750 @ 100.225 & Jun pork cutout up 2.100 @ 105.900
  • Hogs are higher this morning alongside a higher cutout despite falling cash
  • The head and shoulders formation in June is nearing completion and with hogs oversold there should be some upside potential
  • Hogs are undervalued here and any increase in demand from China would be bullish
  • National Direct Afternoon report has cash down 1.93
  • Hog slaughter projected at 453K
  • CME Lean Hog Index for 5/13: down 0.22 @ 101.04

TFM Sunrise Update May 13, 2022

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CORN

Corn futures were firm overnight while respecting Thursday's trading ranges.  July is up 2 cents this morning to 7.93-1/2 while situated between 10 and 20-day moving averages.  Dec corn is up 2 to 7.55.  On Thursday, Managed funds were net buyers of and 8,000 corn raising their estimated net long position to 346,000 contracts.  USDA bowled over the trade with a 177.0 U.S. 2022 corn yield equaling last year's record.  Given the lower South American supplies and lower Ukraine exports, U.S. final corn exports could be 200 mil bu higher.  This suggests a lower U.S. 2021/22 corn carry-in of 1.240 bil bu vs USDA 1.440 and lower U.S. 2022/23 carryout.  This could suggest a US 2022/23 carryout closer to 750 with USDA estimate of U.S. 2022/23 total corn demand 250 mil bu too low.  Current corn futures  prices, arguably are not yet rationing demand which supports the current trend.

In outside markets, U.S. stocks and crude is higher. The dollar is mixed.  Silver, cotton, coffee and sugar are higher.  Gold, copper and cocoa are lower.

SOYBEANS

Soybean futures were firm overnight.  July beans are up 11 cents to 16.24-3/4 this morning, mid-range of last night's trading range from 16.37-3/4 to 16.14.  Nov beans are up 9 to 14.89-1/2.  July meal is up 4.40 to 44.40 and  July soy oil unchanged at 82.52.  Soybean futures price reaction to USDA numbers were mixed with soybean futures higher and soymeal and soy oil lower.  Managed funds were net buyers of 3,000 soybeans, even 4,000 soymeal and sold 2,000 soy oil.   Heading into last night's trade, they were estimated be long 158,000 soybeans, 53,000 soymeal and 93,000 soy oil.   USDA raised U.S. 2022/23 soybean crush 40 mil bu to a new record and exports 60 mil bu.  Still the 51.5 yield increases U.S. 2022/23 carryout to 310 mil bu.  There is already talk of lower U.S. acres due to wet weather increasing U.S. north plains prevent plant acres 1 to 2 million.

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WHEAT

The wheat complex was mixed overnight.  July Chicago wheat is down 7 cents this morning to 11.71-3/4.  July KC wheat is down 54 to 1266.  July MPLS wheat is up a nickel to 13.20-3/4.  The contract posted a new high last night at 13.35-3/4 and session low of 13.10-1/2.  Yesterday, the July, September and December Hard Red Spring Wheat futures contracts settled up the 60 cents price limit, so, the price limits for all non-spot contract months will be expanded to 90 cents effective last night and into today's trade.  The daily price limits shall revert back to 60 cents the next trade day if no HRS futures contracts settle at the expanded limit bid or offer.  The big USDA surprise yesterday was U.S. and World wheat numbers.  US 2022/23 wheat carryout was down for the 6th straight year.  The agency's estimate of U.S. 2022 wheat yield could be too high given HRW dry weather forecast and wet U.S. north Plains weather that could lower U.S. final HRS crop.  Their estimate of India's wheat crop at 108.5 mmt appears to be high.  Talk of Lower Ukraine exports suggest USDA's estimate of Black Sea wheat exports could be 20 mmt or 735 mil bu too high.  With most exporters maxed out, this leaves U.S. a residual exporter with a carryout of only 619 mil bu.  Higher World freight costs, U.S. Dollar at 20 year highs and talk of even higher wheat prices spells problems for World wheat buyers.

CATTLE

Cattle futures are called steady to lower after prices broke to new lows on strong technical selling.  The downside looks to be the easiest path in the near-term.  Additional losses may be viewed as a value, especially in deferred futures given the overall supply numbers and trend seen in cattle supplies, but the money flow and the sellers are still in charge of market direction in the short-term.  June live cattle still held above the most recent lows, holding support at $131.000, but deferred contracts broke to new contract lows as long liquidation and technical selling pushed the market.  The USDA weekly export sales report posted new sales of 28,400 MT for 2022, a marketing-year high, were up 95% from the previous week and from the prior 4-week average.  South Korea, Japan, and Mexico were the top buyers of U.S. beef last week.  Cash markets were quiet on Thursday and looks like business was likely done for the week.  In the South, light $140, and the north saw $144 and $227-230 dress trade, again, mostly steady with last week.  Retail beef demand has seen Choice beef cutout values fall to nearly an 8-month low.  On Thursday prices firmed, gaining 2.12 to 257.20 and Select was 2.18 higher to 244.36.  The load count still shows good movement at 137 loads.  The firmer retail tone could support prices on the open today.  The premium of front month feeder contracts to the feeder cash index looks concerning, with August trading at a $10 premium to the index.  The Feeder cash index was .37 higher to 156.61.

HOGS

The hog market is called mixed to lower.  The technical picture is still weak, and buyers are still absent in the market.  The trend  is lower in the near-term and the hog market is oversold, but the triggers to bring money flow back into the hog market are still lacking.  On Thursday, futures closed sharply lower as technical selling broke hog prices to new near-term lows as grain price surged after the USDA Supply/demand report was released on Thursday morning.   June lean hogs closed under the $100.00 level for the first time since January 13th earlier this year.  This price move has mostly eliminated the entire 2022 price rally.  Prices may still have more downside room as prices while prices are trading under the 200-day moving average at $102.000 above the market, the first top-side resistance barrier.  Demand is still a big concern as retail prices have struggled.  Retail values have trended lower throughout the spring as grilling demand and export demand has been lacking.  Midday carcass values were 1.23 higher, but closed .89 lower to 98.60, as prices struggle to hold the $100.00 level.  Movement was good at 336 loads.  The CME pork cutout index has also been trending lower, down .80 to 102.97 on Thursday.  USDA announced weekly export sales with new net sales of 26,300 MT for 2022 were up 10% from the previous week and 14% from the prior 4-week average.  Top buyers of U.S. pork on the week were by Mexico, China, and South Korea.  Export shipments were strong at 33,100 MT, a marketing-year high.  Midday cash markets were weak with morning direct trade, dropping 7.41 to 104.95 and a 5-day average at 104.54.  CME lean hog index was .17 higher at 101.26 on the day.

Top Farmer Midday Update 5-12-2022

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CORN

  • Jul corn up 3 @ 7.91
  • Corn export sales of 7.6 mb for 21/22 at marketing year low, down 75% from last week and down 80% from prior 4-week average
  • USDA has reported that 612,000 mt of corn has been sold to China- 68,000 mt for 21/22 and 544,000 mt for 22/23
  • There is uncertainty going into today’s WASDE report regarding how many changes the USDA will make
  • New crop ending stocks are estimated to be down to 1.305 bb, the second lowest in eight years if confirmed

SOYBEANS

  • Jul soybeans up 1 @ 16.08
  • Soybean export sales of 5.3 mb for 21/22 at marketing year low, down 80% from last week and 74% from prior 4-week average
  • Soybeans are lower with a drop in soybean oil, which has been the more bullish source of support for beans
  • Lower prices of canola, palm oil, and crude are dragging bean oil lower related to the bearish mood in outside markets
  • Today’s WASDE report will provide clarity on potentially lower ending stocks and increased production

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WHEAT

  • Jul wheat up 12 @ 11.25, Jul KC up 12 @ 12.11, & Jul MNPLS up 8 @ 12.64
  • Wheat export sales of 0.5 mb for 21/22 and 4.6 mb for 22/23
  • Wheat export commitments now total 714 mb for 21/22 and are down 24% from a year ago, which is below estimated pace
  • All wheat contracts are higher this morning with continued weather concerns in the US and abroad

CATTLE

  • Jun LC down 0.825 @ 132.800 & May FC down 0.575 @ 157.575
  • Net exports sales of beef of 28,400 mt for 2022 were a marketing year high, up 95% from last week
  • Steady cash and robust packer inventories are dragging futures lower
  • Look to June live cattle to hold above Monday’s low of 131.025
  • Lower feeders today could point to concerns about higher corn
  • Choice cuts down 0.16 and select down 0.17
  • Cattle slaughter projected at 125K
  • CME Feeder Cattle Index for 5/10: down 0.09 @ 156.24

HOGS

  • Jun hogs down 1.850 @ 99.025 & Jun pork down 1.725 @ 105.400
  • Net export sales at 26,300 mt for 2022, up 10% from last week and up 14% from prior 4-week average
  • Hog futures are lower this morning after a choppy day of trade yesterday
  • Cash fell by 0.81 and the cutout dropped 0.70 so futures are losing some support there
  • When cash finds a bottom there may be quite a bit of upside particularly in the deferred contracts
  • Hog slaughter projected at 480K
  • CME Lean Hog Index for 5/11: up 0.17 @ 101.26

TFM Sunrise Update May12, 2022

Grain - Farming tim-mossholder-4DLnYJQE6kw-unsplash

CORN

Corn futures traded two-sided overnight and are at the lower end of their trading ranges this morning.  July corn traded an overnight high of 7.92-1/4 and low of 7.82-3/4 and is down 4 cents to 7.84-1/2 this morning.  Dec corn is unchanged at 7.35-3/4.  Trade estimates for this morning's USDA Weekly Export Sales are 350,000 to 700,000 tons for old crop, 150,000 to 650,000 tons for new crop.  At 11:00 Central, the USDA May WASDE report will be released.  The trade estimate for 2021/22 carryout is near 1.412 bil bu vs USDA 1.44 bil.  2022/23 production is estimated to be around 14.773 billion bushels, using a 179.6 average yield.  Some analysts doubt USDA will drop U.S. corn yield from 181 vs crop watchers' 177 BPA.  USDA has used their outlook corn yield on the May report every year since 2014.  We'll see how the agency handles Ukraine's 2022/23 corn exports.  Crude, gold, silver, copper, cotton, coffee, cocoa, and sugar are lower this morning.  The U.S. dollar is sharply higher and making a new high.  For the sixth straight day U.S. stocks are lower.  Concerns over inflation and higher U.S. interest rates will push the U.S. economy into a recession offers resistance to stocks.  Crypto currencies are also lower on a lack of confidence as a hedge against inflation. 

SOYBEANS

Soybean futures were down overnight with July slumping 14 cents to 15.92-3/4.  Nov beans were down 12 cent to 14.60-1/4.  July meal is up 20 cents to 389.10.  July soy oil is down 1.28 to 82.17.  Trade estimates for this morning's USDA Weekly Export soybean Sales are 1000,000 to 600,000 tons for old crop and new crop.  Soymeal sales are estimated at 20,000 to 300,000 tons for old crop, Zero to 150,000 tons for new crop.  2022/23 soybean production is estimated to come in at 4.613 billion bushels in today's May WASDE report with an average yield of 51.4 BPA.  2021/22 ending stocks are expected to be down from April with an average estimate of 225 million bushels vs. 260 mb last month.

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WHEAT

The wheat complex was mixed overnight and is in the red this morning.  July Chicago and KC wheat contracts are down 6-1/2 cents to 11.06-1/2 and 11.94, respectively.  July MPLS wheat is off a nickel to 12.51.  Trade estimates for this morning's USDA Weekly Export Sales are 25,000 to 125,000 tons for old crop, Zero to 350,000 tons for new crop.  Today's Supply/Demand report has an average trade estimate for 2021/22 ending stocks of 686 mil bu, down from 678 mb last month. 

CATTLE

Cattle futures are called steady to lower.  The cattle market looks concerning, as the downside looks to be the easiest path in the near-term.  June is still trading under the 200-day moving average.  This level will continue to be a sticking point for cattle prices, and the longer the market trades below this level, the prospects of a downside break stay in front of the market.  Additional value may support deferred positions, given the overall supply numbers and trend seen in cattle supplies.  Live cattle futures saw mixed trade on Wednesday as the development of cash trade brought some value buying into the cattle market, despite the steady pressure on retail beef prices.  Cash prices started developing on Wednesday mostly steady with last week.  In the South light $140 began to develop, and the north saw $144 and $227-230 dressed trade.  The cash market's premium to futures supported the front-end of the futures market.  Retail beef demand has weighed on prices.  Choice beef cutout values fell $3.05 Tuesday to $255.24, near an 8-month low.  On Wednesday's close, prices stayed soft, losing .16 to 255.08 and Select was .17 lower to 242.18.  The load count still shows good movement at 123 midday loads as the discounted retail beef is bringing retail interest.  Feeders are poised to retest near-term lows, as downward momentum continues.  The direction of grain prices will likely dictate the money flow into the feeder market. 

HOGS

The hog market is called lower amid a weak technical picture with prices challenging trendline support.  The selling has been pushed by weaker retail values and stagnant cash markets.  June lean hogs are still showing a downward trend, and prices closed at the lowest level since January on Wednesday, mostly eliminating the entire spring rally.  Prices may still have more downside room as prices have closed under the 200-day moving average, and this keeps an additional downside break as a possibility.  Demand is still a big concern as retail prices have trended lower throughout the spring with grilling demand and export demand lacking punch.  Midday carcass values were .51 higher, but closed softer losing .70 to 99.49, as prices fell under the $100.00 level.  Movement was moderate at 148 loads.  The CME pork cutout index has also been trending lower, down 1.20 to 103.77 on Wednesday.  The market will be watching export sales numbers this morning to watch for an uptick in export demand.

Top Farmer Midday Update 5-11-22

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CORN

  • Jul corn up 11 @ 7.86
  • Corn and the grain complex in general boosted by CPI numbers coming out higher than expected at 0.6% above expectations of 0.4%
  • Further weather concerns for Brazil’s second crop corn which is at a critical stage of development
  • The seven-day forecast is still dry for Central Brazil and most of Argentina
  • Planting is underway in the Corn Belt while North Dakota and northern Minnesota are held back by wet conditions
  • Ethanol production has slowed below 1 million barrels per day the past few weeks

SOYBEANS

  • Jul soybeans up 15 @ 16.07
  • Soybeans are higher again this morning with support from a jump in July soybean oil
  • Soybean oil is being supported by higher diesel oil prices
  • Tomorrow traders will look to the USDA report to see if US ending soybean stock estimates are reduced
  • China bean imports are down from last year, but they are only 25% covered for June and July so they may be looking for old crop US soybeans

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WHEAT

  • Jul wheat up 17 @ 11.10, Jul KC up 18 @ 11.94, & Jul MNPLS up 22 @ 12.35
  • Wheat is higher along with the rest of the grain complex due to further weather troubles
  • Ukraine is continuing planting, but the new concern is in exports with Russia continuing to shell Odessa and export facilities
  • Traders will be watching tomorrows USDA report for views of the crops in India, Europe, and Ukraine
  • The trend in wheat remains up with domestic and foreign supply worries with no end in sight to the war in Ukraine

CATTLE

  • Jun LC up 1.200 @ 133.600 & May FC down 0.900 @ 158.000
  • Live cattle are higher this morning alongside the rally in grains while feeders are down working inversely
  • Cash is steady at 140 in the south and 230 in the North which is a victory considering the packer has bought a lot of cattle in the past 3 weeks
  • Futures at a discount to cash is pointing towards low expectations that the market will remain current
  • Choice cuts up 3.85 and select down 1.93
  • Cattle slaughter projected at 125K
  • CME Feeder Cattle Index for 5/10: up 0.12 @ 156.33

HOGS

  • Jun hogs down 0.600 @ 101.000 & Jun pork down 0.450 @ 107.575
  • Hogs are lower this morning with the cutout losing 4.20 yesterday
  • Overall demand is low right now which can be attributed to the lockdowns in China
  • Supply is low as well with cash staying strong so any increase in demand leaves room for upside potential
  • National Direct Afternoon report rose 2.27
  • Hog slaughter projected at 481K
  • CME Lean Hog Index for 5/11: unch @ 101.09

TFM Sunrise Update May 11, 2022

Grain - Rows of soybeans in a field

CORN

Corn futures were firm with Jul up 5-3/4 cents to 7.81 and Dec up 4-1/2 to 7.23-1/2 in a bid to move back up to 10 and 20-day moving average resistance ahead of Thursday's May WASDE report.  The trade estimate for 2021/22 carryout is near 1.412 bil bu vs USDA 1.44 bil.  2022/23 production is estimated to be around 14.773 billion bushels, using a 179.6 average yield.  Some analysts doubt USDA will drop U.S. corn yield from 181 vs crop watchers' 177 BPA.  USDA has used their outlook corn yield on the May report every year since 2014.  We'll see how the agency handles Ukraine's 2022/23 corn exports.  The market looks like it may need some new bullish news to attract buyers and the path of least resistance may be lower in the short term if planting can catch up.  The dollar is down 42 points , crude is up 2.33 and wheat is posting double-digit gains while offering some outside market support.  Weekly Ethanol Stats will be out later this morning, Exports tomorrow.  Managed funds are estimated to be be net long 331,000 corn contracts.

SOYBEANS

The soybean complex traded firmer overnight while correcting from an oversold condition.  Bullish traders were anticipating some type of supply news which might support their bias in the near-term, and there is now talk of China asking for U.S. old and new crop soybean prices.  China domestic soymeal stocks are down having fallen below last year.  July beans were up 10 cents to 15.02-1/4 last night.  Nov gained 11 cents to 11.65-3/4.  July Meal gained 1.40 to 402.90 and July bean oil was up 1.24 to 82.28.  Soybean meal futures have been one of the weakest performing ag markets in recent weeks, as the July contract has fallen back near $400.00.  This is off the contract high of $484.60 posted in late March as it is on pace for five straight weeks of lower trade, bringing the front-month chart to its lowest point since January.  2022/23 soybean production is estimated to come in at 4.613 billion bushels on Thursday’s report with an average yield of 51.4 BPA.  2021/22 ending stocks are expected to be down from April with an average estimate of 225 million bushels vs. 260 mb last month.  While the technical action has been rough, the markets are overdue for some retracement higher.  On Tuesday, Managed funds are estimated to be long 148,000 soybeans, 57,000 soymeal and 86,000 soy oil. 

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WHEAT

The wheat complex was up overnight.  July Chicago gained 18-1/2 cents to 11.10-3/4.  The KC contract was up 15-1/2 cents to 11.90-1/2.  July MPLS wheat was up 12-1/2 cents to 12.26 after falling just shy of Monday's contract high at 12.34-3/4.  Monday's Crop Progress report raised the winter wheat condition 2 points, although there are still some major concerns for some KC wheat regions with hot and dry weather following an arid winter.  Ongoing dryness could lower the U.S. HRW crop outlook.  EU, Brazil and Argentina are dry.  India, Pakistan, Bangladesh, N Africa and Middle east are also dry.  Major World wheat buyers have little forward coverage and with a big question mark hanging at the end of what Black Sea supplies will look like this year, we look for wheat prices to remain buoyant.  Thursday's Supply/Demand report has an average trade estimate for 2021/22 ending stocks of 686 mil bu, down from 678 mb last month.  On Tuesday, Managed funds were net buyers of 3,000 Chicago wheat and as of yesterday's close, estimated be long 37,000 wheat contracts.  

CATTLE

Cattle futures are called mixed in an attempt consolidate after a lower start to the week.  August live cattle at 134.10 are down, trading below the 200-day Moving Average drawn at 135.13.  The move has countered the stability in the cash market and created a wider discount of futures to the index.  Higher volume slaughter is weighing on box prices.  Last week’s slaughter at 657,000 was 20,000 head more than the last year.  Sluggish demand is also weighing on sentiment and keeping bullish technical traders from buying back into the recent rally.  Improving pasture conditions, now up to 22% Good-to-Excellent from 18% the previous week is a function of recent moisture in the central and southern Plains.  A slide in boxed beef cutout values is also noted. 

HOGS

The hog market is called mixed after finding some late-session buying on Tuesday, allowing nearby contracts to end the day in positive territory.  Prices had arguably fallen into oversold territory suggesting a increased chance for traders to begin selecting price levels that represent a bottom in the market.  Hook reversals formed which may lead to, at least choppy trade today.  Pork cutouts were down $2.09 on the day and heavier than normal weights augmented by lighter export demand needs to work its way through the system.  Weekly Export Sales tomorrow morning will shed more light on near-term movement.  Technically, June hogs, at 101.575 are now situated and stabilizing at 200-day Moving Average support after testing and then breaking through that barrier in recent days. 

