After the Bell | November 17, 2021

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Corn: December corn futures rose 4 1/4 cents to $5.75 1/4, after fading from an early rally to a two-week high at $5.84. Corn gained spillover support from surging soybeans and wheat but failed to make a sustained push above trendline resistance around today’s high. Further signs of robust demand from domestic ethanol producers also supported corn. U.S. ethanol production rose 21,000 barrels per day (bpd) to 1.060 million bpd during the week ended Nov. 12, while ethanol stocks dropped 205,000 barrels to 20.08 million barrels. Over the past four weeks, U.S. ethanol production averaged 1.087 million bpd, the highest four-week average since December 2017. Lack of sustained upside in corn may partly reflect concern over U.S. exports that continue to lag last year’s pace. USDA’s weekly export sales report tomorrow is expected to show corn sales ranging from 800,000 MT to 1.4 MMT for the week ended Nov. 11. A week ago, USDA reported net U.S. corn sales at 1.067 MMT, down 13% from the previous week and down 4% from the average for the previous four weeks.

Soybeans: January soybeans rallied 25 3/4 cents to $12.77, the highest closing price since Sept. 29. December soymeal rose $7.20 to $374.70, the highest close since July 2, while December soyoil rose 60 points to 59.23 cents per pound. Broad-based buying lifted the soy complex, spurred in part by a recent pick-up in exports. Early today, USDA announced China bought two cargoes of U.S. soybeans for 2021-22 delivery, and there was talk of additional business. Today’s sale announcement followed daily sales the previous three business days, totaling 682,000 MT, and also for unknown destinations. A daily soyoil sale of 30,000 MT to India was a surprise, considering the country had purchased limited amounts of U.S. soyoil over the years. Tomorrow’s USDA export sales report is expected to show net U.S. soybean sales ranging from 1 MMT to 1.6 MMT. Speculative funds were active buyers today as they continued to rebuild net long positions in soybeans and soymeal and extend length in soyoil.

Wheat: March SRW wheat rose 13 cents at $8.33 after reaching a contract high at $8.44. March HRW wheat rose 13 3/4 cents to $8.36 1/2, nearer the session high. March spring wheat futures rose 13 1/2 cents to $10.30 1/2. Wheat futures continued to lead grain markets higher, as the “inflation trade” accelerates in global commodity markets, compelling grain traders to, so far, ignore the usually bearish effect of an appreciating U.S. dollar. Tightening wheat supplies from some of the world’s top exporters continues to fuel buying interest. Ukraine, for example, has already exported 12.4 million MT of wheat – nearly half of its quota for 2021-22, APK-Inform agriculture consultancy said today. Continued dry weather in the U.S. Plains is also bullish for wheat prices, with no significant precipitation expected in top HRW areas over the next 10 days. Tomorrow’s weekly export sales report is expected to show U.S. wheat sales of 250,000 to 500,000 MT.

Cotton: December cotton futures rose 1.72 cents to 119.70 cents per pound, while most-active March futures climbed 1.79 to 116.92 cents. Industry sources suggest cotton millers and spinners are comfortable with current elevated prices, arguing that high yarn prices are justifying the elevated cost of cotton. They also indicate a shift toward synthetic fibers is currently too much trouble for the industry to shut down and reconfigure machine settings. Elevated energy and gold prices also suggest growing anticipation of sustained commodity inflation into 2022, which in turn seemed to power widespread gains in the ag markets today. Cotton futures faded from early-session highs today, possibly on profit-taking ahead of tomorrow’s export sales report. Sales posted the past two weeks have been disappointing.

Cattle: December live cattle rose 50 cents to $132.225 and February futures rose 30 cents to $136.40. January feeder cattle declined 35 cents to $158.925. USDA reported live steers in five top feedlot areas at an average of $132.05 today, compared to last week’s average of $131.47. Anticipation of sustained inflationary pressures continued to support many ag markets, as cotton, wheat and soybeans rallied. December futures’ close is essentially in line with cash prices around $132, signaling futures are not overpriced. However, a continued slump in wholesale beef indicated consumers are increasingly balking at expensive beef. Choice cutout values fell $3.66 today to $278.47, the lowest since late July. Still, packers may have considerable room to bid higher for cattle, given strong margins and the large premium wholesale quotes carry over cash values.

Hogs: February lean hog futures fell 22.5 cents to $83.15, after earlier reaching a five-week high at $83.475. Nearby hog futures fell in a mild corrective setback from yesterday’s rally to six-week closing highs, though ongoing weakness in cash fundamentals limited futures upside. After tumbling over $6.00 yesterday, pork cutout values fell another $3.25 today to $84.52, the lowest daily price since early February. Today’s decline was led by a drop of nearly $10.00 in bellies. Movement was relatively strong at over 384 loads. Carcasses on national direct markets fell 86 cents to $56.30. Signs of stabilization in the CME lean hog index this week could help hog futures extend the recent upturn, or at least limit price weakness. The next CME lean hog index is expected to fall 5 cents to $76.28, after gaining 16 cents today. The index remains near a nine-month low hit at the end of last week. Hog slaughter so far this week totaled an estimated 1.448 million head, up 1.8% from the same period last week but down 1.4% from the comparable period in 2020, USDA data showed.

 

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