After the Bell | November 10, 2021
Corn: December corn futures gained 14 1/2 cents to $5.69 1/4, the highest closing price since $5.69 1/4 on Nov. 2. Corn rode a surge in the wheat market and a wave of fresh fund buying as futures sharply extended yesterday’s gains. With USDA’s Crop Production report yesterday offering no major bearish surprises, buyers have actively returned to the market. Traders shook off the Energy Department’s weekly ethanol report that showed a 68,000-barrel-per-day (bpd) decline in production to 1.039 million bpd, the lowest weekly output in a month but still up 6.3% from last year. Given strong ethanol production margins of around $1 or more per bushel across the Midwest, we attribute the decline to plants not being able to source enough corn to produce more product. Basis at ethanol plants across the Midwest remains firms, signaling a need for more near-term supplies.
Soybeans: January soybeans rose 4 3/4 cents to $12.16 3/4. December soybean meal fell 10 cents to $342.40 per ton, down from a seven-week high yesterday. December soyoil rose 67 points to 59.14 cents per pound. Soybeans extended yesterday’s rally after USDA unexpectedly lowered its U.S. harvest estimate. USDA cut its 2021 production estimate to 4.425 billion bu., down 23 million bu. from an October estimate and contrary to analysts’ expectations for an increase of about 36 million bu. USDA also raised projected U.S. soybean ending stockpiles for 2021-22 by a lower-than-expected 20 million bu., to 340 million bu., but supplies are still expected to be up about 33% from 2020-21. Price gains were limited by a mostly favorable start to South America’s soybean-growing season.
Wheat: December SRW wheat rose 24 1/2 cents to $8.03, the highest closing price for a nearby contract since December 2012. December HRW wheat rose 24 cents to $8.17 1/2, the highest settlement for a nearby contract since May 2014. December spring wheat rose 22 1/2 cents to $10.46 1/4. USDA’s Supply and Demand report bolstered the bullish outlook for tightening global stockpiles. USDA lowered projected global wheat ending stocks for 2021-22 by 0.5% to 275.87 MMT, down 6.7% from 2020-21 and the lowest in five years. Buying was also fueled by a report today that Russia, the world's largest wheat exporter, plans to set a grain export quota no later than mid-February that will run through June of 2022. Russia may also make weekly adjustments to a formula for calculating its grain export tax, in case of further significant price gains in global wheat markets.
Cotton: December cotton futures fell 70 points to 118.68 cents per pound, after rallying earlier to 120.75 cents, the highest intraday price since Nov. 2. U.S. cotton prices rose in early trading amid ideas export demand stayed robust despite the recent price surge, and despite China starting daily cotton sales from domestic stocks. That move likely reflects the ongoing Trump Administration ban on imports of Chinese apparel manufactured from cotton grown and/or processed in its Xinjiang province. Today’s CPI unexpectedly strong jump spurred talk the Federal Reserve may hike U.S. interest rates sooner than previously thought, which may have stirred selling in some commodity markets. Gold prices rallied in response to the CPI report, while the U.S. dollar index reached a 16-month high, a bearish development for U.S. commodities.
Cattle: December live cattle futures fell 20 cents to $132.00, while January feeder cattle fell $1.25 to $156.65. Firm cash prices and the prospect of rising feed costs supported live cattle futures, but the market was unable to generate sufficient buying to push above this week’s highs. Stronger corn prices pressured feeder cattle. Some cattle changed hands at $132.00 in the South today, and USDA reported a five-area live steer price at $130.00, compared to last’s week’s average of $129.23. But bullish enthusiasm may have been tempered by recent weakness in wholesale beef. Choice cutout values fell $2.28 today to an average of $285.52, the fourth consecutive daily decline, while Select fell $4.00 to $266.62. Meatpackers slaughtered an estimated 365,000 head of cattle this week through today, equal to the same period last week and up 12,000 head from the same period a year ago.
Hogs: December lean hog futures rose 75 cents to $75.70, after dropping earlier in the session to $73.70, near a two-week low. Hog futures generated a corrective bounce to post a gain for the first time in four sessions, though slumping cash fundamentals continued to burden the market. Cutout values fell $1.98 today to an average of $90.57, the lowest daily price since $89.17 on Feb 17. Movement totaled 347 loads. The preliminary quote for the next CME lean hog index is down 51 cents to $78.72, near the eight-month low of $78.32 reached Nov. 3. Carcasses on national direct markets today fell 57 cents to $58.09. Slaughter so far this week totaled an estimated 1.423 million head, down 1,000 head from the same period last week and down 13,000 head from the comparable period in 2020.