Top Farmer Closing Commentary 5-10-2022

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CORN HIGHLIGHTS: Corn futures recovered today, ending the session with gains of 3-1/4 cents in July to 8-1/4 in December. July closed at 7.75-1/4 and December at 7.19. All futures contracts finished near the high of the daily trading range, a response to only 22% of the crop planted versus a five-year average of 50%. Traders were buying July near support at 7.70 and December at the 10-day moving average of 7.07.

On Thursday, the USDA will release the monthly WASDE report. Typically, adjustments to yield do not occur on the May report unless there are changes of significance in crop progress. In 2013 the USDA did lower yield in May due to a late start to the planting season. Is this likely on Thursday? Our best guess is that it is possible but not likely. Advances in technology and the ability to plant significant number of acres in short order would argue against a downgrade to yield. Yet, with the prevent plant date in North Dakota May 25, only 1% of their crop planted and more rain in the forecast, it does make one wonder if changes to yield will occur. At least, even the most aggressive supporter of yearly yield increases must be tempered this year. Much of Illinois and Indiana remain well behind the norm and are already reaching key dates where studies suggest declining yield potential is already at hand.

SOYBEAN HIGHLIGHTS: Soybean futures closed higher today after a harsh drop yesterday, which brought us to the lowest prices seen since the beginning of April for the July contract. July gained 7 cents, closing at 15.92-1/4 and Nov gained 8 cents at 14.54-3/4. Crop progress is now in the spotlight with the USDA reporting only 12% of soybeans planted as of May 8, which is well below the five-year average of 24%. Traders will continue to look at weather to determine how much that number increases next week with a favorable forecast.

Both export and crush demand remain strong, so it would appear that this recent sell-off has been due to funds liquidating some of their net long position in addition to the liquidation in meal which caused a drop of 10.80 yesterday. On the Dalian exchange, September soybean meal fell 2.5% yesterday, which brought it below the 50-day average for the first time this year. We are watching for July to hold key support above the 100-day moving average which is around 15.57. The daily chart has July soybeans in oversold territory but at this point things will boil down to weather, fund activity, and how much (if any) the USDA reduces its estimate of US ending soybean stocks on Thursday. There is the added possibility that the USDA reduces their estimate of the Argentinian bean crop following their dry conditions the past few weeks.

WHEAT HIGHLIGHTS: Wheat futures traded higher today. Not much has changed on the newswire, but the crop progress numbers were supportive to futures. July Chi was unchanged at 10.92-3/4 and Dec up 1-1/2 at 11.02. July KC gained 10-3/4 cents, closing at 11.75 and Dec up 11 at 11.83.

Yesterday afternoon’s Crop Progress report appears to still leave a supportive backdrop for the wheat market. Though winter wheat ratings improved 2% from last week to 29% good to excellent, they are still relatively poor and the worst rating since 1989. Last year at this time, the crop was rated 49% good to excellent. The dry pattern is expected to continue to stress the HRW wheat crop in the southern Plains. Texas, which has arguably had the most trouble on that front, remains with a rating of 77% poor to very poor and only 7% is rated good (with 0% in the excellent category). Looking north, spring wheat also shows delays, with 27% planted (vs 19% last week), but the average for this time is 47%. This is also well behind last year’s pace at 67% complete. The areas struggling with wet conditions in Minnesota and North Dakota don’t appear to have much change with only 2% and 8% planted respectively. This compares with an average this time of year of 50% for Minnesota and 37% for North Dakota. Apart from the Crop Progress report, there is not much fresh wheat news; Europe looks to remain hot and dry for the next two weeks, Russia is targeting Black Sea ports, and drought in the US southern Plains is likely to reduce yields.

CATTLE HIGHLIGHTS: Live cattle futures, as well as feeders, dropped sharply today as it looks like cash is not able to keep up with futures. Weak equity markets, inflation, and lockdowns in China are problematic for the meats, and beef is no exception. June cattle lost 1.15 to end the session at 132.40, and August feeders gave up 2.37 to close at 171.85, their lowest close in 7 sessions.

The cattle complex is struggling in three areas. Demand has been lackluster due to a later than usual spring for much of the U.S. keeping a lid on the grilling season. Lockdowns in China are starting demand hopes, and lastly inflation and a poor performance by the equity markets is a concern as consumers are feeling the pinch of a tighter budget. Nonetheless, a tight inventory will provide underlying support so that price pullbacks in either the live or feeder market are likely temporary. The overriding concern regarding tight world supplies of food will keep prices well supported from a macro sense. In the short term, anticipate that higher than normal volatility will remain more the norm. As we peer down the road, we can’t help but believe between demographics and high input cost, the number of people willing to take on cow calf operations will remain on the decline. It will take more economic incentives to suggest otherwise. Our big picture bias remains supportive grains and defensive cattle.

LEAN HOG HIGHLIGHTS: Hog futures closed mixed to lower, as the overall technical picture still looks weak and is unsupportive to the market. May hogs gained 0.200, closing at 101.075 and June was up 0.275 to 101.575. Deferred contracts struggled however with July down 1.225 to 102.975 and Oct down 0.700 at 90.350.

A mixed to lower close in hogs is somewhat disappointing but not unexpected given the recent weakness seen in the market. If one chooses to look at the glass half full, however, the chart gap left on the June chart above the market may need to be filled. Additionally, futures are well oversold technically and due for a correction to the upside. As we mentioned yesterday, the May contract has converged with the index but the modest gains in the front months may be an indication that packers need hogs now, not later. It is also noted that African swine fever has been confirmed in Rome. This should be watched closely as it has the potential to push prices higher if the disease spreads.

Top Farmer Midday Update 5-10-2022

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CORN

  • Jul corn up 1 @ 7.73
  • The USDA’s Crop Progress report showed 22% of corn planted as of May 8, which is well below the 5-year average of 50%
  • Crop progress numbers should make a significant jump by next week’s report with warmer weather and a mostly dry forecast in the Midwest improving planting conditions
  • The Northern Plains will see a challenge with wet conditions and more rain forecast
  • With Brazil and Argentina still experiencing dryness the US will likely be the world’s main source of corn in the year ahead and supplies could get tight

SOYBEANS

  • Jul soybeans up 7 @ 15.92
  • Soybeans are pushing back higher this morning after yesterday’s sharp drop
  • The USDA’s crop progress report showed 12% of soybeans planted as of May 8 below the five-year average of 24%
  • Soybean demand overall remains strong, and we will likely see the USDA estimate the lowest ending stocks of US soybeans in six years this Thursday
  • Domestic demand for meal has fallen but strong demand for soybean oil is driving the crush

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WHEAT

  • Jul wheat up 3 @ 10.96, Jul KC up 8 @ 11.72, & Jul MNPLS up 9 @ 12.16
  • The USDA rated 29% of winter wheat as good to excellent which is up from 27% last week but still the lowest rating since the drought of 1989
  • USDA reports show 27% of spring wheat crop planted down from the 5-year average of 47%
  • North Dakota is only 8% planted with more rain forecast this week
  • Weather is the main issue right now affecting both the North and Southwestern Plains

CATTLE

  • Jun LC down 0.125 @ 133.425 & May FC down 0.475 @ 159.325
  • Live cattle were lower again yesterday alongside lower corn, yet recovered significantly for a green close in Jun
  • All live cattle contracts are down today with anticipation of lower cash as the packer is well bought for now
  • Feeders have slipped lower with a rise in grains, alongside a record number of cattle on feed
  • Choice cuts up 3.85 and select down 1.93
  • Cattle slaughter projected at 124K
  • CME Feeder Cattle Index for 5/9: up 0.70 @ 156.21

HOGS

  • Jun hogs up 0.250 @ 101.525 & Jun pork down 0.325 @ 107.975
  • Front month hogs are leading the charge higher with deferred contracts down indicating the packer’s need for hogs now
  • Higher cash is supporting futures
  • Potential ASF spread in Rome must be watched as fears could drive prices higher
  • National Direct Afternoon report rose 4.85
  • Hog slaughter projected at 479K
  • CME Lean Hog Index for 5/10: up 0.18 @ 101.09

TFM Sunrise May10, 2022

Grain - Farming etienne-girardet-_Fp3YZ7lt-Y-unsplash

CORN

Corn futures were mixed overnight.  July was up 2-1/2 cents to 7.74-1/2, and Dec gained 2 cents to 7.12-3/4.  Corn contracts are staying below 10 and 20-day moving average resistance ahead of Thursday's May WASDE report.  The trade estimate for 2021/22 carryout is near 1.412 bil bu vs USDA 1.44 bil.  U.S. corn planting was 22% complete, according to the USDA Weekly progress update on Monday afternoon.  This is up from 14% a week ago, but lags the 5-yr average of 50%.  . IL is 15% vs 71% last year, IA 14% vs 84%, MN 9% vs 81.  5% of the U.S. crop is emerged versus the 5-ry average of 15%.  Next week's numbers will likely be more important for the trade as dryer U.S. weather should help corn and soybean plantings.  Outside markets are mixed this morning with the dollar firm and stocks up 250 points.  Crude is lower on talk of lower Saudi Arabia prices and China lockdowns.  Gold, silver, copper and cotton are higher.  Coffee, cocoa, and sugar are lower.  

SOYBEANS

The soybean complex traded firmer overnight.  July beans were up 7 cents to 15.92-1/4.  Nov was up 3 to 14.49-3/4.  July Meal gained 2.90 to 405.70 and July bean oil was up .20 to 80.02.  U.S. soybean planting was 12% complete, up from 8% a week ago and down from the 5-yr average of 24%.  IL is 11% vs 55% last year, IA 7% vs 64%, MN 2% vs 59%.  China's covid lockdown, a slower US economy and EU recession could slow rebound any price rebound.  So far, China has been absent from buying beans to start the week.  Their Yuan is near an 18 month low.  Looking ahead to Thursday, trade estimates for U.S. 2021/22 soybean carryout is near 225 mil bu vs the previous 260 and 2022/23 U.S. soybean carryout near 317.  

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WHEAT

The wheat complex was firm overnight.  July Chicago gained 5-1/2 cents to 10.90-1/4 after reaching an overnight high at 11.07.  The KC contract was up 7-1/4 cents to 11.71-1/2.  Winter wheat crop ratings came in at 29% Good-to-Excellent vs 27% last week.  Last year, the crop was 49% G/E.  July MPLS wheat was up a nickel last night to 12.11-3/4 while trading inside yesterday's new contract high range.  27% of the crop is planted compared to 19% a week ago and the 5-yr average of 47%.  Trade estimates US 2021/22 wheat carryout on Thursday is near 686 mil bu vs 678 previously and U.S. 2022/23 carryout near 659.  For now, more rains could slow U.S. HRS plantings.  Ongoing dryness could lower the U.S. HRW crop outlook.  EU, Brazil and Argentina are dry.  India, Pakistan, Bangladesh, N Africa and Middle east are also dry. 

CATTLE

Cattle futures are called mixed as the markets make a choppy start to the week.  The futures' discount to the cash market and strong midday retail values supports the front of the Live cattle market.  But, gains are limited by concerns in the market due to weakness in the macro-markets with strong selling in equity and energy markets.  Despite strong selling pressure in the grain markets, buyers stayed quiet in cattle futures for the most part on Monday.  Cash trade is expected to be steady to firmer with June futures trading at a discount to the expected cash.  Retail values saw strong buying support to start the week as Choice carcasses gaining 3.85 to 258.29 at the close.  Select carcasses were 1.93 softer to 243.13.  The load count was light at 131 loads.  Warmer temperature forecasts likely helps demand after the cold spring delayed some of the potential grilling demand.  Estimated slaughter to start the week was at 121,000 head for Monday, 10,000 head above last week, with heavier weights, the cattle numbers and product produced has been a limiting factor in cattle markets.  Feeder cattle struggled to find footing even with a weaker grain market, as softness in live cattle market in general limited feeder gains.  With May expiration around the corner, the May futures are tied to the cash index, which gained .70 to 156.21. 

HOGS

The hog market is called lower following strong selling pressure to start the week, as concerns regarding demand and large slaughter numbers with heavier carcass weights keep the supply side of the market heavy in the near-term.   Jun hogs posted a price gap lower and closed at the lowest point since January.  Most importantly, prices closed below the 200-day moving average for the first time since Oct.  Prices are still looking for a bottom and may be ready to test the January low for the year at 95.330 from January 11th.  The May contract is still tied to the cash index. The index traded 0.05 lower on Monday to 100.91 as May futures are in line with the index.  The cash market still looks to be an issue, limiting the front end of the market. In morning direct cash trade, prices were .97 higher to 101.42 and a 5-day average of 102.35.   Retail carcasses were softer at the close slipping 0.31 to 104.39 on demand of 294 loads.  Carcass values, in general, have been choppy trended lower last week.  Weekly hog slaughter, last week stood at 2.427 million head, up 1.6% over last week and 1.3% over last year.  On the year, total hog slaughter is down 5.4% compared to last year, but pork carcass weights are running well above last year and 5-year averages.  This large hog number in the near-term and heavier hog weights have been a limiting factor in the current hog market.

Top Farmer Closing Commentary 5-9-2022

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CORN HIGHLIGHTS: Corn futures started weaker and stayed as such throughout the session. Broad-based “risk off” selling had many markets on the defensive, including row crops and energies. Ideas that planting progress will make big strides this week also had the trade paring down long positions. July lost 12-3/4 cents to close at 7.72, and December gave up 10 to end the session at 7.10-3/4, its lowest close since early April. A continuous firming dollar and weak equity market didn’t help corn’s cause today either.

Export inspections at nearly 55 mb were termed supportive, bringing the year-to-date total to 1.496 bb or 59.8% of total expected sales of 2.5 bb. Today’s technical trade looked weak with prices violating the lower band of the Bollinger band, as well a second consecutive close beneath the 21-day moving average, something that has not occurred since before the first of the year. Expectations for rapid planting progress in the days ahead and continued concerns that lockdowns in over 40 cities in China will remain impactful to demand are pressuring prices as is a broad base sell-off in commodities and equities. Equities dropped below levels that were established just after the war erupted in Ukraine. Yet, bulls will argue the market was over-due for a correction and with Brazil’s second crop corn being downgraded by private forecasters, prices are well supported. They may have a point.

SOYBEAN HIGHLIGHTS: Soybean futures were dragged lower by a large hit to the energy complex which affected the entire market today, a sharp drop in soybean meal of 10.8 in Jul, and the anticipation of increased planting this week. Jul soybeans fell 36-3/4 cents, closing at 1585-1/4 and Nov lost 24 cents at 1446-3/4.

Export inspections at nearly 18.5 mb were termed supportive, bringing the year-to-date total to 1.751 bb or 82.8% of total expected sales of 2.115 bb. In addition to the hit in meal and improved weather forecast which should allow for significant planting this week, the stock market fell dramatically again today, and commodities seem to be falling in sympathy. The likely culprit for the dip in meal is fund selling with non-commercials holding a net long position of 99,561 and risk of further liquidation. Though China remains the top buyer of both US corn and soybeans, their recent lockdowns have put a damper on demand for the moment while the USDA has estimated a record number of planted bean acres at 91.0 million. Even though we have seen some price correction, longer-term demand from crush and exports is still strong and should keep pace with production.

WHEAT HIGHLIGHTS: Wheat futures traded lower, as the market took on a risk-off posture. Improved weather for planting corn and beans likely pressured the market and spilled over into wheat. July Chi lost 15-3/4 cents, closing at 10.92-3/4 and Dec down 11-3/4 at 11.00-1/2. July KC lost 6-1/4 cents, closing at 11.64-1/4 and Dec down 5-3/4 at 11.72.

Though the story for wheat has not changed much since last week, improvements to the weather forecast with warmer and drier weather in many parts of the Midwest had corn and soybeans under pressure today, taking wheat along for the ride. While this should allow for the planting pace to pick up for corn and beans, the northern Plains are a different story. Lingering rains in that part of the country may further delay spring wheat planting. And though closing lower today, MPLS futures continued to make new highs. Paris milling wheat futures, though closing lower as well, also continue to establish new highs. Heat and dry weather in Europe seem to be driving that market. On the other end of the spectrum from MPLS, the seven-day forecast for the southwestern Plains is mostly dry. With HRW wheat conditions already poor this won’t be of any help to that crop which has been struggling with drought. Today’s Crop Progress report is not expected to show big changes to winter wheat conditions with pre-report estimates averaging up 1% from last week at 28% good to excellent. Additionally, spring wheat is expected to be 28 % planted vs 19% last week. In other news, today’s inspections data showed wheat inspections at 8.7 mb, down 20% from last year.

CATTLE HIGHLIGHTS: Live cattle futures finished with mixed trade to start the week. Cattle prices shook off early session lows on Monday, as the discount to the cash market and strong midday retail values supported the front of the Live cattle market. Gains were limited by concerns in the market due to weakness in the macro-markets with strong selling in equity and energy markets. June Live cattle gained 0.800 to 133.550, and August added 0.025 to 135.375. Feeder cattle saw light gains in May cattle finishing 0.250 higher to 159.800, but August was 0.475 lower to 174.225.

Despite strong selling pressure in the grain markets, buyers stayed quiet in cattle futures for the most part on Monday. The influences of strong pressure in equity markets and energy markets limited gains in cattle markets. Cash trade is undeveloped on Monday, but expectations are for a steady to firmer cash trade, and with June futures trading at a discount to the expected cash, looked like a value. Cash trade volume will likely develop later in the week. Retail values saw strong buying support to start the week as Choice carcasses gained 4.57 to 259.01 at midday. Select carcasses were 0.81 softer to 244.25. Load count was light at 71 midday loads. Warmer temperature forecasts likely helped demand, as the cold spring has delayed some of the potential grilling demand. Estimated slaughter to start the week was at 121,000 head for Monday, 10,000 head above last week, with heavier weight, the cattle numbers and product produced has been a limiting factor in cattle markets. Feeder cattle struggled to find footing even with a weaker grain market, as softness in live cattle market in general limited feeder gains. With May expiration around the corner, the May futures are tied to the cash index, which gained 0.70 to 156.21. The cattle market saw some value buying on the soft opening, which is encouraging that buyers were ready to step in at those levels. The pressure from outside markets could stay as a limiting factor, as cattle prices are trying to build a near-term bottom.

LEAN HOG HIGHLIGHTS: Hog futures saw strong selling pressure to start the week, as concerns regarding demand and large slaughter numbers with heavier carcass weights keep the supply side of the market heavy in the near-term. May hogs traded 1.325 lower to 100.875, and Jun lost 2.800 to 101.300.

Jun hogs posted a price gap lower and closed at the lowest point since January. Most importantly, prices closed below the 200-day moving average for the first time since October. Prices are still looking for a bottom and may be ready to test the January low for the year at 95.330 from January 11. The May contract is still tied to the cash index. The index traded 0.05 lower on Monday to 100.91 as May futures are in line with the index. The cash market still looks to be an issue, limiting the front end of the market. In morning direct cash trade, prices were 0.97 higher to 101.42 and a 5-day average of 102.35. Retail carcasses were softer at midday, slipping 0.16 to 104.54 on light demand of 166 loads. Carcass values, in general, have been choppy trended lower last week, and look to be off to a soft start on Monday. Weekly hog slaughter, last week stood at 2.427 million head, up 1.6% over last week and 1.3% over last year. On the year, total hog slaughter is down 5.4% compared to last year, but pork carcass weights are running well above last year and 5-year averages. This large hog number in the near-term and heavier hog weights have been a limiting factor in the current hog market. Finding a low is a process, and the price action to end of last week had summer hogs pointing to a retest of that potential lows this week, which was verified today.

Top Farmer Midday Update 5-9-2022

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CORN

  • Jul corn down 12 @ 7.72
  • The 2-week forecast is warm and dry across most of the Midwest – should allow for increased corn planting
  • Crude oil is lower with Saudi Arabia lowering their prices, and reduced demand out of China due to lockdowns
  • Argentina and central Brazil are still struggling with a lack of rain
  • September corn on China’s Dalian Exchange is around the equivalent of $11.29 per bushel

SOYBEANS

  • Jul soybeans down 33 @ 15.89
  • High crush margins are still incentivizing to soybean processors
  • Rising covid cases in China are affecting their economy with reports of about 328 million people on lockdown in 40 cities
  • The Buenos Aires Grain Exchange said Argentina’s soybean harvest is 55% complete but only 12% of the crop is rated good to excellent
  • July soybeans on China’s Dalian Exchange are around the equivalent of $21.39 per bushel

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WHEAT

  • Jul wheat down 5 @ 11.03, Jul KC up 4 @ 11.75, & Jul MNPLS up 1 @ 12.10
  • Heat and dryness in Europe may push wheat prices higher
  • Some lingering rains across parts of the Northern Plains may further delay spring wheat planting
  • The 7-day forecast for the southwestern plains is mostly dry – HRW wheat conditions are already poor and this will not help
  • MPLS wheat continues to make new highs

CATTLE

  • Jun LC up 0.125 @ 132.875 & May FC down 0.050 @ 159.500
  • Live cattle were lower Friday, despite lower corn futures (and a similar trend today)
  • Packers have some cattle bought ahead so may be less aggressive this week
  • High food prices may be causing consumers to purchase fewer high-end cuts of beef
  • Choice cuts down 0.74 and select down 0.75
  • Cattle slaughter projected at 122K
  • CME Feeder Cattle Index for 5/6: down 0.08 @ 155.51

HOGS

  • Jun hogs down 2.600 @ 101.500 & Jun pork cutout unchanged @ 110.650
  • African swine fever has been found in Rome
  • Seasonally, pork demand should start to increase
  • Friday, futures were weaker on lower cash and cutouts
  • National Direct Afternoon report declined 1.59
  • Hog slaughter projected at 478K
  • CME Lean Hog Index for 5/9: down 0.05 @ 100.91

TFM Sunrise Update May9, 2022

Grain - Large soybean field on a sunny day

CORN

Corn futures were down overnight on seasonal planting season pressure and outside market movement to start the week.  July and Dec corn was down 12-1/2 cents to 7.72-1/4 and 7.08-1/4, respectively. The dollar is up 25 basis points to a new high, crude is down $2.00 per barrel and stock index futures are down 400 points.  We'll get a Weekly Planting Progress update this afternoon.  Some see 50% of U.S. corn crop being planted by May 20 and the remaining acres by June 1.  Weekly Export Inspections will come out mid-morning today.  The May WASDE report will be on Thursday at 11:00 AM Central time.  After Friday, Managed Money had shrunk their net long position to an estimated 343,000 contracts.  Basis bids for corn shipped by barge to the U.S. Gulf Coast were roughly steady on Friday and soybean barge bids had a firm tone, supported by slower movement of grain from the country as farmers scrambled to plant their 2022 crops where weather allowed.

SOYBEANS

The soybean complex traded lower overnight.  July beans fell 15 cents to 16.07.  Nov was down 12 to 14.58-1/4.  July meal shed 5.20 to 408.40, and July soy oil slipped .21 to 80.69.  Chinese Sept bean futures were up 2 yuan; Soymeal down 100; Soy oil down 104; Palm oil down 192; Corn down 13;  Malaysian palm oil prices overnight were up 10 ringgit (+0.16%) at 6410.  On Friday, Managed funds sold 12,000 soybeans, 2,000 soymeal and 3,000 soy oil and were estimated to be log 161,000 soybeans, 63,000 soymeal and 86,000 soy oil.  The steep drop in World equity markets combined with new highs in the U.S. dollar continues to weigh on futures.  U.S. soybean plantings are estimated near 14 to 18% complete ahead of this afternoon's weekly USDA update.   Looking ahead to Thursday, trade estimates for U.S. 2021/22 soybean carryout is near 225 mil bu vs the previous 260 and 2022/23 U.S. soybean carryout near 317. 

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WHEAT

Winter wheat futures were up overnight as prices trend higher, particularly in spring wheat.  July Chicago gained as much as 26-1/2 cents to get back to the top of it's 2-month trading range 11.35 before trimming gains this morning.  On Friday, Managed funds were net buyers of 1,000 Chicago wheat and were estimated to be long 41,000 contracts.   July KC hit 12.00 on gains of 29-1/2 cents last night.  July MPLS spring wheat made a new contract high at 12.34-1/2 on a gain of 25 cents.  Futures are higher on lingering support from ideas that India may not have additional wheat for sale.  In addition, Pakistan and Bangladesh remain dry, and drier EU and U.S. HRW weather along with a wet northern U.S. and Canadian weather pattern add to concerns over a Black Sea wheat export pace.  Trade estimates US 2021/22 wheat carryout on Thursday is near 686 mil bu vs 678 previously and U.S. 2022/23 carryout near 659.

CATTLE

Cattle futures are called mixed.  Futures finished .275 to 1.025 lower to end the week.  June Live cattle have struggled in the second half of the week after failing at resistance at the 200-day moving average, and with the soft price action on the week, look vulnerable to additional downside pressure this week.  Friday's low of $132.500, will be a key support level for nearby June live cattle.  There was active fed cattle cash trade in the North last week at $144 to $148 live, and $228 to $234 dressed.  That is steady compared to the previous week.  Moderate to large volumes were traded in the South at mostly $140 live, which was steady with the previous week.  The Choice cutout moved $7.42 lower last week, while Select decreased by $5.25/cwt.  Seasonally, boxed beef should see a rally with the approach of Memorial day and grilling season meaning increased demand.  Friday's slaughter totaled 121,000 head, 3,000 more than last week, and 10,000 greater than a year ago.  The heavier slaughter tone still indicates the market has plenty of cattle to work through in the near-term.  The feeder market was supported by a weak tone in the grain markets on Friday.  May feeders were pressured by the premium over the Feeder index, which gained .01 today to 155.60, but trading nearly to a $4.00 discount under the May futures.   Despite some end of the week selling pressure, Feeder cattle charts used the corn market weakness to post good weekly gains, but the action of the grain markets will stay as a trigger for buying or selling in the feeder market. 

HOGS

The hog market is called steady to low as sellers step back into the market.  The 200-day moving average for June hogs still acts as key support, and may be tested again this week.  The May contract is still tied to the cash index, and prices recovered back above the index during the week last week.  The index traded .08 lower on Friday to 100.96 and is holding a small discount to the futures.  For the week, the lean hogs index was .85 lower overall.  The cash market still looks to be an issue, limiting the front end of the market.  Retail carcasses closed softer on Friday, slipping 1.57 to 104.70 on demand of 289 loads. Carcass values, in general, have been choppy trending slightly lower on the week, losing nearly $2.00 from Monday's close.  The weak afternoon close will be limiting for price direction going into today.  Large hog numbers and heavier hog weights has been a limiting factor in the current hog market.  Finding a low is a process, and the price action to end the week has summer hogs pointing to a retest of that potential low next week.  The fundamentals just aren't there to provide the overall support as prices consolidated last week.  

Top Farmer Closing Commentary 05-06-2022

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CORN HIGHLIGHTS: Corn futures closed with strong losses, dropping 11-1/2 to 19 cents lower to end the week. The grain markets saw overall selling pressure, influenced by outside markets, and an improved weather forecast for the Corn Belt that may improve the planting pace. Jul corn dropped 12-3/4 cents to close at 784-3/4 and Dec fell 17-3/4 to close at 7.20-3/4. For the week, Jul corn traded 28-3/4 cents lower, while Dec lost 30-1/2 cents.

Selling pressure started on the overnight session, as the grain markets reacted to the strong selling pressure in equity markets late Thursday afternoon. The selling pressure in both markets stayed consistent through the day on Friday, providing the weaker tone. In addition, weather forecasts going into next week are staying more friendly to supporting planting pace for large portions of the Grain Belt, as most of the region is forecasted for warmer temperatures. The cool temperatures and frequent moisture have had the current planting pace historically behind schedule. With the technology available today, the market is anticipating that will quickly pick up pace over the next handful of days. Price action was weak through the day, and the weekly close lower was the first down week in the corn market in the last four weeks. The technical picture is also concerning with a close under the 20-day moving average, and Jul posted its lowest close since mid-April. The prospects of improved planting pace and technical weakness had funds taking profits going into the end of the week. The corn market will be keeping a close eye on the estimates for the Brazilian crop forecast. Hot and dry weather is looking to continue, and analysts will likely be making additional adjustments lower on the Brazilian crop, but it may not be enough to outweigh the pressure in the market from improved planting conditions here in the U.S.

SOYBEAN HIGHLIGHTS: Soybean futures traded sharply lower today as improvements to the weather outlook may allow planting pace to quickly increase. The lower trade in soy products also did not allow any room for a rally. Jul lost 25 cents, closing at 16.22 and Nov was down 21 cents at 14.70-3/4.

Lower meal and oil today were unsupportive, and soybeans just could not find any footing. The weather looks to be improving in much of the Midwest, which should allow the planting pace to pick up quickly, and the anticipation of this likely put pressure on the market as well. Sharply lower palm oil does not help the situation. It is not clear yet whether or not Indonesia will stop palm oil exports, but Malaysian palm oil stocks at the end of April are expected to be up 5%. The fact that the stock market was sharply lower yesterday (and to a lesser extent today) may have also somewhat spilled over into commodities. Despite these things, there is some bullish news – March 31 - Canadian canola stocks are the smallest since 2005, according to Stats Canada. Additionally, Argentina’s soybean harvest is said to be 55% complete but has a rating of only 16% good to excellent.

WHEAT HIGHLIGHTS: Wheat futures had a mixed close after a rollercoaster ride of a day. The market couldn’t seem to make up its mind with a near 40-cent trading range in Chi, only to end up posting small gains. A similar story unfolded in KC with a trading range of about 35 cents but closing with modest losses. Jul Chi gained 2 cents, closing at 11.08-1/2, and Dec up 4-1/4 at 11.12-1/4. Jul KC lost 6-1/2 cents, closing at 11.70-1/2, and Dec down 3-1/4 at 11.77-3/4.

After trading both sides of neutral the mixed close in wheat may signify the battle going on between the bears and the bulls. As we mentioned yesterday, the Oklahoma Grain and Feed Association is estimating the Oklahoma wheat crop at about 50% of last year (57 mb vs 115 mb). The drought conditions and high winds in many areas of the southern Plains have done no favors for the crop and this data exemplifies that. And, this year every bushel will count when you consider the fact that Russia appears to be strategically attacking supply routes and grain infrastructure in Ukraine. Paris milling wheat futures have also been on the rise as some dryness in Europe may threaten their crop. In the face of all these things, the markets today seemed to take a risk-off posture on talk of improving weather for much of the Midwest. Additionally, the stock market tumbled yesterday and was lower again today. Some of this pressure may have spilled over into commodities with some analysts suggesting that portfolio managers should exit commodity and equity markets to stand on the sideline for now.

CATTLE HIGHLIGHTS: Live cattle futures finished with moderate losses as prices finished from 0.275 to 1.025 lower to end the week. Cattle prices saw additional technical selling with overall weak price action as the market worked lower off the highs from earlier in the week. Jun cattle led the market lower losing 1.025 to 132.750, and Aug cattle dropped 0.675 to 135.350. In feeders, May feeders traded lower, losing 0.775 to 159.550, but the remaining contracts were higher with Aug 0.325 higher to 174.700. For the week, Jun live cattle traded 0.100 higher, but at the bottom of the range for the week, and Jun feeders used corn price weakness to gain 6.425 on the week.

Jun live cattle have struggled in the second half of the week after failing at resistance at the 200-day moving average, and with the soft price action on the week, look vulnerable to additional downside pressure next week. Prices traded and held last Friday's low of $12.500, and this will be a key support level going into next week's trade. The cash market traded steady on the week, and that was disappointing to the market, leading to the end of the week selling pressure. Light cash trade was seen on the week with $140 cash trade in the South, steady with last week, and North ranging around $146. Northern dress trade was at $232, again steady with last week. Today's slaughter totaled 121,000 head, 3,000 more than last week, and 10,000 greater than a year ago. Saturday's kill is estimated at 49,000 head, bringing the weekly total to 657,000 head, 8,000 larger than the prior week, and 18,000 above 2021. The heavier slaughter tone still indicates the market has plenty of cattle to work through in the near term. Beef retail values at midday saw carcass values trade mixed (Choice: -0.48 to 254.70, Select: +0.62 to 246.43) on movement of 60 loads. Choice carcass values trended lower on the week, which helped pressure cattle prices. The feeder market was supported by a weak tone in the grain markets on Friday.  May feeders were pressured by the premium over the Feeder Index, which gained 0.01 today to 155.60, but trading nearly to a $4.00 discount under the May futures. Despite some end-of-the-week selling pressure, feeder cattle charts used the corn market weakness to post good weekly gains, but the action of the grain markets will stay as a trigger for buying or selling in the feeder market. Live cattle markets look concerning with the weak close on the week. The steady cash tone and demand concerns overall have live cattle charts looking weak and holding on to support. The price action early in the week will be key. Feeders consolidated at the top of the week's trade but will be vulnerable to grain markets for direction.

LEAN HOG HIGHLIGHTS: Hog futures saw the sellers step back into the market to end the week, as hog futures closed the week with strong triple-digit gains, keeping front-month futures tied closer back to the cash market. May hogs traded 0.600 lower to 102.200, and Jun led the market lower losing 2.975 to 104.100.  For the week, May hogs settled 1.300 higher, but the more actively traded Jun contract lost 2.275.

Jun hogs had a disappointing day overall, but in the big picture, prices consolidated this week. The 200-day moving average still acts as key support and may be tested again next week, as determining a price low is a process. The May contract is still tied to the cash index, and prices recovered back above the index during the week. The index traded 0.08 lower on Friday to 100.96 and is holding a small discount to the futures. For the week, the Lean Hog Index was 0.85 lower overall. The cash market still looks to be an issue, limiting the front end of the market. In morning direct cash trade, prices were 1.13 lower to 100.45 and a 5-day average of 101.46. Retail carcasses were softer at midday, slipping 0.08 to 106.19 on light demand of 169 loads. Carcass values, in general, have been choppy trending slightly lower on the week, so the afternoon close will be key for price direction going into Monday. Weekly hog slaughter, without Saturday estimates, stands at 2.427 million head, nearly 40,000 more than last week, and 30,000 over last year. This large hog number and heavier hog weights have been a limiting factor in the current hog market. Finding a low is a process, and the price action to end the week has summer hogs pointing to a retest of that potential low next week. The fundamentals just aren't there to provide the overall support, as prices consolidated on the week. Price direction early next week will be a key. 

Top Farmer Midday Update 05-06-2022

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CORN

  • Jul corn down 8 @ 7.90
  • Corn trading lower partially due to bearish outside influences with U.S. stocks continuing their sharp decline
  • Anticipation that US planting will pick up with warmer temperatures over the next few days is putting pressure on prices
  • Dryness in South America is hurting Brazil’s second crop corn and only 16% of Argentina’s crop is rated good to excellent
  • DTN’s National Corn Index closed at 7.85 down from highest price in nine years

SOYBEANS

  • Jul soybeans down 8 @ 16.39
  • USDA reports that the U.S. has already exceeded soybean export estimate by 28mb for 2021-22
  • Bearish influence coming from a 1.54-cent drop in Jul soybean oil and 1.30 drop in Jul soybean meal
  • Over half of Argentina’s crop is harvested but only 12% is rated good to excellent
  • DTN’s National Soybean Index closed at 16.10 down from highest prices in nine years

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WHEAT

  • Jul wheat up 20 @ 11.27, Jul KC up 10 @ 11.87, & Jul MNPLS up 4 @ 12.14
  • Yesterday Oklahoma estimated this year’s wheat crop at 57mb which is half of last year’s at 115mb
  • Continued worries in Ukraine as Russia strategically attacks important supplies making flow of grain challenging
  • Open interest in May contracts of U.S. wheat has fallen dangerously low making trading difficult
  • Dryness in France poses a threat to their wheat crop

CATTLE

  • Jun LC down 0.225 @ 133.550 & May FC down 0.175 @ 160.125
  • The packer is back in control of the market for now with sufficient supply and no higher cash bids
  • Live cattle futures are trending lower with light cash activity and a hit to boxed beef
  • Feeders may find some buyers today with corn futures lower
  • Choice cuts down 4.65 and select down 1.87
  • Cattle slaughter projected at 118K
  • CME Feeder Cattle Index for 5/5: down 0.16 @ 155.59

HOGS

  • Jun hogs down 1.625 @ 105.450 & Jun pork cutout down 1.100 @ 112.450
  • Hog futures showed strength again yesterday and seem to have more upside potential after recent price decline
  • Cutouts rose 2.44 which gives hope that consumer demand is improving
  • The packers aggressive purchasing yesterday may have given them sufficient supply for the week and could account for lower cash
  • National Direct Afternoon report decreased 4.90
  • Hog slaughter projected at 459K
  • CME Lean Hog Index for 5/6: down 0.08 @ 100.96

TFM Sunrise Update May 6, 2022

Grain - Grain Elevator Processing Drying Plant

CORN

Corn futures were down overnight overnight with July losing a dime to 7.87 and Dec 13 cents to 7.25-1/2.  World Weather Inc reports a huge opportunity for significant fieldwork will be opening up next week across the U.S. Midwest and a part of the mid-south region as drier and warmer weather evolves.  The window for planting may not be tremendous even though recent forecast model runs have suggested it could last a while.  Producers have the ability to plant huge amounts of land in a relatively short period of time and after a period of drying this weekend and early next week the Midwest is likely see some impressive field progress.  U.S. stocks are lower following yesterdays steep losses.  Crude is higher and near $110. U.S. Dollar is lower.  Copper, silver, coffee, cocoa, sugar and cotton are lower.  Next Thursday the USDA will release its May WASDE report, and the market is looking for lower South American production and higher US 21/22 demand.  Many are also looking for the USDA to lower the 22/23 US carryout.  Brazil and EU are dry.  Argentina's corn Good-to-Excellent rating dropped 3% to 16%.

SOYBEANS

The soybean complex was mostly lower overnight, in part due to ideas of late corn planting leading to the potential for more bean acres.   July beans are down 14 cents to 16.33 this morning.  Nov beans fell as much as 17-3/4 cents to 14.74.  July meal is down 1.0 to 418.90.  Key support in soybean meal has failed and a decline in open interest suggests the market is still liquidating long positions, which may be adding pressure to soybeans.  July soy oil is down 1.47 to 80.38.  Headlines suggest the selloff in the stock markets and China's Covid-led lockdowns that will slow their economy, combined with seasonal U.S. planting progress is acting as a drag on the bean complex heading into the weekend.  The lockdown could slow China's veg oil demand and soybean imports.  Dalian palm oil and soy oil futures are lower. U.S. inflation will also be an influencer for feed and cooking oil demand.

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WHEAT

Winter wheat futures were down a dime overnight to 10.97-1/4 in July Chicago and 11.67 in the KC contract.  July MPLS was down 4-3/4 cents to 12.05.  Prices are still up for the week, though.  The recent heat wave that affected India also affected Pakistan and Bangladesh, raising concerns that they may become net wheat importers.  India may consider restricting wheat exports, as some estimate their crop may be down as much as 6 mmt due to a recent heat wave. They were expected to export as much as 10 mmt to help offset lower supplies from Ukraine.  There are questions whether the USDA will lower export demand and raise the carryout for 21/22 in next Thursday's report.  The May WASDE report will also show the USDA’s first estimate of the US 22/23 wheat crop with the lowest winter wheat ratings since 1996 and delays in spring wheat planting.

CATTLE

Cattle futures are called steady to lower following some profit taking pressure on Thursday as grain prices traded higher, led by a wheat price surge.  In addition, strong selling in the equity markets is noted.  Grains are lower this morning.  Jun live cattle futures failed to push through the 200-day moving average, so the path of least resistance seemed to work lower.   Light cash trade began building on Thursday with $140 cash trade in the South, steady with last week, and North ranging around $146.  Northern dressed trade was at $232, again steady with last week.  Trade was quiet on Thursday, and there may be a few wrap up deals to end the week.   Beef retail values saw carcass values trade lower (Choice: -4.56 to 255.18, Select: -1.87 to 245.81) on movement of 159 loads.  The Choice/Select spread narrowed to 9.37 could be reflecting a more current cattle supply.   Feeder price action was weak, and charts turned technically lower, leaving the door open for additional long liquidation into the weekend.  Cattle markets have had a good start to this week, but prices are pressured, giving back those gains.  The market seems poised to retest recent lows.

HOGS

The hog market is called steady to higher on follow-through from strong triple-digit gains for the second consecutive day allowing  June hogs to post its first higher high of the week.  The strong price action on the day leaves more upside room for prices to challenge back to the 100-day moving average and the 10-day moving average at the $109-110 levels.   The cash market still looks to be an issue, limiting the front end of the market.  The Lean Hog Cash Index lost 0.11 to 101.04, and back trading at a discount of 1.760 to the May and 6.035 to Jun contracts, limiting upside.  In afternoon direct cash trade, prices were 2.66 lower to 101.58 and 5-day average of 101.31.  Retail carcasses were firmer at midday, gaining 4.28 and held those gains closing 2.44 to 106.27 on light demand of 265 loads. The firm afternoon close will help support prices on the Friday open.  We view hogs as putting in a season-low with the firming price action on Wednesday and the follow through higher on Thursday may help confirm the move.  The technical picture on deferred contracts looks more friendly, as the nearby months are still dealing with demand issues and a choppy cash market

Top Farmer Closing Commentary 05-05-2022

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CORN HIGHLIGHTS: Corn futures closed with modest gains of 2-1/4 to 3-1/2 cents. Sharply higher wheat prices and some talk China may be in the market now that a holiday period is over added underlying support. Jul corn gained 3-1/4 cents to end the session at 797-1/2 and Dec added 2-1/4 to close at 7.38-1/2. Depending on where you are in the Midwest, planting is about to pick up in a major way, or remain delayed. Cumulatively, progress will advance as temperatures increase and drier conditions in the East prevail in the days ahead.

Export sales were supportive at 30.8 mb old crop and 29 mb for new crop. Year-to-date sales are now at 2.295 bb or 91.8% of total expected sales of 2.5 bb. If less than ideal weather persists in Brazil, look for a potential increase in export sales in the very near term. Next week’s Supply and Demand report could show an increase of expected sales as the world is looking for inventory to fill the void from Ukraine, and it will likely come from the U.S. The dominant weather for price direction will come in the form of weather. We just can't put ourselves into a category to argue that weather is a dominant factor affecting yield at this time. Yet, each day that passes weather will become more critical for the planting season, in particular for those who are very wet and are looking at more rain in the forecast.

SOYBEAN HIGHLIGHTS: Soybean futures firmed, closing modestly higher gaining 6-1/2 cents to close at 16.47 and Nov added 5-1/4 to end the day at 14.91-3/4. Traders were buying meal (after hitting 3-month low yesterday) and selling oil. Meal gained 1.70 in Jul, while Jul soybean oil gave up 58 points. Export sales at 27 mb put the total for the year at 2.143 bb or 1.3% above the total forecasted sales of 2.115 bb. The 18 mb increase above the total forecasted suggests the USDA will raise exports next week on the WASDE report and lower carryout.

Keeping prices in check is a surge in the U.S. dollar and expectation for more soybean acres as was reported on the March 31 acreage estimate. However, probably the biggest determinant of soybean acres is how well corn planting goes. With some very saturated soils, it is likely there could be some re-measurement of whether or not to plant corn in these areas if it stays wet through the end of next week. They may choose to shift to more soybeans. We don't believe, at least in conversation with producers, that there was much switch back to corn acres. Once farmers began conversations with vendors, they found fertilizer prices were either too high or there was no guarantee they could have delivery. Therefore, they likely stuck with their intent to increase soybean acreage.

WHEAT HIGHLIGHTS: Wheat futures again traded sharply higher on several supportive news items outlined below. Jul Chi gained 30 cents, closing at 11.06-1/2, and Dec up 26-1/4 cents at 11.08. Jul KC gained 53-3/4 cents, closing at 11.77, and Dec up 49-3/4 at 11.81.

The news that India may be restricting or banning wheat exports is still not confirmed, but the fact that the Indian government reduced its production estimate to 105 mmt is significant. Down from an expected 111.3 mmt (and with some private estimates below 100 mmt), India likely won’t play a major export role. In addition, Pakistan and Bangladesh are said to have lower wheat crops as well and they could ultimately be importers. Aside from the India news, there was another item of note which likely contributed to higher prices today. Oklahoma’s wheat crop is projected at just 57 mb (vs 115 mb last year) and yield at 23.5 bpa (vs 39 bpa last year). This information comes from the Oklahoma Grain and Feed Association. Aside from that, Texas may be in dire straits; their crop is rated only 8% good to excellent and 77% of the crop is rated poor to very poor. With triple-digit temperatures expected there in the coming days, the drought concerns are only on the rise. On a bearish note, export sales data was unspectacular. USDA reported an increase of 4.4 mb of wheat export sales for 21/22 and an increase of 1.6 mb for 22/23.

CATTLE HIGHLIGHTS: Cattle futures finished lower in some profit taking, as grain prices traded higher, led by a wheat price surge that triggered long liquidation in the cattle market. In addition, strong selling pressure in the equity markets likely spilled over and pressured cattle markets. Jun live cattle were 1.050 lower to 133.775, and Aug live cattle fell 1.050 to 136.025. May feeder lost 1.925 to 160.325.

Jun live cattle futures failed to push through the 200-day moving average. The path of least resistance seemed to work lower. The price action was soft today, as prices closed at the bottom end of the daily trading range, which likely leaves more downside trade for Friday. The steady tone in the cash market has helped limit gains in the cattle markets. Light cash trade began building on Thursday with $140 cash trade in the South, steady with last week, and North ranging around $146. Northern dress trade was at $232, again steady with last week. Trade was quiet on Thursday, and there may be a few wrap-up deals to end the week. Beef retail values at midday saw carcass values trade lower (Choice: -2.91 to 256.83, Select: -1.78 to 245.90) on movement of 114 loads. Choice/Select spread narrowed to 10.93 and could be reflecting a more current cattle supply. Weekly export sales reported new net sales of 14,600 MT for 2022 were up 28% from the previous week and 1% from the prior 4-week average. Japan, South Korea, and Taiwan were the top buyers of U.S. beef last week. The feeder market was also lower with triple-digit losses as the strong tone in grains triggered some selling pressure. Feeder price action was weak, and charts turned technically weaker, leaving the door open for additional long liquidation int Friday. The action of the grain markets will stay as a trigger for buying or selling in the feeder market. Cattle markets have had a good start to this week, but prices are pressured, giving back those gains. Cattle prices will be watching the grain market and money flow trying to push cattle prices lower. The market seems poised to go and retest recent lows, especially if the grain market can find strong buying support again.

LEAN HOG HIGHLIGHTS: Hog futures found another round of short covering, pushing hog prices higher with strong triple-digit gains for the second consecutive day. May hogs traded 0.200 higher to 102.800, and Jun gained 1.975 at 107.075.

Jun hogs got the key follow-through off Wednesday's strong gains, posting its first higher high of the week. The strong price action on the day leaves more upside room for prices to challenge back to the 100-day moving average and the 10-day moving average at the $109-110 levels. The cash market still looks to be an issue, limiting the front end of the market. The Lean Hog Cash Index lost 0.11 to 101.04, and back trading at a discount of 1.760 to the May and 6.035 to Jun contracts, limiting upside. In morning direct cash trade, prices were 2.66 lower to 101.58 and a 5-day average of 101.31. Retail carcasses were firmer at midday, gaining 4.28 to 108.11 on light demand of 135 loads. Carcass values, in general, have been choppy trending slightly lower on the week, so with strong midday trade, the afternoon close will be key for price direction on the Friday open. Weekly pork export sales report new net sales of 23,800 MT for 2022 were down 24% from the previous week and 13% from the prior 4-week average. Top buyers of U.S. pork last week were Mexico, South Korea, and Japan. The hogs may be putting in a season-low with the firming price action on Wednesday and the follow-through higher on Thursday may help confirm the move. The technical picture on deferred contracts looks more friendly, as the nearby months are still dealing with demand issues and a choppy cash market.

Top Farmer Midday Update 05-05-2022

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CORN

  • Jul corn unchanged @ 7.94-1/4
  • USDA reported an increase of 30.8 mb of corn export sales for 21/22 and an increase of 29.1 mb for 22/23
  • 7-day forecast for Brazil and Argentina is mostly dry (may stress Brazil’s safrinha corn)
  • September corn on China’s Dalian Exchange is around the equivalent of $11.60 per bushel
  • Next week the Midwest could see a drier/warmer pattern which would help in getting the corn crop planted

SOYBEANS

  • Jul soybeans up 11 @ 16.51
  • USDA reported an increase of 27.0 mb of soybean export sales for 21/22 and an increase of 15.0 mb for 22/23
  • China is back from holiday and they may return to purchasing US soybeans
  • Concern about China’s economy still exists after disappointing PMI data
  • July soybeans on China’s Dalian Exchange are around the equivalent of $21.75 per bushel

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WHEAT

  • Jul wheat up 21 @ 10.98, Jul KC up 33 @ 11.56, & Jul MNPLS up 14 @ 11.91
  • USDA reported an increase of 4.4 mb of wheat export sales for 21/22 and an increase of 1.6 mb for 22/23
  • Triple-digit temperatures are expected in Texas soon – drought is still a big concern there
  • India’s government reduced its wheat crop production estimate to 105 mmt (from 111.3 mmt)
  • In addition to India, Pakistan and Bangladesh may have lower wheat crops

CATTLE

  • Jun LC down 0.250 @ 134.575 & May FC down 1.775 @ 160.475
  • Relatively high corn prices may keep pressure on cattle
  • Cash has been steady
  • Live cattle futures still have large chart gaps above the market
  • Beef export sales at 14,600 mt (up 28% from previous week)
  • Choice cuts up 0.19 and select up 0.34
  • Cattle slaughter projected at 126K
  • CME Feeder Cattle Index for 5/4: down 0.02 @ 155.75

HOGS

  • Jun hogs up 0.875 @ 105.975 & Jun pork cutout down 0.200 @ 111.850
  • Hogs may be correcting from an oversold situation
  • Demand should pick up seasonally over the coming months
  • Porn export sales at 23,800 mt (down 24% from previous week)
  • Packers bought aggressively yesterday
  • National Direct Afternoon report increased 8.34
  • Hog slaughter projected at 481K
  • CME Lean Hog Index for 5/5: down 0.11 @ 101.04

TFM Sunrise Update May5, 2022

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CORN

Corn futures were firm overnight ahead of this morning's USDA Weekly Export Sales and following friendly Weekly Ethanol Stats yesterday.  July and Dec corn were up 3-1/2 cents to 7.97-3/4 and 7.39-3/4, respectively.  Trade estimates for Export Sales are 500,000 to 1.20 mil tons for old crop, 700,000 to 1.20 mil for new crop.  The trend remains well supported given the overall chart images, but we cannot ignore the recent choppiness as a signal that a strong push by U.S. farmers to get their crop in the ground could form some near-term topping action in the corn market.   However, the U.S. Midwest 7-day forecast is wet.  The following week could be warmer and drier.  Central Brazil, Argentina and EU are dry.  Higher crude oil futures offers support.  The uptrend in the green back favors the corn bears.  The next area of resistance for the July contract is around 8.01-1/4 with support down around 7.81-1/4. 

SOYBEANS

The soybean complex was mostly higher overnight.  July beans rose 15 cents to 16.55-1/2.  Nov was up a dime to 14.96-3/4 as both contracts make it back over their respective 50-day moving averages.  Trade estimates for Export Sales are 200,000 to 575,000 for old crop beans and 400,000 to 1.05 mil tons for new crop.  Soybean meal sales are seen at 100,000 to 300,000 tons for old, zero to 35,000 for new.  Soy oil sales are estimated at zero to 25,000 for old, zero to 5,000 for new.  Jul meal was up 3.50 per ton overnight to 421.70.  July soy oil was unchanged at 82.31.  China is back from holiday. Dalian soybean, soymeal, palm oil and soy oil are lower.  China's purchasing managers' index (PMI) is down to 36 vs 42 previous, raising concern about their economic growth.  Next week's USDA report is Thursday, May 12. 

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WHEAT

Wheat futures rallied overnight on follow-through from Wednesday's push higher on talk of India's short crop and export ban. There is also concern about dryness in Pakistan and Bangladesh that may turn them into wheat importers.  Dry EU weather and higher Matif futures are also noted.  July Chicago and KC contracts surged another 28 cents to 11.04-1/2 and 11.51-1/4, respectively while moving back into the upper end of their recent trading ranges.  July MPLS looks to challenge contract highs while advancing 21 cents overnight to 11.98-1/4.  The U.S. north plains and east Canadian prairie forecast is wet.  Trade estimates for Export Sales are zero to 200,000 tons for old crop, 100,000 to 250,000 tons for new crop.

CATTLE

Cattle calls are mixed for Thursday.  Cattle markets have had a good move this week, but prices overall may hitting the top of the range.  Traders will be watching grain markets and money flow trying to push cattle prices higher.  June live cattle futures consolidated under the 50-day and key 200-day moving averages, still holding on to most of the gains for the week.  There is still a large price gap overtop the charts after the last Cattle on Feed report, but that market may need more positive news to push into the window.   Light cash trade began building on Wednesday with $140 cash trade in the south, steady with last week, and North ranging around $146.  Northern dressed trade was at $232, again steady with last week.  The lack of movement has placed pressure on the front of the cattle market.  The bigger concern in the marketplace is demand.  Export demand has stayed overly strong, domestic demand and the impact of inflation on beef consumption acts as a wet blanket over the market.  Beef retail values are still historically strong, and at a the close, carcass values slightly higher (Choice: +.19 to 259.74, Select: +.34 to 247.68) on movement of 131 loads.  Choice/Select spread is fairly narrow at 12.06 and could be reflecting a more current cattle supply.  The feeder market was also mixed on Wednesday.  May and June feeders are challenging moving average resistance, and if grain markets were to gain strength, feeder prices could be limited again. 

HOGS

The hog market is called steady to higher after a wave of short covering on Wednesday to close with triple-digit gains.  Despite strong gains, nearby and summer hogs traded within Tuesday's trading range, keeping the move as a consolidation trade only.  Prices did hold support at the 200-day moving average on Tuesday, which was likely the reason to trigger the short covering move.  The technical picture on deferred contracts looks more friendly as the nearby months are still dealing with demand issues and a choppy cash market.  Deferred contracts a posted more bullish action on the chart as prices were viewed as value given the forecasted tighter hog supply picture into the second half of the year. The price action overall may be the making of a seasonal low after this push lower.  Cash markets still look to be an issue, limiting the front end of the market.  The Lean hog cash index lost .44 to 101.15, and are back to trading at a discount to the May and June contracts, limiting the upside.  Tuesday saw a firmer close, and that trend looked firmer on Wednesday.  Morning weighted average prices were at 104.24, with a 5-day average at 101.24.  Hog carcass weights have been 1.3% higher than last year, and slaughter has been strong, adding more pork pounds into the cooler.  Seasonally, hog weights typically start to trend lower into summer, helping build some support.  Carcass values in general have been choppy, trending slightly lower on the week.

Top Farmer Closing Commentary 05-04-2022

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CORN HIGHLIGHTS: Corn futures edged higher today with front-month Jul gaining 1-1/4 cents to end the day at 7.94-1/4 and Dec added 1 cent to close at 7.36-1/4. The May contract lost 2-1/4, however with last trading day approaching (5/13/2022) and cash bids based off Jul, we will only use Jul as the old crop contract of relevance. Bulls are apparently cautious as solid gains in energies, soybean, and wheat failed to provide much support. While rains in the western Corn Belt will delay planting, it appears the market is of the belief that recent rains are beneficial. The eastern Corn Belt is anticipating better planting conditions over the next 10 days which should allow planting to pick up.

The corn market is at a critical crossroads. The 21-day moving average is holding new crop price, acting as support with the market closing under this level only one time since December 31. On February 25, futures did close under this level but for only one day. Keep in mind the volatility of the market at that time, as the war in Ukraine just got underway and the market was trying to figure out whether this was bullish or bearish. Next week, the USDA will release its monthly Supply and Demand report. We expect to see an increase in export expectations as importers need to fill the void of lost purchases from Ukraine. For now, the market will focus on weather, and as we have indicated in recent sessions, we can't quite bring ourselves, on May 4, to argue that the cumulative yield on corn will be altered much from expectations. However, many farmers will not plant until at least May 10 or beyond, and history does suggest yield potential could be on the decline by then. Common sense might argue that to achieve greater than 181 bushels an acre may be a tall challenge with the weather the crop has faced so far this spring.

SOYBEAN HIGHLIGHTS: Soybean futures gained strength posting a positive technical hook reversal. Sharp gains in the energy complex and a weaker dollar, coupled with sharply higher wheat prices provided support. Jul soybeans gained 10 cents on the session closing at 16.40-1/2 and Nov added 8-1/4. The big picture perspective suggests soybeans may have dropped enough in recent sessions to spur export demand. Soybean meal lost 5 to 8.00 (3-month lows) and soybean oil gained over 200 points, gaining back some of its recent losses.

The Federal Reserve raised interest points a half percent, as expected. We would not be surprised if traders were trimming long positions prior to this announcement. Perhaps more importantly the wording from the Federal Reserve Chairman suggested there may be more increases but likely not more than a 1/2 percent. Basically, his words were somewhat assuring to the marketplace. Equities wasted little time moving sharply higher. This may provide traders more confidence to again go to the long side of the soybean complex due to tight inventory. The only problem we are having currently is that prices really don’t have enough new news to argue for higher. They have failed repeatedly at 17.00 old crop and 15.00 new crop.

WHEAT HIGHLIGHTS: Wheat futures traded sharply higher today after reports came out about possible export bans by India. Jul Chi gained 31 cents, closing at 10.76-1/2, and Dec up 29 at 10.81-3/4. Jul KC gained 30-1/2 cents, closing at 11.23-3/4, and Dec up 29-3/4 at 11.31-1/4.

The big news in the wheat market was the talk that India may ban wheat exports, sending all three U.S. contracts, as well as Paris milling futures, sharply higher. Recent heat and dryness in India have affected their crop, and some analysts are reducing their production estimates to around 100 mmt from 112 mmt. The Indian government’s most recent estimate is at 105 mmt, which compares to last year’s harvest of 109.6 mmt. The ban has not been confirmed at this time and reports are conflicting as to whether it will be implemented or not. It was earlier anticipated that they may pick up a lot of the slack left by the absence of Ukraine from the export market, but now things are a bit more ambiguous. In other world headlines, it is also noted that the USDA projects Canadian wheat stocks to be record low by the end of July at 2.9 mmt. As far as U.S. news, weather is at the forefront of traders’ minds. Despite recent moisture, much of the HRW crop is still experiencing drought. As an example, parts of Texas are expecting triple-digit temperatures this weekend and they also are experiencing some of the worst drought conditions. Spring wheat areas have the opposite problem with flooding in parts of eastern North Dakota.

CATTLE HIGHLIGHTS: Cattle futures finished mixed on the day as a firmer tone in grain markets, and a pause in buying strength, held the market in check. Jun live cattle were 0.500 lower to 134.825, and Aug live cattle slipped 0.250 to 137.075. May feeder gained 0.150 to 162.250.

Jun live cattle futures consolidated under the 50-day and key 200-day moving averages, still holding on to most of the gains for the week. There is still a large price gap overtop the charts after the last Cattle on Feed report, but that market may need more positive news to push into the window. Light cash trade began building on Thursday with $140 cash trade in the South, steady with last week, and North ranging around $146.  Northern dress trade was at $232, again steady with last week. The lack of movement put pressure on the front of the cattle market. The bigger concerns in the marketplace stay focused on demand. Export demand has stayed overly strong, domestic demand and the impact of inflation on beef consumption acts as a wet blanket over the market. Beef retail values are still historically strong, and at midday, carcass values are slightly higher (Choice: +0.15 to 259.70, Select: +0.11 to 247.45) on movement of 80 loads. Choice/Select spread is fairly narrow at 12.25 and could be reflecting a more current cattle supply. The feeder market was also mixed on the session. A strong tone in grains limits gains, as prices are back challenging the top of the trading range. May and Jun feeders are challenging overtop moving average resistance, and if grain markets were to gain strength, feeder prices could be limited again. Cattle markets have had a good move this week, but prices overall may be hitting the top of the range. Cattle prices will be watching the grain market and money flow trying to push cattle prices higher.

LEAN HOG HIGHLIGHTS: Hog futures found a wave of short covering on Wednesday to close with triple-digit gains. May hogs jumped 2.825 higher to 102.600, and Jun gained 2.900 at 105.100.

Despite strong gains, nearby and summer hogs traded within yesterday's trading range, keeping the move as a consolidation trade only. Price did hold support at the 200-day moving average on Tuesday, which was likely the reason to trigger the short covering move. The deferred contract did post more bullish turns on the chart, and prices were likely a value given the forecasted tighter hog supply picture into the second half of the year. The price action overall may be the making of a seasonal low after this push lower. The cash market still looks to be an issue, limiting the front end of the market. The Lean Hog Cash Index lost 0.44 to 101.15, and back trading at a discount to the May and Jun contracts, limiting upside. In morning direct cash trade, prices were not reported due to confidentiality, but Tuesday saw a firmer close, and that trend looked firmer on Wednesday. Morning weighted average prices were at 104.24, with a 5-day average at 101.24 this morning. Hog carcass weights have been 1.3% higher than last year, and slaughter has been strong, adding more pork pounds into the cooler. Seasonally, hog weights typically start to trend lower into summer, helping build some support. Retail carcasses were softer at midday, losing 0.80 to 104.76 on light demand of 150 loads. Carcass values in general have been choppy, trending slightly lower on the week. The hogs may be putting in a season-low with the firming price action on Wednesday. The technical picture on deferred contracts looks more friendly, as the nearby months are still dealing with demand issues and a choppy cash market.

Top Farmer Midday Update 05-04-2022

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CORN

  • Jul corn up 5 @ 7.98
  • Dryness in central Brazil is a continued concern for the safrinha corn crop
  • Some analysts are reducing Brazil’s corn production by 5-10 mmt (last WASDE was at 114 mmt)
  • China is on Golden Week holiday until Thursday so no export activity expected from them
  • APK Inform reported Ukraine’s April grain exports at 923,000 mt (of which 768,000 mt was corn) which compares with 2.8 mmt per month before the war

SOYBEANS

  • Jul soybeans up 7 @ 16.37
  • Higher crude oil is supporting higher soybean oil
  • China is expected to purchase more new crop US soybeans after they return from their Golden Week holiday
  • Crush margins are still historically high
  • Covid lockdowns are still in effect in China which could reduce their import demand
  • EU ban on Russian oil could ultimately impact the demand for biofuels

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WHEAT

  • Jul wheat up 31 @ 10.76, Jul KC up 29 @ 11.22, & Jul MNPLS up 21 @ 11.77
  • India is potentially banning wheat exports, which has wheat sharply higher
  • Heat and dryness in India have caused some analysts to reduce their estimates of that crop from 112 mmt to around 100 mmt (India’s government says 105 mmt)
  • Canadian wheat stocks are projected by the USDA to be record low by the end of July at 2.9 mmt
  • Paris milling wheat futures are sharply higher
  • Despite some recent moisture, drought is ongoing in many HRW areas

CATTLE

  • Jun LC down 0.300 @ 135.025 & May FC up 0.050 @ 162.450
  • Feedlots may be willing to hold out for higher cash with lower corn prices recently
  • Packers may be less aggressive with some cattle already contracted ahead
  • Live cattle charts still have large gaps above the market
  • Choice cuts down 3.00 and select down 0.89
  • Cattle slaughter projected at 125K
  • CME Feeder Cattle Index for 5/3: up 0.53 @ 155.77

HOGS

  • Jun hogs up 2.300 @ 104.500 & Jun pork cutout up 1.175 @ 110.775
  • June hogs closed the small chart gap at 101.95
  • Futures are oversold and due for a correction
  • Stronger cash expected today
  • National Direct Afternoon report increased 2.57
  • Hog slaughter projected at 480K
  • CME Lean Hog Index for 5/4: down 0.44 @ 101.15

TFM Sunrise Update May 4, 2022

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CORN

Corn futures were narrowly mixed overnight as the trade evens up positions before the Fed meeting.  The trade is looking for a 50 point hike in the interest rate.  India and Australia have raised their rates.  July corn is up a penny this morning to 7.94.  Dec is fractionally lower at 7.35.  Warmer and drier forecasts are weighing on sentiment, as well as strength in the dollar as nearby corn prices struggle near $8.00.  Corn planting is falling behind last year and the previous 5 year average.  Only Texas is running ahead of last year.  Weekly Ethanol Stats will be out later this morning.  Crude is higher this morning.  On Tuesday, Managed funds were net sellers 12,000 corn bringing their net long position down to an estimated 338,000.

SOYBEANS

The soybean complex was mixed overnight.  July and Nov beans are unchanged at 16.30-1/2 and 14.78-1/4, respectively while slumping to a 4-week low on declining open interest.  July meal is up .70 to 424.60 while slumping toward $400/ton.  July bean oil is up .25 to 80.53.  Economists remain concerned about China's economy due to Covid lockdowns.  On Tuesday, Managed funds were net sellers of 7,000 soybeans, 3,000 soymeal and bought 1,000 soy oil.  They are now estimated to be long 134,000 soybeans, 76,000 soymeal and 91,000 soy oil.  Looking ahead to next Thursday, the trade is looking for USDA to lower South America soybean supply and raise U.S. soybean demand and lower US 2021/22 and 2022/23 carryout.

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WHEAT

Wheat futures were firm overnight as the U.S. wheat trade starts to reverse lower.  July Chicago wheat was up 7-1/2 cents to 10.53.  July KC gained 10-1/2 cents to 11.03-1/4.  July MPLS was up 6-1/4 cents to 11.61-3/4.  Strength in the U.S. dollar keeps the pressure on wheat while the lowest winter wheat crop ratings since 1996 and spring wheat planting progress slowed by weather underpins prices.  Year-To-Date nearby futures are up 34% in SRW, up 35% in HRW and up 17% in HRS.  Next week, USDA will have to deal with the impact the war in Ukraine will have on 2022/23 trade.  Ukraine crop acres could be down 33% with 30% of the crops planted to date.  Ukraine's grain exports fell to around 923,000 tons in April due to the Russian invasion from 2.8 million tons in the same month in 2021. 

CATTLE

Cattle calls are steady to lower after closing well of their highs on Tuesday after starting higher due to an oversold market.  Cash has been quiet so far this week within a firming trend recently.  Light trading began in the north at mostly steady prices of $145-146 live and $232 dressed.  Lower corn prices have supported feeders, thus helping live cattle. Tuesday's slaughter was estimated at 126,000 head, 1,000 head more than week ago and 4,000 head more than a year ago.  Monday's slaughter was revised to 111,000 head, 4,000 head less than what was originally stated, according to DTN.

HOGS

The hog market is called steady to lower as June futures test 200-day Moving Average support.  A classic head and shoulders topping formation highlights the lean hog chart from a technical perspective and sets up a downside target area at 98.70.  On the upside, the next area of resistance is 104.45.  The contract settled at 102.20 on Tuesday.  Weaker pork cutout values may help keep futures in search of a low.  Tuesday's slaughter was estimated at 480,000 head, steady with a week ago and 6,000 head less than a year ago.

Top Farmer Closing Commentary 05-03-2022

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CORN HIGHLIGHTS: Corn futures finished on a weak note, losing 10-1/2 cents in July to close at 7.93. Dec gave up 7 cents to close at 7.35-1/4. After recovering overnight and this morning with gains of 8 to 10 cents only to finish weaker is not a very encouraging sign for bullish traders. Prices this morning filled a gap left from Sunday night's weaker open price. To fill the gap and then finish as weak as prices did would suggest the market is looking beyond near-term planting delays. Weaker energy, soybeans, and what may have also weighed on the corn market.

The USDA Crop Progress report yesterday afternoon indicated 14% of the crop planted versus a five-year average of 33%. The implication is that the crop is behind schedule which heightens the anxiety of bunching it together for both pollination and crop maturity. Yet, the most recent 6-10 day forecast indicated above normal temperatures for the entire Midwest and below normal precipitation for the eastern half. Warming temperatures and lack of rain in the East could allow for a very fast pick up in planting progress over the next three to ten days. We can't help but think that many traders believe the rain totals in the western Corn Belt at the end of April and early May overshadow planting delay concerns as this region was critically dry.

SOYBEAN HIGHLIGHTS: Soybean futures lost 10 to 15 cents following corn, wheat, and energy prices lower. Traders were buyers on the overnight and early this morning on continued wet weather for most of the Midwest. Yet by day's end, expectations that planting progress in the eastern Corn Belt would improve and funds likely trimming positions in front of the Federal Reserve’s expected interest rate hike tomorrow had prices finishing on a weak note. Jul futures gave up 14-3/4 cents to end the session at 16.30-1/2 and Nov lost 12-1/4 cents to close at 14.78-1/4.

The NOPA crush at 192.8 mb was record but failed to ignite much enthusiasm. Planting progress at 8% was in line with the five-year average. In old crap contracts, the close below the 40 and 50-day moving average does not look very supportive. We indicated recently that strong export sales may be reflective of countries buying their needs for the near term which is reflective of smaller supply out of Brazil. Yet, export activity is slowing on old crap which may suggest end users have purchased what they need. Weather will be the most dominant factor for price determinants. As of now, it is too early to argue whether it has a direct or significant bearing on yield potential.

WHEAT HIGHLIGHTS: Wheat futures traded lower as little fresh news was available to drive the market higher and an elevated US dollar provides pressure too. Jul Chi lost 10 cents, closing at 10.45-1/2 and Dec down 7-1/4 at 10.52-3/4. Jul KC lost 5-1/4 cents, closing at 10.92-3/4 and Dec down 3-1/4 at 11.01-1/2.

Monday’s Crop Progress report was expected to show a slight increase in winter wheat conditions but the crop was rated at 27% good to excellent, unchanged from last week. This compares to 48% good to excellent at this time last year. The winter wheat rating is currently the lowest since 1996. In the report, the USDA also said spring wheat is 19% planted vs 28% average and 46% last year. Looking closer, however, Minnesota and North Dakota are still struggling to get the crop in the ground with only 1% and 5% planted respectively. The average for Minnesota at this time is 24% and North Dakota at 18%. In global news, the ag minister of Germany stated that he believes Russia is specifically targeting Ukraine’s grain infrastructure to eliminate them as an export competitor. There are also reports of Russia stealing Ukraine grain to then be sold by Russia. While the export demand out of Ukraine has so far not shifted to the U.S., other countries have been picking up some of the slack – India among them. However, the private estimates of India’s wheat crop are near 105-106 mmt which compares to 109.6 mmt last year and early projections of 111-112 mmt. Ultimately, a recent heatwave there could jeopardize their wheat production and relieve them of picking up Ukraine’s export slack.

CATTLE HIGHLIGHTS: Cattle futures firmed as did feeders as grain prices weakened and demand for product is on the rise. Live futures close 12 to 72 points higher with Dec leading the way closing at 150.775. Aug feeders lead feeder contracts to the positive side, gaining 2.20 to end the session at 176.27, its highest close since April 22. In three sessions the Aug contract has gained over 8.00.

An 11.00 spread between choice and select suggest the feedlots are mostly current. With high-priced feed, this is not a big surprise. Yet with crops falling behind their normal planting schedule, this could be problematic, heavier animals may make their way to market. The bigger concerns in the marketplace, however, are potential slowdowns and demand due to continuous lockdowns in China, as that country tries to keep the spread of COVID in check. The hog market has been in a nosedive as well. Bottom line is there's not a lot of momentum to carry cattle prices higher. The feeder market, however, could find additional support if corn prices are close to or finding their high level. The corn market in the last two sessions has had plenty of friendly news but has not responded as such. This might tell us that traders are of the belief corn futures are high enough and have room to work lower, especially if the planting of this year's crop moves forward in the weeks ahead. Currently, the eastern Corn Belt is expected to see above-normal temperatures and below-normal precipitation as noted by the most recent National Weather Service 6-10 day outlook.

LEAN HOG HIGHLIGHTS: Hog futures again succumbed to selling pressure as technical weakness is driving the market lower. May hogs lost 0.100, closing at 99.775, and Jun down 2.775 at 102.200.

Jun hogs gave up a fair amount of ground today as they approached the 200-day moving average, which is acting as support at 101.742. Cutouts, though closing 2.00 higher yesterday, need to continue to show strength in order to give traders the confidence needed to buy back into the market. The National Direct Afternoon report declined 2.58 however, offsetting that gain in cutouts. The CME Lean Hog Index at 101.59, leaving May hogs at a slight discount but Jun at a slight premium. As futures and cash converge further, it may limit the downside potential of futures. Jun hogs did manage to close a small chart gap left in late January. With that gap now closed and the fact that hog futures are well oversold, traders may be given the confidence to buy back into the market, but charts still look weak overall. Until a definite low is established the trend may remain downwards.

Top Farmer Midday Update 05-03-2022

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CORN

  • July corn down 4 @ 7.99
  • Corn inspections pegged at 66.3 mb with total inspections now at 1.440 bb
  • USDA said 14% of the corn crop is planted vs 33% average and 42% last year
  • CONAB has Brazil’s 2nd (safrinha) corn crop at 88 mmt
  • The ag minister of Germany stated he believes that Russia is targeting Ukraine’s grain infrastructure to eliminate them as an export competitor
  • Jul corn has closed the gap on the daily chart

SOYBEANS

  • July soybeans up 7 @ 16.52
  • Soybean inspections pegged at 22.1 mb with total inspections now at 1.735 bb
  • USDA said 8% of the soybean crop is planted vs 13% average and 22% last year
  • Unconfirmed rumors that Indonesia is going to reverse their palm oil export ban
  • China is on holiday so no export news expected from them
  • Economists are concerned about China’s economy due to covid lockdowns there, which could ultimately impact the global economy

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WHEAT

  • Jul wheat down 8 @ 10.47, Jul KC down 7 @ 10.91, & Jul MNPLS down 7 @ 11.61
  • Wheat inspections pegged at 14.1 mb with total inspections now at 689 mb
  • USDA said winter wheat crop is rated 27% good to excellent vs 48% last year (but unchanged from last week)
  • These are the lowest winter wheat crop ratings since 1996
  • USDA said spring wheat is 19% planted vs 28% average and 46% last year
  • Private estimates of India’s wheat crop are around 105-106 mmt compared to 109.6 mmt last year

CATTLE

  • Jun LC up 0.925 @ 136.125 & May FC up 0.725 @ 162.150
  • Packers already have some cattle contracted for the week and may be less aggressive
  • Higher corn futures overnight may pressure feeder cattle
  • Large chart gaps still exist above the market in live cattle futures
  • Choice cuts up 1.77 and select up 0.26
  • Cattle slaughter projected at 124K
  • CME Feeder Cattle Index for 5/2: down 0.40 @ 155.24

HOGS

  • Jun hogs down 1.200 @ 103.775 & Jun pork cutout down 1.100 @ 110.750
  • Cutouts closed 2.00 higher – if they hold strength it may give traders confidence to buy back into the market
  • Packers might be more aggressive today
  • Hog futures are oversold and due for a correction
  • National Direct Afternoon report declined 2.58
  • Hog slaughter projected at 480K
  • CME Lean Hog Index for 5/3: down 0.18 @ 101.59

TFM Sunrise May 3, 2022

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CORN

Corn futures were firm overnight with July up a nickel to 8.08-1/2 and Dec up 4 to 7.46-1/4.  Weekly Crop Progress data showed the U.S. corn crop 14% planted versus 7% last week and the 5 yr average of 33%.  3% of the crop is emerged.  On Monday, Managed funds were net sellers of 17,000 corn and are now estimated to be long 350,000 contracts.  Talk of higher U.S. corn and ethanol demand should keep a bid under prices.  Meanwhile, the U.S. Fed increasing U.S. interest rates offers resistance to commodity prices.  U.S. stock index futures are mixed.  Crude and the U.S. dollar are lower. 

SOYBEANS

The soybean complex was mixed overnight as the major trend softens at overbought levels.  July beans are down a penny this morning to 16.44-1/4.  Nov is down 2 to 14.88-1/2.  July meal is up 2.20 to 433.10.  July soy oil is down .44 to 79.65 after reversing lower from an all-time high sparked by China's economic concerns highlighted by severe lockdowns.  China and Malaysia markets are closed through Thursday due to holiday.   Weekly Crop Progress data showed the U.S. soybean crop 8% planted versus 3% last week and the 5 yr average of 13%.  On Monday, Managed funds were net sellers of 21,000 soybeans, 1,000 soymeal and 9,000 soy oil.  They're net long an estimated 141,000 soybeans, 79,000 soymeal and 90,000 soy oil.

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WHEAT

Wheat futures were firm overnight.  July Chicago wheat was up 2-1/2 to 10.58.  July KC gained 7 cents to 11.05.  The contract has given up $1.50 per bushel since the putting in the March 7 high at 12.59 with U.S exports taking a hit.  USDA kept the U.S. winter wheat crop rating at 27% Good-to-Excellent and the lowest since 1996.  The crop was 48% G/E a year ago. 5% of the U.S.  July MPLS was up 4-1/2 cents to 11.72-1/4.  The spring wheat crop is 19% planted versus the 5 year average of 28%, 13% last week and 46% last year.  The 7-day weather forecast for the north Plains remains wet before some expected warmer and drier conditions.

CATTLE

Cattle calls are steady to higher.  A strong start to the week supports the market from an oversold condition.  The key will be follow-through as the market moves along this week.  Cash trade and improved demand will be key for that support.  We're not calling Monday's move a low, but a possible good sign.  June cattle used the weakness in grains and the expiration of April cattle to start "May beef month" with a strong price recovery.   June Live cattle's close on Friday, trading $8.00 under the final trades in April looks under-valued.  Prices moved quickly off the trend line support from Friday's close.   June cattle challenged the 200-day moving average as overhead resistance, and this mark may be a key swing point for the June Market.  Last week's cash market was supportive of prices, and that help bring some buying support into the June contract.  Expectations are for packers to stay supportive of cash bids again this week.  The trend in cash markets will be a key for price stability this week.  Beef demand has been a concern, as colder, wet weather has pushed some of the spring demand back but an improving forecast may have helped prices on Monday.  Boxed beef prices were higher at midday, and held gains into the close (Choice 262.55, +1.77, Select 248.23 +.26), on light movement at 79 loads.   A weak tone in the grain markets was the fuel for an uptick in feeders, triggering a short covering rally in an oversold market.  The charts turned more friendly, posting chart reversals, and closing above nearby moving averages.  

HOGS

The hog market is called steady to lower.  Lean hog charts are still on the defensive, and the trend is still lower as the market searches for a bottom.  Demand concerns on the export front and the retail consumer are the fundamental concerns pressuring the market amid a cold spring.   June hogs posted their lowest close since January.  Prices did try to work off session lows, but the mid-range close still keeps the trend intact, as prices are looking to challenge the 100-day support level at 101.700.   The cash hog midday direct trade was 3.50 lower to 96.08.  The lean hog cash index was .04 lower to 101.77.   May hogs are at a 1.895 discount to the index, but June is still 3.2050 higher.  The tightening spread between the cash and futures could help slow the selling pressure on the front end of the market.  Pork retail values were sharply higher at midday, and held gains into the close, gaining 2.00 to 106.58.  Product movement was moderated at 290 loads.   

Top Farmer Closing Commentary 05-02-2022

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CORN HIGHLIGHTS: Corn futures struggled throughout the session as prices plunged early in sympathy with many markets. After scoring new contract highs on Friday, bulls may have temporarily run out of supportive new news. Planting progress in the western Corn Belt followed by much-needed rain had bears in charge. China continues with stringent lockdowns, continuing to worry investors that long-term demand and a 20% drop in energy use during April point to lower commodity prices. Sharply weaker soybean prices also weighed on corn futures. Jul corn gave up 10 cents on the session closing at 8.03-1/4 and Dec dropped. Technical weakness was noted with today’s move under the 10-day moving average, likely triggering stop orders.

The daily limit is now 50 cents, from 35, as enacted by the Exchange today. This may have had some impact today, although probably not much. News from Ukraine is not good for supplies (world) and China’s lockdowns will likely impact planting progress in that country. Nonetheless, today’s drop is concerning, yet we don’t want to read too much into it. This is the second Monday in a row where prices have dropped rather hard. We must keep in mind just how high prices are and how vulnerable they could be to a price drop, perhaps without cause. Like many springs, it is quickly becoming the have and have nots. Some are well done with planting and then have received beneficial moisture, while others have not turned a wheel and are concerned it could be several days or longer until they hit the fields. Coming into the trade session the average guess at planting progress is 16% with a range of 12 to 24%, according to Reuters. Export inspections at 66 mb were termed supportive.

SOYBEAN HIGHLIGHTS: Soybean futures plunged due to a large drop in soybean oil and concerns that exports for old crop have about maxed, as importers will concentrate on new crop. Export inspections at 22.1 mb were supportive bringing the year-to-date total to 1.735 bb or 82% of expected sales of 2.115 bb. Strong gains in the U.S. dollar and a 2.00 to 3.00 drop in crude oil were likely responsible for a weak opening. After peaking on Friday, soybean oil finished with a negative technical hook reversal (new high and lower close) which likely signaled those who were long to place sell stops under the market to exit if prices dropped. These orders were triggered adding to downside weakness with oil trading 200 to 400 points lower during the session.

Last week, we made the remarks that continuous pesky rains and wet weather would likely suggest that producers who were considering planting corn will likely stay with the extra soybean acres they intended to plant when surveying in mid-winter. We believe that continues to be the case after weekend rains kept many from advancing fieldwork. Historically the March-April-May window is a challenge for soybean prices to sustain uptrends if spring weather is close to normal. South American product fills the demand pipeline. While not an ideal spring, we still cannot make the argument of any significant delays or drawdown on yield potential either in corn or soybeans. That may change soon but for now, we continue to suggest an average crop with technology and farming practices indicating above-average yield.

WHEAT HIGHLIGHTS: Wheat futures had a mixed close today. Chi contracts Dec onward had small gains, but KC posted modest losses all the way out to May 2023. It seems that the market is stagnating and needs fresh news to provide direction. Jul Chi lost 1/4 cent, closing at 10.55-1/2 and Dec up 1-3/4 at 10.60. Jul KC lost 7-3/4 cents, closing at 10.98, and Dec down 6-1/2 at 11.04-3/4.

The Ukraine war provides a bullish backdrop as there is no end in sight. Several reports suggest that Russia destroyed the Odessa airport over the weekend and will continue its assault for the foreseeable future. In other world news, a heatwave in India has the potential to reduce their wheat crop, and the EU Commission has reduced their estimate of the EU soft wheat crop from 131.3 mmt to 130.1 mmt. Also bullish is the fact that the panhandles of Oklahoma and Texas and western Kansas are likely to miss upcoming rains. There are two sides to the coin though, as some HRW areas have chances for moisture. Last week the U.S. Dollar Index hit a high of 103.9280 – this is the highest level since December 2002 and may also provide a headwind to wheat prices, limiting upside potential. Weekly wheat inspections were pegged at 14.1 mb with total inspections now at 689 mb. Wheat exports are estimated by the USDA at 785 mb for 21/22. In other news, the Kansas Wheat Quality Tour is scheduled to start on May 16. This is delayed as it is typically completed ahead of the May WASDE report (which is due for release on May 12).

CATTLE HIGHLIGHTS: Cattle futures saw strong buying support, as a break lower in grain markets sent buyers pouring into the cattle market after the strong sell off. Jun cattle led the live cattle market higher gaining 2.550 to 135.200, and Aug live cattle gained 1.775 to 137.050. Feeders surged higher, as May feeders jumped 5.075 to 161.425, and Aug feeders were 5.800 higher to 174.075.  

Jun cattle used the weakness in the grain market and the expiration of Apr cattle to start "May beef month" with a strong price recovery. Jun live cattle closed Friday trading $8.00 under the final trades in Apr and looked under-valued. Prices moved quickly of the trend line support from Friday's close. Jun cattle challenged the 200-day moving average as overhead resistance, and this mark may be a key swing point for the Jun market. Last week's cash market was supportive of prices, and that helped bring some buying support into the June cattle.  Typical cash trade for Monday as cash trade was undeveloped and watching the trend.  Expectations are for a packer to stay supportive of cash bids again this week. The trend in cash markets will be a key for price stability this week. Beef demand has been a concern, as colder wet weather has pushed some of the spring demand back but the improving forecast may have helped prices on Monday. Boxed beef prices were higher at midday (Choice 263.60, +2.82; Select 249.13 +1.16), on light movement at 82 loads. Feeder cattle futures quickly rejected Friday's lows as prices surged higher during the session. A weak tone in the grain markets was the fuel, triggering a short-covering rally in an oversold market. The charts turned more friendly, posting chart reversals, and closing above nearby moving averages. The Feeder Cash Index lost 0.40 to 155.24. A strong start to the week and technical and strong price action helped support the market from an oversold condition. The key will be follow-through as the market moves along this week. Cash trade and improved demand will be key for that support. Not calling today's move a low, but a possible good sign.

LEAN HOG HIGHLIGHTS: Hog futures saw strong selling pressure continue to start the week, as the path of least resistance is still trending lower. Demand concerns on the export front and the retail consumer are the fundamental concerns pressuring the market. May hogs were 1.025 lower to 99.875, and Jun closed 1.400 lower to 104.975.

Jun hogs keep the downward trend intact, posting its lowest close since January. Prices did try to work off session lows, but the mid-range close still keeps the trend intact, as prices are looking to challenge the 100-day support level at 101.700. The cash hog market at midday eliminated any chances of a trend higher, as midday direct trade was 3.50 lower to 96.08. The Lean Hog Cash Index was 0.04 lower to 101.77. With the trade today, May hogs are at a 1.895 discount to the index, but Jun is still 3.2050 higher. The tightening spread between the cash and futures could help slow the selling pressure on the front end of the market. Pork retail values were sharply higher at midday, gaining 5.59 to 110.17. Product movement was moderated at 157 loads. Demand has been a concern with slowing export demand and a cold spring forecast. Retail prices may have some optimism with a worming forecast that could help trigger some of the delayed spring demand due to weather. Estimated hog slaughter is 482,000 head for Monday, up 17,000 from last week as available hog numbers stay heavy. Lean hog charts are still on the defensive, and the trend is still lower as the market searches for a bottom. The hog market is moving into oversold territory, but the path of least resistance at this point still looks to be searching for a low.

Top Farmer Midday Update 05-02-2022

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CORN

  • July corn down 17 @ 7.97
  • US corn planting is expected to show 17-20% complete this afternoon (which would be behind average)
  • 6-10 and 8-14 day NOAA maps show above-normal precipitation across the Midwest which could further delay planting
  • Front-month contracts gapped lower overnight
  • Rain delays could potentially lower corn acres by 1 million and lower the yield below 180
  • Argentina’s corn crop is rated 19% good to excellent and harvest is 25% complete

SOYBEANS

  • July soybeans down 37 @ 16.48
  • Soybean oil had a reversal from the high on Friday and is lower at midday
  • Soybean oil is worth as much as soybean meal (as a percentage of crush) for the first time in 20 years
  • Planting progress this afternoon is expected to show 8-9% complete (which, like corn, is behind the average)
  • Palm oil is higher, driven by the Indonesian bans on exports
  • Argentina’s soybean crop is rated 16% good to excellent and harvest is 46% complete

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WHEAT

  • Jul wheat down 4 @ 10.52, Jul KC down 6 @ 11.00, & Jul MNPLS up 3 @ 11.69
  • Last week the US Dollar Index hit 103.9280 (the highest since 2002) and which may pressure wheat
  • Northern Plains may be drier this week which could allow for some fieldwork
  • War in Ukraine continues with no end in sight
  • Texas and Oklahoma panhandles, along with western Kansas are likely to miss upcoming rain
  • A heatwave is hitting India, potentially reducing their wheat crop

CATTLE

  • Jun LC down 1.800 @ 134.450 & May FC up 5.050 @ 161.400
  • June is now the front month in live cattle and is at a discount to cash
  • Large chart gaps in live cattle are still above the market and may need to be filled
  • Packers may be less aggressive as they have some contracted ahead
  • Choice cuts down 1.82 and select down 3.09
  • Cattle slaughter projected at 123K
  • CME Feeder Cattle Index for 4/29: down 0.72 @ 155.64

HOGS

  • Jun hogs up 0.025 @ 106.400 & Jun pork cutout down 1.825 @ 111.000
  • June hogs lost 12.40 last week
  • Lower cash and cutouts were unsupportive
  • Supplies are still expected to tighten as time progresses
  • Futures are oversold which could mean hogs are at or near a bottom
  • Hog slaughter projected at 476K
  • CME Lean Hog Index for 5/2: down 0.04 @ 101.77

TFM Sunrise Update May 2, 2022

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CORN

Corn futures gapped lower overnight from last Friday's trading ranges to start the new month.  July corn fell 13 cents 8.00-1/2 while slipping below the contract's 10-day Moving Average support.  Dec corn made an overnight low at 7.39-1/2 on a loss of 11-3/4 cents.  New daily trading limits greet the new week and month.  For corn, the new daily limit goes from .35 to .50 cents.  Talk of planting delays offer support.  The U.S. Midwest saw weekend rains with more on tap for mid-week this week, but warmer temps.  We'll get Weekly Planting Progress data later this afternoon.  Higher U.S. corn and ethanol demand should help underpin prices.  The dollar is up 41 points, keeping the up-trend alive.  Crude, gold, silver and copper are lower.  Stock index futures are seeing a modest bounce from last week's fallout.

SOYBEANS

The soybean complex was lower overnight.  July beans fell 19 cents to 16.65-3/4 after testing 17.00 for first time since July and August, 2012.  November beans were down 15-3/4 cents to 14.99.  Daily trading limits for beans reset today to $1.15 per bushel from .90.   July meal lost 6.50 per ton to 426 overnight.  July soy oil fell 1.95 to an overnight low of 82.23.  China and Malaysia markets are closed due to holiday and the trade is starting to look ahead to the May 12 USDA Supply/Demand report.  China is expected to sell 500 metric tons of reserve soybeans May 6.  U.S. soybean export commitments could increase 100 mil bu.  April Brazilian soybean exports were down 28% compared to last year.  Going into last night's session, Managed funds were estimated net long 162,000 soybeans, 80,000 soymeal and 99,000 soyoil.  Traders may be reducing commodity positions in front of the U.S. Fed increasing U.S. interest rates and what that could do to demand.

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WHEAT

Wheat futures traded lower overnight on follow-through from Friday's drop.  July Chicago wheat was down 20-1/2 cents to 10.34-1/4 before trimming losses.   July KC was down 15-3/4 cents to 10.90.  July MPLS is fractionally lower to 11.65-1/2.  New crop Matif markest are making new highs as World wheat import demand is expected to increase and lower Black Sea exports could shift demand to the EU.  India and Pakistan is hot and India's wheat crop is in decline.  A dry U.S. HRW could shrink the crop size.  Spot basis bids for hard red winter wheat held steady at grain elevators in the southern U.S. Plains on Friday and protein premiums rose, while farmers awaited much-needed rains to bolster their drought-hit crops, dealers said.  Wet conditions and forecasts for the U.S. HRS crop remains supportive.

CATTLE

Cattle calls are mixed for today to lower.  The trend is still lower, and that is being driven by technical selling, backed by demand concerns.  There is no sign of a low in place currently.  The cash market may be the best chance of building that low this week. April cattle ended its trading life on Friday, finishing at 141.900, after gaining 3.400 on its last day.   June cattle posted its lowest close since March 4, and trade within one tick of the 132.475 April low.  The market is technically hanging on by a thread and could be susceptible to more pressure this week as the market is looking for a near-term low.  There was active fed cattle cash trade in the North last week at $144 to $148 live, and $230 to $234 dressed.  That is steady compared to the previous week.  Moderate to large volumes were traded in the South at mostly $140 live, which was steady with the previous week.  Expectations are for cash trade to remain strong this week, which could support the market.  The Choice cutout moved $7.57 lower last week, while Select decreased by $4.62/cwt.  High slaughter levels and cold, wet weather have put a damper on the beginning of grilling season and the normal, seasonal rally, that beef would see this time of the year.  Feeder cattle futures had some optimism on Thursday, and that faded quickly on Friday.  Price opened firm, but quickly broke to new lows on the week.  The feeder cash index gained .72 to 155.64. 

HOGS

The hog market is called steady to lower. The hog market is moving into oversold territory, but the path of least resistance at this point still looks to be searching for a low.  Demand concerns on the export front and the retail consumer are the fundamental concern pressuring the market.  June hog futures broke through the 100-day moving average at $109.700 and may be headed for a small price gap on the chart from Jan 19 at 101.950.  Afternoon direct hogs cash trade on Friday was 2.43 lower with a weighted average price of 100.14 and a 5-day rolling average of 102.60. The softer cash tone will likely pressure the market this morning.  The premium that has been on the front end of the market to the cash market has evaporated.  The lean hog cash index was .53 lower to 101.81 on Friday.  For the week, the Lean hog index traded .56 higher.  May hogs are at a .910 discount to the index, but June is still 4.565 higher.  The lack of premium could help support the market.  Closing pork retail values finished slightly higher, gaining .09 to 104.58 on moderate demand of 285 loads. Retail values trended softer on the week, losing $1.20 off Monday's close. 

 

Top Farmer Closing Commentary 04-29-2022

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CORN HIGHLIGHTS: Corn futures limped into the close, finishing mixed and well off the daily and contract highs posted earlier this morning. May corn added 2-1/4 cents to close at 8.18-1/4, while July finished unchanged at 8.13-1/2 and 11 cents off today’s high of 8.24-1/2. July posted another new contract high today of 8.24-1/2. December lost 0-1/2 to close the week out at 7.51-1/4, after posting a new contract high of 7.57 this morning. For the week, July corn added 24-1/2 cents and December gained 26-3/4. A less than ideal planting start this spring, as well as strong export sales, provided a lift for prices this week, keeping the overall uptrend intact.

Despite today’s less than stellar close, there was little doubt the corn market was factoring in potential supply concerns in the form of both U.S. and South American weather. Another week of  unannounced sales of over 1 mmt underscores the shortfall of inventory from Ukraine. We continue to view that part of the world as a “mess” for Agriculture and a sad state due to the negative impact of war. Regions of the western Corn Belt will make rapid planting progress for many farmers likely to complete sooner than normal due to dry weather. In other parts of the Midwest, continued pesky rains and, in some areas, saturated ground will keep farmers out of the field for the very foreseeable future. The most recent 6 to 10-day forecast has most of the Midwest at or below normal temperatures and turning to a more normal precipitation outlook. Still, we want to be careful not to draw any strong conclusions to yield expectations. In a week or two, stronger correlations will occur.

SOYBEAN HIGHLIGHTS: Soybean futures firmed though out the morning session, but sagged into the close with May ending the day 17.08-1/2, up 1-3/4, July steady at 16.84-3.4 and November down 6-1/4 cents to close at 15.14-3/4. Most futures finished near 20 cents off the daily high. A drop in the US dollar (after 6 consecutive positive closes) was viewed as supportive, yet the strong gains in the dollar this week may be taking their toll on traders who need bullish news. Price support from Indonesia banning exports of palm oil is supportive, but likely now old news. Soybean oil futures in the US are considered cheaper than canola and sun oil.

Yet, the news from Indonesia also seemed to point toward the ban on palm oil exports to only last through the end of May. While the market didn’t end on a very firm note today, this week still suggested that prices held together well, as today was last trading day for the month. July futures lost 3-1/4 cents to end the week at 16.84-3/4, while the November contract gained 9-1/2 cents, compared to last Friday’s close. A less than an ideal weather forecast has provided support, along with continued tight old crop inventory. Surging world vegetable oil prices and US exports, as of this week’s figures, have met the USDA projections for expected sales. The market may yet have to move higher to ration inventory.

WHEAT HIGHLIGHTS: Wheat futures closed sharply lower on expectations of improved weather in the US southern Plains and news that the White House may be trying to encourage farmers to grow more wheat. May Chi lost 30-1/4 cents, closing at 10.43-3/4 and July down 30 at 10.55-3/4. May KC lost 42 cents, closing at 10.94-1/4 and July down 35-1/2 at 10.05-3/4.

Wheat sold off hard today as little fresh news is available to drive the market upwards. In fact, an improving chance for rain in the HRW areas caused significant weakness. KC wheat crop ratings are expected to show a decline on Monday though. Additionally, some news outlets are reporting that the Biden administration is seeking approval from congress for $500 million for the farm sector; the goal is to get farmers to plant more wheat. Traders may have interpreted this as negative news, as more acres likely mean more supply and lower prices. A tough day was not limited to the US markets though. Paris milling wheat was also down sharply – the May contract lost 15.75 to 400.75 euros per metric ton. Even so, most Paris futures are still near contract highs. In global news, Ukrainian farmers are reportedly finding Russian mines in their fields. This only increases the danger they face and will likely reduce the number of people willing to work. With Reuters reporting 13 million people now displaced and $565 billion in property damage, it is hard to imagine any normalcy there this season. On a final note, the CME is reducing the daily trading limit for both Chi and KC wheat futures from 85 to 70 cents, effective Monday, May 5.

CATTLE HIGHLIGHTS: Cattle futures saw moderate to strong selling pressure to end the week as the charts posted their lowest closes in weeks. April cattle ended its trading life on Friday, finished at 141.900, gaining 3.400 on its last day.  June cattle led the live cattle market lower, losing 1.250 to 132.650.  Feeders saw triple digit loses across the board with May dropping 1.600 to 156.300.  For the week, June live cattle lost 5.775 and May feeders were 7.525 lower.

Strong selling pressure was across the livestock complex, led by the hog market on Friday.  June cattle posted its lowest close since March 4, and trade within one tick of the 132.475 April low.  The market is technically hanging on by a thread and could be susceptible to more pressure next week, as the market is looking for a near-term low. The expiration of the April contract may have helped weigh on the cattle complex, and June may look like a value compared to the cash market and the final trades in the April contract.  Cash trade was completed for the week, with the early activity this week. Throughout the week, southern live cattle have traded for $140 and northern dressed cattle have sold for $232. Some regional buyers in the North stepped up cash and dress bids reflecting a stronger market.  The trend in cash markets will be a key for price stability next week. Boxed beef prices were softer at midday (Choice 261.49 -1.11, Select 248.98 -2.08), trending lower into the end of the week.  Movement was light at 82 loads. The demand concerns for beef are weighing on the market as the consumer may be looking for alternate protein source, given high retail prices.  This is a trend that will be in focus.  Feeder cattle futures had some optimism on Thursday and that faded quickly on Friday. Prices opened firm, but quickly broke to new lows on the week. The feeder cash index gained .72 to 155.64. A corn market tone helped pressure the feeder market, as prices are searching for a bottom.  The trend is still lower, and that is being driven by technical selling, backed by demand concerns.  There is no sign of a low in place currently.  The cash market may be the best chance of building that low next week.

LEAN HOG HIGHLIGHTS: Hog futures saw strong selling pressure to end the week, and technical support levels broke, triggering another round of selling and long liquidation.  Demand concerns on the export front and the retail consumer are the fundamental concerns pressuring the market.  May hogs were 3.065 to 100.900 and June closed 4.600 lower to 106.375.  For the week, May hogs dropped 10.950, and June dropped 12.400 or just over 10% this week.

June hog futures broke through the 100-day moving average at $109.700 and that triggered more technical selling, as price pushed the 4.750 limit down during the session.  Despite a little price recovery, June still looks pressured, and may be headed for a small price gap on the chart for Jan 19 at 101.950. The premium that has been on the front end of the market to the cash market has evaporated.   The lean hog cash index was .53 lower to 101.81 on Friday.  For the week, the Lean Hog Index traded .56 higher.  With the trade today, May hogs are at a .910 discount to the index, but June is still 4.565 higher.  Midday Direct Trade was not compared to yesterday's confidential trade, but the weighted average price was 99.58 and the five-day average settled to 97.69, trending lower on the week. Pork retail values were .17 lower at midday to 104.32. Product movement was moderated at 211 loads.  Hog retail values trended lower on the week, with midday trade down approximately 1.40 from Monday's close.  Lean hog charts look defensive, and the trend is still lower as the market searches for a bottom.  The hog market is moving into oversold territory, but the path of least resistance at this point still looks to be searching for a low.

Top Farmer Midday Update 04-29-2022

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CORN

  • May corn up 8 @ 8.24
  • Food prices are reportedly up 31% in 2021 and are forecast to be up 23% in 2022
  • Between now and May 6, the Midwest forecast is very wet, which may slow plantings – this could reduce planted acreage and lower the odds of a US corn yield above 180
  • China buying 1 mmt of US corn this week may suggest they are replacing corn they were supposed to get from Ukraine
  • September corn on China’s Dalian Exchange is around the equivalent of $11.67 per bushel
  • The Buenos Aires Grain Exchange reported 19% of Argentina’s corn crop was good to excellent (and 25% has been harvested)

SOYBEANS

  • May soybeans up 16 @ 17.22
  • Possibility of increased demand for US soybeans due to high crush margins and discount of US soybean oil vs canola and sunoil
  • US soybean exports may increase another 100 mb, with US competitive vs Brazil August 1st
  • May soybeans on China’s Dalian Exchange are around the equivalent of $21.83 per bushel
  • The Buenos Aires Grain Exchange reported 16% of Argentina’s soybean crop was good to excellent (and 46% has been harvested)

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WHEAT

  • May wheat down 23 @ 10.51, May KC down 18 @ 11.18, & May MNPLS down 12 @ 11.78
  • Matif new crop futures are making new contract highs
  • The western half of the US southern Plains will remain dry overall, potentially lowering the HRW wheat crop further
  • The US Dollar Index is above 103 – the highest level in 20 years – this may be pressuring wheat
  • Ukrainian farmers are reportedly finding Russian mines in their fields, making it very dangerous for them to do any work
  • A flood watch is in effect in eastern North Dakota and northwest Minnesota

CATTLE

  • Jun LC down 0.700 @ 133.20 & May FC unchanged 0.750 @ 157.950
  • April live cattle expire today
  • Live cattle still have large chart gaps above current levels which may need to be filled
  • Cash was steady to higher this week suggesting that packers need cattle
  • Higher corn futures may limit upside potential
  • Choice cuts up 0.69 and select down 1.26
  • Cattle slaughter projected at 118K

HOGS

  • Jun hogs down 2.325 @ 108.650 & Jun pork cutout down 3.000 @ 115.100
  • Good export sales suggest international demand remains strong
  • After recent liquidation traders may be willing to buy back into the market
  • Lower cash and cutouts were not supportive even though hogs rebounded yesterday
  • National Direct Afternoon report declined 2.16
  • Hog slaughter projected at 467K
  • CME Lean Hog Index for 4/29: down 0.53 @ 101.81

TFM Sunrise Update April 29, 2022

Grain - Grain Elevator Processing Drying Plant

CORN

Corn futures were firm overnight with the December contract eclipsing this week's new contract high to a new peak at 7.55-3/4.  For the week, the new crop contract advanced 31-/14 cents.  July was up 4-1/4 to 8.17-3/4 overnight, gaining nearly 30 cents this week.  Year-To-Date nearby futures are 38% higher. The U.S. dollar is seeing a pull-back this morning.  Crude, precious metals, copper, coffee, cocoa, sugar and cotton are higher.  On Thursday, Managed funds bought 3,000 corn contracts and are going into the weekend and end of the month net long an estimated 384,000 contracts.  Wall Street Journal headlines state that corn and soybean prices are near record levels adding to food inflation.  The UN estimated World 2022 food prices up 23%.  2021 was up 31% as Global food prices were up before Russia invaded Ukraine.  China bought 1.1 mmt U.S. corn this week and could buy more to replace unshipped Ukrainian corn.  Lower South America crops, increased U.S. biofuel demand and now U.S. weather is slowing early planting progress, thus continuing to support higher prices at their highest levels since the U.S. 2012 drought.

SOYBEANS

The soybean complex was up overnight led by another round of new contract highs in soy oil and a slow start to the U.S. planting season.  The U.S. Midwest April 29 to May 6 forecast is wet.  July beans are up 16 cents this morning to 17.00-3/4, and up 13 cents this week.  Nov beans are up 15 cents to 15.36 and up 30 cents for the week.  July meal is up 4.30 to 430.40.  July soy oil hit a new high at 87.65.  Year-To-Date nearby bean futures are up 30%; Soymeal up 7%; Soy oil up 62%.  On Thursday, Managed funds were net sellers of 6,000 soybeans and 6,000 soymeal and bought 7,000 soy oil.  They are estimated to be going into the end of the month net long 163,000 soybeans, 83,000 soymeal and 125,000 soy oil.  Overnight, Chinese September soybean futures were up 56 yuan; Soymeal up 19; Soy oil up 100; Palm oil up 244; Corn up 18;  Malaysian palm oil prices overnight were up 189 ringgit (+2.73%) at 7103.

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WHEAT

Wheat futures were mixed overnight.  July Chicago wheat is up 9 cents to 10.83.  For the week, the contract is 18 cents higher.  On Thursday, Managed funds were net sellers of 2,000 Chicago wheat and are now estimated long 2,000 contracts.  July KC is up 8 cents to 11.49-1/4 and unchanged for the week.  World wheat demand is expected to increase, and the U.S. HRW crop could be lower.  New crop Matif is making new highs as lower Black Sea exports could shift demand to EU.   India and Pakistan is hot and India's wheat crop is in decline.  July MPLS wheat gained 10-1/2 cents overnight to 12.02 versus yesterday's new high at 12.06.  For the week, the spring wheat contract has gained 36 cents underpinned by slow spring wheat planting progress.  The U.S. north Plains April 29 to May 6 forecast continues to remain wet.   Year-To-Date nearby futures are up 41% in SRW, up 42% in HRW, up 21% in HRS.

CATTLE

Cattle calls are mixed for today.  Prices tested and held key support levels on Thursday, and could be looking to form a low, but the technical picture is still weak.  June cattle may be under the influence of today's April expiration at trendline around $134.  This will be a key support line to keep the uptrend still intact.  Cash trade was quiet and likely done for the week with the early activity this week. Throughout the week, Southern live cattle have traded for $140 and Northern dressed cattle have sold for $232.   Boxed beef prices were firmer at midday, but closed mixed (Choice 262.60 +.69, Select 251.06 -1.26) trying to find some support into the end of the week.  Movement was light at 96 loads. Weekly export sales reported new beef net export sales of 11,400 metric tons for 2022 were down 24% from the previous week and 34% from the prior four-week average. The three largest buyers were Japan, China and South Korea of U.S. Beef last week.  Feeder cattle futures may be looking to carve out a near-term low.   Buying support stepped into the market after Wednesday's strong sell off, possibly signaling some value buying in the market.  A firm close on Friday may be needed to truly show a low could be in place at this level.  April feeder futures and options expired on Thursday and will stay tied to the index.  The Feeder cash index gained .15 to 156.36. 

HOGS

The hog market is called steady to lower.  Lean hog charts look defensive, but the price action was improved on Thursday.  The path of least resistance at this point still looks to be searching for a low, and one day of firmer trade may be the beginning of the process.  June hog futures held the 100-day moving average at $109.600 ushering in support to the charts.  The Lean hog cash index has been trending higher but was .55 lower to 102.34 on Thursday.  The premium of the futures to cash has quickly evaporated during this price sell off.  May is still holding a 1.6350 premium, and June is 8.635 over the index.  Cash markets were unreported due to confidentiality at midday on Thursday.  Closing afternoon direct trade was lower, losing 2.16, to 102.57 and the five-day average settled to 102.58.  Pork retail values closed 1.02 lower to 104.49. Product movement was light at 248 loads.  The softer retail close will pressure this morning's futures open.  Weekly export sales added new pork sales total of 31,500 MT for 2022 were up noticeably from the previous week and up 19% from the prior 4-week average.  Mexico, Japan, and Canada were the top buyers of U.S. pork last week.  

 

Top Farmer Closing Commentary 04-28-2022

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CORN HIGHLIGHTS: Corn futures edged higher today on announced export sales (rumored earlier in the week) and actual sales as listed on this morning’s USDA Thursday report. Bulls are concerned that weather is less than ideal for planting and are gradually adding risk premium as another week of cool temperatures and above normal rainfall is forecasted for most of the Midwest. July futures gained 1-1/4 cents to close at 8.13-1/2 and December added 2-1/4 to finish the day at 7.51-3/4. Both were new contract high closes.

Announced sales of 1.088 mmt, of which 476,000 mt were for the 2021/2022 and the remainder for 2022/2-23, confirmed rumors from earlier in the week. Export sales at 34.1 mb old crop and 33.2 for new crop on the weekly report were supportive. Year-to-date sales are 2.264 bb, or 90.5% of expected sales of 2.5 bb. Due to continued concerns that corn from Ukraine will be limited or nonexistent, we wouldn't be surprised if the USDA added to export expectations. All focus will be on the southern hemisphere second crop safrinha corn as it matures, as well as conditions for US planting and early growth. The world is backed into a corner with must-have crops. Pandemic issues in China have accelerated lockdowns in recent weeks. We can't help but believe that has a supportive tone for prices as logistically, this may make it more challenging for China to plant its crop without disruption.

SOYBEAN HIGHLIGHTS: Soybean futures lost ground today, with May dropping 20 cents on the eve of first notice day to end the session at 17.06-1/2. July gave up 8 cents to finish at 16.84-3/4 and November lost 3-3/4 to close at 15.21. Traders were selling meal (down near 10.00) and buying soybean oil (up near 2.80 points in May) as Indonesia confirmed halting exports of palm oil, both crude and refined.

USDA reported 17.7 mb sales for 2021/2022 for a total of 2.116 bb. The current projected sales expectation for the year is 2.115. This implies that sales have achieved expectations. New crop sales were 21.3 mb, also supportive. The Indonesia news is indicative of a growing concern of tight world food supplies and a country taking action to keep inventories in house. While this could be temporary, if weather conditions in the norther hemisphere in 2022 are less than ideal, it would not be a surprise to see more governments take similar action. The trend remains higher, yet there isn’t enough weather concern yet to rocket futures much above 17.00 old crop and 15.00 new crop.

WHEAT HIGHLIGHTS: Wheat futures settled with moderate losses. Poor export sales and the potential for moisture next week in the southern Plains pressured the market. May Chi lost 6 cents, closing at 10.74 and July down 5-1/2 at 10.85-3/4. May KC lost 12 cents, closing at 11.36-1/4 and July down 12-3/4 at 11.41-1/4.

The forecast for the US southern Plains is somewhat mixed. The European model puts rains into some of the driest areas, but the American model conflicts with this, keeping those areas dry. In any case, drought is still a major concern and any rains that do fall are not likely to significantly change this. Just the prospect of these rains caused some selling pressure though. The USDA is again expected to lower HRW crop ratings on Monday. In addition, poor export sales weighed on the wheat market with the USDA reporting an increase of only 1.2 mb of export sales for 21/22 and an increase of 4.6 mb for 22/23. Rain in the northern Plains is also a concern in Canada where delays to spring wheat planting may be an issue. This may somewhat offset the higher estimate of Canadian wheat acreage. In Ukraine, there is no end in sight for the war and reports that Russia is cutting off natural gas to Poland and Bulgaria may be significant. It is also noted that Sov Econ reduced their estimate of Ukraine wheat production by 500,000 mt to 23.1 mmt. This compares to last year’s production of 32.1 mb.

CATTLE HIGHLIGHTS: Cattle futures saw mixed trade with additional selling pressure in the live cattle market as April futures expire on Friday and weak technical picture weighed on prices.  April cattle finished unchanged at 138.500, and June cattle fell 1.125 to 133.900.  April feeders expired on Thursday, losing .275 to 155.925, but deferred futures finished .600-1.450 higher.

June cattle may be under the influence of April expiration, as prices tested and held support at trendline around $134.  This will be a key support line to keep the uptrend still intact.  Trade on Friday will be key for live cattle to forge out a bottom in the market. April live cattle futures expire on Friday and will try and stay tied to the cash market, which is firmer than current futures prices.  Selling pressure from the expiration of April futures likely pushed on June live cattle prices.  Cash trade was quiet and likely done for the week with the early activity this week. Throughout the week, southern live cattle have traded for $140 and northern dressed cattle have sold for $232.  Boxed beef prices were firmer at midday (Choice 262.65 +.71, Select 251.88 +.41), trying to find some support into the end of the week.  Movement was light at 96 loads. Weekly export sales reported new beef net export sales of 11,400 metric tons for 2022 were down 24% from the previous week and 34% from the prior four-week average. The three largest buyers were Japan, China and South Korea of U.S. beef last week.  Feeder cattle futures may be looking to carve out a near-term low.  Buying support stepped into the market after yesterday's strong sell off, possibly signaling some value buying in the market.  A firm close tomorrow may be needed to truly show a low could be in place at this level.  April feeder futures and options expired on Thursday and will stay tied to the index.  The feeder cash index gained .15 to 156.36.  The expiration of April future and options this week likely added to the selling pressure in the cattle markets.  Prices are testing and holding key support levels on Thursday, and could be looking to form a low, but the technical picture is still weak. 

LEAN HOG HIGHLIGHTS: Hog futures finished mostly higher, as value buying may have stepped into the market after this recent push lower in prices. Prices held key support levels, which triggered some short covering.  May hogs were .200 lower to 103.975, but June closed .625 higher to 110.975.  Jul hogs led the deferred contracts higher, gaining 1.450 on the day.

June hog futures held the 100-day moving average at $109.600 and brought support to the charts.  June price action was positive, and some follow through money flow could help support the market into the end of the week on Friday.  The premium of front-end futures to the cash market have stayed as a selling point and that limited trade in May and June futures today.  The lean hog cash index has been trending higher, but was .55 lower to 102.34 on Thursday.  The premium of the futures to cash has quickly evaporated during this price sell off.  May is still holding a 1.6350 premium, and June is 8.635 over the index.  Cash markets have been trying to find some support with strength on Thursday.  Midday Direct Trade was unreported on Thursday due to confidentiality, but the five-day average settled to 97.33. Pork retail values were .77 lower at midday to 104.74. Product movement was light at 176 loads. Weekly export sales added new pork sales total of 31,500 mt for 2022 were up noticeably from the previous week and up 19% from the prior 4-week average.  Mexico, Japan, and Canada were the top buyers of U.S. pork last week.  Lean hog charts look defensive, but the price action was improved on Thursday.  The path of least resistance at this point still looks to be searching for a low, and one day of firmer trade may be the beginning of the process.  Overall, the trend is still lower.

Top Farmer Midday Update 04-28-2022

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CORN

  • May corn up 1 @ 8.16
  • USDA reported an increase of 34.1 mb of corn export sales for 21/22 and an increase of 33.2 mb for 22/23
  • Private exporters reported 1,088,000 mt of corn for delivery to China (476,000 during 21/22 and 612,000 during 22/23)
  • More rain forecasted in the US Midwest over the next 10 days could slow plantings
  • Some analysts are lowering the Brazil 2nd corn crop estimate to 108 mmt (vs the USDA’s 116 mmt)
  • September corn on China’s Dalian Exchange is around the equivalent of $11.56 per bushel

SOYBEANS

  • May soybeans down 13 @ 17.13
  • USDA reported an increase of 17.7 mb of soybean export sales for 21/22 and an increase of 21.3 mb for 22/23
  • Indonesia last night announced a ban on all palm oil exports
  • Strong crush margins are supportive to soybeans
  • Brazil may be out of the soybean export market August 1st which may help US soybean demand
  • On Friday the Energy Department will issue an update on plant capacity for renewable diesel
  • May soybeans on China’s Dalian Exchange are around the equivalent of $21.50 per bushel

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WHEAT

  • May wheat down 1 @ 10.79, May KC down 2 @ 11.46, & May MNPLS down 1 @ 11.98
  • USDA reported an increase of 1.2 mb of wheat export sales for 21/22 and an increase of 4.6 mb for 22/23
  • Rain in the northern Plains and Canada may slow plantings of the spring wheat crop there – this may somewhat offset the higher estimate of Canadian wheat acres
  • Mixed forecast for the US southern plains – European model shows showers in some of the driest areas, but the American model remains dry
  • USDA is expected to again lower the HRW wheat crop ratings on Monday

CATTLE

  • Jun LC down 1.225 @ 133.800 & May FC up 0.750 @ 158.100
  • Cash cattle traded steady yesterday
  • Packers have been purchasing some cattle ahead
  • Chart gaps above the market may need to be filled
  • Export sales of 11,400 mt down 24% from last week
  • Choice cuts down 2.26 and select down 3.91
  • Cattle slaughter projected at 125K
  • CME Feeder Cattle Index for 4/27: up 0.09 @ 156.21

HOGS

  • Jun hogs down 0.750 @ 109.600 & Jun pork cutout down 0.900 @ 116.100
  • The front month May contract continues to converge with cash
  • Export sales of 31,500 mt up 19% from the 4 week average
  • Consumer demand is lackluster – pressuring futures
  • National Direct Afternoon report increased 1.70
  • Hog slaughter projected at 481K
  • CME Lean Hog Index for 4/28: down 0.55 @ 102.34

TFM Sunrise Update April 28, 2022

Grain - Grain Elevator Processing Drying Plant

CORN

Corn futures were up overnight with July corn matching yesterday's contract high at 8.18-1/2 on gains of 6-1/4 cents.  U.S. ethanol margins turned positive when July corn hit 8.17 and the new contract highs do not seem to be rationing U.S. corn demand.  Option open interest is increasing.  The highest July open interest is the 9.00 strike.  Dec corn was up 3 cents overnight to 7.53-1/2 in a bid to take out that contract's high at 7.55 from April 19 as Ukraine sits aside the corn export market and Central Brazil faces its driest conditions in 17 years.  Next Monday, the daily trade limit for corn futures will increase to 50 cents from their current 35 cent limit. Trade estimates for this morning's USDA Weekly Export Sales numbers are 900,000 to 1.60 mil tons for old crop, 800,000 to 1.25 mil tons for new crop.  The dollar made another new high overnight and crude traded two-sided.  Stock index futures are up 300 points while clawing back from a drop to start the week. 

SOYBEANS

The soybean complex traded narrowly mixed overnight.  July beans are unchanged at 16.92-3/4.  Nov is up 2-1/2 to 15.27-1/4.  Jul meal is up 90 cents to 441.90.  July soy oil is down 80 cents to 83.92.  Trade estimates for this morning's USDA Weekly Export Sales numbers are 250,000 to 800,000 tons old crop beans, 250,000 to 750,000 tons for new crop.  Soymeal estimates are 100,000 to 250,000 tons for old crop, zero to 50,000 for new crop.  Soy oil is zero to 24,000 for old, zero to 10,000 for new.  Despite near record soybean and soy oil futures it does not seem that prices are slowing demand for U.S. soybeans.  The largest July bean call option open interest is the $21.00 strike.  Next Monday, the daily trade limit for bean futures will increase to $1.15 per bushel versus .90 currently.  Overnight, Chinese September bean futures were up 26 yuan; Soymeal up 25; Soy oil up 170; Palm oil up 364; Corn up 21.  Malaysian palm oil prices overnight were down 77 ringgit (-1.10%) at 6910.

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WHEAT

Wheat futures traded higher overnight led by a double digit advance in the Chicago market and new highs in spring wheat.  July Chicago was up 13-1/4 cents to 11.04-1/2.  July KC gained 8 cents to 11.62; And, July MPLS made another new contract high at 12.02 on gains of 7-1/4 cents.  Trade estimates for this morning's USDA Weekly Export Sales are zero to 175,000 tons for old crop, 150,000 to 400,000 tons for new crop.  Next Monday, the daily trade limit for wheat futures will be .70 per bushel.  Spot basis bids for hard red winter wheat held steady at elevators in the southern U.S. Plains on Wednesday, but protein premiums backed down from elevated levels, due in part to softer demand from flour millers, dealers said.  Basis bids for wheat moved by rail to the U.S. Gulf fell by 20 cents a bushel, to 165 cents over K.C. May futures. The Texas Gulf cash market has been quiet, stifled by weak exporter demand for U.S. wheat supplies.

CATTLE

The cattle market is called mixed following a difficult session on Wednesday as a stronger tone in grains renewed selling pressure.  Chart action was negative due to additional long liquidation and technical selling.  June cattle retested the low established on Monday and have held that point on the close.  Prices did close below the 200-day moving average, which could bring additional selling pressure into the end of the week.  Trendline support under June cattle is at the $134 level.  April Live cattle futures expire tomorrow and will try and stay tied to the cash market, which helped support the market on Tuesday.  The cash trade was light on Wednesday with Southern deals at $140.  Boxed beef prices were lower at closed (Choice 261.91 -2.26, Select 252.32 -3.91) adding to the selling pressure in the market on Wednesday.  Movement was light at 160 loads.   Feeders tumbled, falling apart technically as the weak live cattle tone and the higher grain prices triggered additional selling pressure.  Most feeder cattle contracts broke to new or are challenging nearby contract lows.   April feeder futures and options expire on Thursday and will stay tied to the index.  The Feeder cash index gained .09 to 156.21 in line with April Feeders at 156.200.  Cattle markets are the victim of a larger cattle number picture, and now charts have broken down technically.  Additional selling pressure seems likely into the end of the week, as prices are searching for a near-term low.

HOGS

The hog market is called mixed.  Chart action looks defensive, but the selling pressure did slow on Wednesday.  The path of least resistance at this point still looks to be searching for a low, but cash market is trying to firm, and retail values have trended strong this week, which could help be an indicator of a near-term low.  Bear spreading moved the front end of the market lower, removing more market premium over the cash market.  Buying strength was in the back end of the market as Oct and later futures finished higher on the day.  June hog futures saw additional technical selling as the market continues to move premium to the sidelines.  The 100-day moving average is at $109.400 and could be a support point on the charts.  Front end futures are moving into oversold territory and may be starting to look like a value.  In the bigger technical picture, June hogs are completing a potential head and shoulders pattern, that could bring a test of trendline support under the market at $97.50 for a potential target.   The Lean hog cash index has been trending higher, gaining .39 to 102.89 on Wednesday.  The premium of the futures to cash has quickly evaporated with the selling pressure in the futures market.  May is still holding a 1.2850 premium, and June is 7.460 over the index.  The tighter gap between the two may limit some of the selling pressure.  Cash markets have been softer, adding to the selling pressure, but did see a tick higher at midday on Wednesday.  Closing afternoon direct trade held gains, finishing 1.70 higher to 104.73 and the five-day average settled to 103.69, as the direct market may be turning higher.  Pork retail values were 3.68 higher at midday but slipped to close -.04 to 105.51. Product movement was moderate at 317 loads.

 

Top Farmer Closing Commentary 04-27-2022

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CORN HIGHLIGHTS: Corn futures firmed scoring new contract highs with May gaining 12-1/4 cents to close at 8.15.1/2, and July adding 10-3/4 to end the session at 8.12-1/4. December closed at 7.49-1/2, gaining 6 cents as it closed at its highest price for the contract. Strength in soybeans may have provided some support (up over 20 cents), however, a continued cool and wet forecast delaying the planting season for most of the Midwest, dry crop conditions in South America, and rumors of China buying provided support.

Market pressure from another new high in the dollar and a decline in open interest is keeping rally potential in check. Yet, focus on dry weather for the Safrinha crop and the continued war in Ukraine keep buyers active. Russia’s advance on south Ukraine export ports could limit Ukraine corn exports. A bridge in western Ukraine was destroyed, affecting a key rail and truck line for Ukrainian grain exports to EU and military imports to Ukraine. This could suggest corn from the U.S. makes its way to Europe. Russia announced they have stopped shipping gas to Poland and Bulgaria. With so much turmoil, it looks as thought the market is adding premium. The sharp rise in the dollar is a concern. The index has risen from 98 at the end of March to now over 102, or an increase of 4.1% in a month. One way to look at it, corn has increased about 30 cents in value to a buyer in 30 days.

SOYBEAN HIGHLIGHTS: Soybean futures had an impressive close on the heels of sharp gains in soymeal and soybean oil. More clarity from Indonesia indicated they would be limiting or banning export sales of both refined and crude palm oil. Palm oil futures shot into new contract highs bring soybean oil with it. May soybeans gained 21-1/4 cents to end the session at 17.26-1/2 and November added 22 to close at 15.26-3/4.

Limiting gains was another sharp upturn in the U.S. dollar as foreign investors are willing to pay more for dollars anticipating these dollars can then buy bonds (debt instruments), which will reflect higher interest rates and positive returns. Also, in times of turmoil, the U.S. has been a haven for investors. Soymeal gained 3.00 to 6.00 and soybean oil made new contract highs, adding 190 to 250 points. Recent announced export sales have been viewed as supportive, yet the underlying takeaway is sales of new crop. Preemptive buying for new crop is reflective of expectations of shorter South American supplies, perhaps unavailable by late summer, and need to import from the U.S. by early fall. There are a lot of moving parts in the market. Weather, Ukraine, and exports are taking their turn of which is most important. All, to date, are supportive.

WHEAT HIGHLIGHTS: Wheat futures had a mostly lower close with losses in Chi and KC, but gains in MPLS. Some chances for rain in the southern Plains likely contributed to the pressure seen today. May Chi lost 3-1/4 cents, closing at 10.80 and July down 3-3/4 at 10.91-1/4. May KC lost 9-1/2 cents, closing at 11.48-1/4 and July down 10-1/2 at 11.54. May MPLS gained 12-1/4 cents, closing at 11.98-3/4.

As the war continues, there is concern about a bridge in western Ukraine, which has been reportedly destroyed by Russian troops. This specific bridge is apparently significant in terms of moving grains out of Ukraine and into Europe, as well as getting military aid from the West into the country. Additionally, the Russians are pushing to take over the export facilities in the Black Sea. It has also been reported that Russia has cut off gas to Poland, further escalating the conflict. This may help keep prices supported overall. The chances for rain early next week in the Texas panhandle and Oklahoma are welcomed, but also may have put pressure on futures today (especially KC). The moisture is needed there, but probably won’t be significant enough to change HRW yields much. Some areas of North Dakota have the opposite problem with reports of flooding. Conditions there may delay the planting of spring wheat for several weeks, which helped to rally MPLS futures today. Bear spreading was also noted in Chi contracts with selling pressure in nearby months, but buying in deferred. July of 2023 gained 3 cents to close at 10.32. This likely signifies traders’ concerns about supply down the road.

CATTLE HIGHLIGHTS: Difficult Wednesday in cattle futures as a stronger tone in grain markets renewed selling pressure, as charts broke to the downside, triggering additional long liquidation and technical selling.  April cattle lost 1.500 to 138.500, and June cattle fell 1.225 to 135.025.  Feeders were sharply lower, with May dropping 3.375 to 157.350.

Despite a firmer open, selling pressure developed quickly in cattle markets on Wednesday.  June cattle retested the low established on Monday and have held that point on the close.  Prices did close below the 200-day moving average, which could bring additional selling pressure into the end of the week. Trendline support under June cattle is at the $134 level. April Live cattle futures expire on Friday and will try and stay tied to the cash market, which helped support the market on Tuesday. The cash trade was light on Wednesday, with trade steady with yesterday's trade, with southern deals at $140.  Boxed beef prices were lower at midday (Choice 262.58 -1.59, Select 253.16 -3.07) adding to the selling pressure in the market on Wednesday. Movement was light at 93 loads. The feeder market tumbled, falling apart technically as the weak live cattle tone and the higher grain prices triggered additional selling pressure.  Most feeder cattle contract broke to new or are challenging nearby contract lows.  April feeder futures and options expire on Thursday and will stay tied to the index.  The Feeder cash index gained .09 to 156.21 in line with April Feeders at 156.200.  Cattle markets are the victim of a larger cattle number picture, and now charts have broken down technically.  Additional selling pressure seems likely into the end of the week, as prices are searching for a near-term low.

LEAN HOG HIGHLIGHTS: Hog futures finished mixed on Wednesday, as bear spreading moved the front end of the market lower, removing more market premium over the cash market.  May hogs were 1.025 lower to 104.175, and June closed .825 lower to 110.350.  Buying strength was in the back end of the market as Oct and later futures finished higher on the day.

June hog futures saw additional technical selling as the market continues to move premium to the sidelines.  The 100-day moving average is at $109.400 and could be a support point on the charts.  Front end futures are moving into oversold territory and may be starting to look like a value.  In the bigger technical picture, June hogs are completing a potential head and shoulders pattern, that could bring a test of trendline support under the market at $97.50 for a potential target.  The premium of front-end future to the cash market have stayed as a selling point.  The Lean hog cash index has been trending higher, gaining .39 to 102.89 on Wednesday.  The premium of the futures to cash has quickly evaporated with the selling pressure in the futures market.  May is still holding a 1.2850 premium, and June is 7.460 over the index.  The tighter gap between the two may limit some of the selling pressure.  Cash markets have been softer, adding to the selling pressure, but did see a tick higher at midday on Wednesday.  Midday direct trade was firmer, gaining 3.59 to 99.33 and the five-day average settled to 100.38, as the direct market may be turning higher. Pork retail values were 3.68 higher at midday to 109.23. Product movement was light at 162 loads, helping support the market. Estimated hog slaughter for Wednesday was 482,000 head, steady with last year, and 1,000 behind last week.  Lean hog charts look defensive, but the selling pressure did slow on Wednesday. The path of least resistance at this point still looks to be searching for a low, but cash market is trying to firm, and retail values have trended strong this week, which could help be an indicator of a near-term low.

Top Farmer Midday Update 04-27-2022

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CORN

  • May corn up 10 @ 8.13
  • There is concern about a specific bridge in western Ukraine being destroyed because it has a lot of movement of grain, as well as military aid from the West
  • Some of the US weather forecasts have changed a bit overnight with chances for rain next week in the western Corn Belt
  • Russia has reportedly cut off gas to Poland, possibly escalating the conflict
  • The 7 day forecast for central Brazil remains dry
  • Argentina’s corn harvest is reported to be 23% complete

SOYBEANS

  • May soybeans up 5 @ 17.10
  • Stats Canada lowered their canola acreage estimate and Matif rapeseed new crop contract was making new highs – this may offer some support to soybean oil
  • Crush margins are very strong, which helps demand for soybeans
  • Soybean meal stocks in China are down 50% from last year, though covid lockdowns could be reducing food demand
  • USDA may lower Chinese soybean imports on the May 12th report as the pace is currently running behind what is needed to reach their estimate

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WHEAT

  • May wheat down 11 @ 10.72, May KC down 13 @ 11.45, & May MNPLS up 3 @ 11.89
  • Russians are pushing to take over export facilities in the Black Sea
  • Stats Canada came out with higher wheat acreage estimate yesterday
  • Chances for rain early next week in the Texas panhandle and Oklahoma – the moisture is welcomed, but probably will not change HRW yields much
  • Flooding is a concern in the eastern part of North Dakota
  • US Dollar Index is at 19 year highs, which may pressure the wheat market

CATTLE

  • Jun LC down 1.425 @ 134.825 & May FC down 1.050 @ 159.675
  • Cash was steady to higher early this week
  • More market ready cattle expected to become available over the next couple months
  • Today, there will be a hearing by the House Ag Committee regarding transparency and alleged unfair practices in cattle markets
  • Choice cuts down 2.43 and select down 0.29
  • Cattle slaughter projected at 125K
  • CME Feeder Cattle Index for 4/26: down 0.40 @ 156.12

HOGS

  • Jun hogs down 0.525 @ 110.650 & Jun pork cutout down 0.200 @ 117.300
  • Hog futures continued liquidation yesterday
  • A large head and shoulders chart pattern potentially points to the downside
  • Futures are near technical support levels and traders may view the recent liquidation as a buying opportunity
  • National Direct Afternoon report increased 3.26
  • Hog slaughter projected at 480K
  • CME Lean Hog Index for 4/27: up 0.39 @ 102.89

TFM Sunrise Update April 27, 2022

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CORN

Corn futures were mixed overnight as price action turns choppy toward the end of the month while clinging to their highest price level since 2012.  July corn is up a penny this morning to 8.02-1/2 just below contract high resistance at 8.10.  Dec corn is fractionally higher to 7.44-1/4 after gaining 60 cents this month alone and 76-1/2 cents in March.   Market pressure from another new highs in the dollar overnight and a decline in open interest is offset by slow U.S. planting progress, dry weather for the Safrinha crop and the continued war in Ukraine.  Russia's advance on south Ukraine export ports could limit Ukraine corn exports. A bridge in western Ukraine was destroyed, affecting a key rail and truck line for Ukrainian grain exports to EU and military imports to Ukraine.  Russia announced they have stopped shipping gas to Poland and Bulgaria.  Crude futures are seeing some follow-through to the upside after turning higher on the news late Tuesday.  Stock index futures are rebounding, up 400 points this morning.  Gold, coffee and sugar are lower.  Copper, silver, cocoa and cotton are higher.  On Tuesday, Managed funds were net buyers of 2,000 corn and still net long an estimated 373,000.  Weekly Ethanol Stats will be out today, Exports tomorrow. 

SOYBEANS

The soybean complex traded higher overnight as beans continue to add demand premium.  July beans rose 12-1/2 cents to 16.84-1/4.  Nov was up a dime to 15.12-3/4.  July meal gained .60 to 437.60.  July soy oil was up 1.91 to a new contract high of  84.35.  World new crop canola futures are higher on lower estimate of Canada 2022 acres.  Soybean meal futures have been trending lower in recent weeks after a push near their 2014 highs last month with a particularly nasty reversal for the soybean complex on Friday.  Outside markets have been mostly negative with a higher dollar and a break in the energy markets.  Fundamentally, soybean planting was said to be 3% complete this week (compared to the 5-year average of 5%) and StatsCanada announced that canola crushings were down 17.3% in the August-March timeframe vs. that same period last year.  On Tuesday, Managed funds were net buyers of 2,000 soybeans, 5,000 soyoil and sold 4,000 soymeal.  They are now estimated to be long 159,000 soybeans, 86,000 soymeal and 109,000 soyoil.

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WHEAT

Wheat futures were mixed overnight.  July Chicago is down a nickel to 10.90.  July KC is down 4 to 11.60-1/2.  July MPLS is down 3 to 11. 85 while trading mid range of yesterday's new contract high trading range.  New highs in the dollar overnight is likely creating headwinds for the wheat rallies.  July Chicago wheat has tacked on nearly $1 per bushel in April as concerns grow over the winter wheat crop amounting to anything in parts of SW KS, SE CO and areas in OK and TX due to the relentless drought.  On Tuesday, Managed funds were net buyers of 10,000 Chicago wheat and are long an estimated 5,000 contracts.  In the north, spring wheat planting is at a standstill in many areas areas of the Western portions of spring wheat country due to wet and cold conditions.  

CATTLE

The cattle market is called mixed to higher.  Live cattle futures traded higher on Tuesday supported by cash prices, but the strong grain market led selling in the feeder complex.  Even though the market had positive gains, trade on Tuesday was at the lower end of Monday's trade and was consolidative in nature.  Charts did hold near-term support at the 200-day moving average but are still susceptible to more downside pressure.  The cash trade helped trigger the buying support.  Southern cattle are beginning to trade for $140, full steady with last week, and the North is seeing cattle sell for $232 dressed, $2.00 higher than last week, and $145 to $146 live, steady to $1.00 higher.  Packers were aggressively bidding for cattle, which demonstrates that packers are short bought going into the week.  Boxed beef prices were lower at close (Choice 264.17 -2.43, Select 256.23 -.29) on movement of 183 midday loads.  The feeder market failed to find a bid, despite the stronger tone in the live cattle market.  A firmer tone in the grain market helped pressure feeders, with the strong selling strength in the deferred contracts.  The cattle market may be at a crossroads, as the heavier cattle on feed numbers from last week are a limiting factor in the market, despite a stronger cash tone.  Prices will need to see some further recovery in order to show that a near-term low maybe in place.

HOGS

The hog market is called lower on additional long liquidation as prices continue to break down technically.  June hog futures saw additional technical selling as the market continues to move premium to the sidelines.  The 100-day moving average is at $109.300, and could be a support point on the charts.  In the bigger picture, June hogs are completing a potential head and shoulders pattern, that if complete could bring a test of trendline support under the market at $97.50 for a potential target.  Cash markets have been softer, adding to the selling pressure.  Midday direct trade on Tuesday was slightly firmer, gaining .14 to 95.74 and the five-day average settled to 100.30.  The lean hog index gained 0.83 on the day to 102.50 as the index has trended higher.  The strong cash premium to the cash market has been removed quickly with the futures selling pressure, but is still a limiting factor to near-term rallies, especially with the market on the defensive.  May hog futures is still trading at a 2.700 premium to the index, and June is 8.6750 over.  Pork retail values were .24 lower at the close to 105.55.  Product movement was moderate to good at 340 loads.  Estimated hog slaughter to start the week was 465,000, down nearly 15,000 from last year, but growing pork supplies are likely reflection the heavier overall slaughter weights, and the slowing export demand seen for U.S. pork and that is a macro concern that is pressuring the hog market.  Lean hog charts look defensive, and the fundamentals are still lacking in supporting the market.  The path of least resistance at this point still looks to be searching for a low.

Top Farmer Closing Commentary 04-26-2022

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CORN HIGHLIGHTS: Corn futures had a rather volatile session ending the session on a firm note, with back months the recipient of additional strength on growing planting delay concerns. July gained 3-1/2 cents to end the session at 8.01-1/2 and December added 9-1/2 to close at 7.43-1/2, well off the low of yesterday, 7.14-1/2. A cool forecast for the northern Midwest (snow in parts of the Dakota’s) and above normal precipitation suggests further planting delays. Bottom line, not the best start to the planting season. Higher wheat and energy prices provided support as well.

The key for now, at least perceptively, is planting progress and expectations. Corn planting is off to a slow start with only 7% completed versus the 5-yr average of 15%. Top states: Iowa 2% (15%), Illinois 2% (21%), Nebraska 10% (11%), Minnesota 0% (10%), Indiana 1% (10%). So, does it matter? In April, we still can’t bring ourselves to put a lot of stock into correlation to yield drawdown. Yet, it is not an ideal start. The most recent 6 to 10-day forecast has most of the Midwest above normal in precipitation and the northern regions below normal in temperature adding stress to plant timely and logistically, in a year of tight supplies and labor, have all move forward without delay.

SOYBEAN HIGHLIGHTS: Soybean futures ended mixed despite announced export sales. May soybeans added 1-3/4 to close at 17.05-1/4 and July lost 3-1/2 to end the session at 16.71-3/4. November added 8-1/2 cents, closing at 15.02-34. Meal dropped 7 to 8.00, while oil screamed higher following the energy complex. Most oil contracts gained 1.90 to 2.55 points higher. Tight world vegetable oil supplies continue to underpin the soy complex. Wet weather could mean less corn and more soybean acres.

Announced export sales of 132,000 mt for China for the 2022/2023 marketing year and 133 mt to unknown destinations (78,000 mt for this year and 55,000 mt for 2022/2023) were supportive and continuing to suggest end users are anticipating supplies could be tight into the fall months. Support for oil came from news the Indonesia intends to tax refined oil, but not crude. This suggests tight supply. The bearish factor, and perhaps most reasonable, explanation for bear spreading is increased covid concerns from China. Additional lockdowns suggest lower near-term usage. This may make some sense from an energy consumption argument (bio-diesel), but not a long term consumer function.

WHEAT HIGHLIGHTS: Wheat futures had a positive close for all three US classes. Declining crop ratings and increasing weather concerns seem to have given traders the push they needed to buy back into the market. May Chi gained 21-1/4 cents, closing at 10.83-1/4 and July up 22-1/2 at 10.95. May KC gained 12-1/2 cents, closing at 11.57-3/4 and July up 11-1/2 at 11.64-1/2.

Yesterday afternoon’s Crop Progress report showed a decline in winter wheat condition to 27% good to excellent vs 30% last week (and 49% last year). The poor to very poor rating came in at 39%, compared with 37% last week (and 19% last year). Conditions are the lowest since 1996. According to some “boots on the ground” reports, the extreme weather in southwest Kansas, southeast Colorado, and the Texas / Oklahoma panhandles will lead to zero wheat being produced in some areas and the drought is becoming more of a concern each day. Looking North, spring wheat is 13% planted vs 15% average and is 2% is emerged vs 4% average. Also, the cold and wet weather in the northern Plains looks like it will cause further delays to the spring wheat seeding there. When looking at Minnesota and North Dakota specifically, MN is 0% planted vs 8% average and ND is 4% planted vs 8% average. In other news, the Ukraine war remains a bullish backdrop for the wheat market. The only new reports out of that region are that Russia is again attacking central and western Ukraine cities. On a bearish note, Stats Canada estimates their wheat acreage up 1.6 to 25 million acres. Additionally, while likely not having as big of impact on wheat as say, soybeans, it is also noted that the increasing covid cases and lockdowns in China may impact their demand for commodities and energies. With reports earlier in the year of dryness in their winter wheat areas, this could become more significant over time.

CATTLE HIGHLIGHTS: Live cattle futures traded higher on Tuesday supported by cash prices, but the strong grain market led selling in the feeder complex.  April cattle gained .900 to 140.000, and June cattle added .825 to 136.250.  May feeders were .575 lower to 160.725.

Cattle futures rebounded slightly on Tuesday after Monday's strong trade lower.  Even though the market had positive gains, trade on Tuesday was at the lower end of Monday's trade and was consolidative in nature.  Charts did hold near-term support at the 200-day moving average, but are still susceptible to more downside pressure.  The cash trade helped trigger the buying support for Tuesday as light early trade began to develop.  Southern cattle are beginning to trade for $140, fully steady with last week, and the North is seeing cattle sell for $232 dressed, $2.00 higher than last week, and $145 to $146 live, steady to $1.00 higher. Packers were aggressively bidding for cattle, which demonstrates that packers are short bought going into the week. Trade was light and more trade is expected to develop Tuesday afternoon and into Wednesday.  Boxed beef prices were mixed at midday (Choice 265.62 -.98, Select 257.29 +.77) on movement of 91 midday loads. The feeder market failed to find a bid, despite the stronger tone in the live cattle market.  A firmer tone in the grain market helped pressure feeders, with the strong selling strength in the deferred contracts. The cattle market may be at a crossroads, as the heavier cattle on feed numbers from last week are a limiting factor in the market, despite a stronger cash tone.  Prices will need to see some further recovery in order to show that a near-term low maybe in place.

LEAN HOG HIGHLIGHTS: Hog futures saw strong selling pressure in the front end of the market fueled by additional long liquidation as prices continued to break down technically.  May hogs were 2.600 lower to 105.200, and June closed 2.850 lower to 111.175.

June hog futures saw additional technical selling as the market continues to move premium to the sidelines.  The 100-day moving average is at $109.300, and could be a support point on the charts.  In the bigger picture, June hogs are completing a potential head and shoulders pattern, that if complete could bring a test of trendline support under the market at $97.50 for a potential target.  Cash markets have been softer, adding to the selling pressure.  Midday direct trade on Tuesday was slightly firmer, gaining .14 to 95.74 and the five-day average settled to 100.30. The lean hog index gained 0.83 on the day to 102.50 as the index has trended higher. The strong cash premium to the cash market has been removed quickly with the futures selling pressure, but is still a limiting factor to near-term rallies, especially with the market on the defensive.  May hog futures are still trading at a 2.700 premium to the index, and June is 8.6750 over.  Pork retail values were .21 lower at midday to 105.58. Product movement was light at 178 loads. Estimated hog slaughter to start the week was 465,000, down nearly 15,000 from last year, but growing pork supplies are likely reflecting the heavier overall slaughter weights, and the slowing export demand seen for U.S. pork and that is a macro concern that is pressuring the hog market. Lean hog charts look defensive, and the fundamentals are still placing in supporting the market.  The path of least resistance at this point still looks to be searching for a low.