After the Bell | November 3, 2021
Corn: December corn futures fell 9 cents to $5.64, down from a 2 1/2-month intraday high at $5.86 hit yesterday. Corn futures fell for a second consecutive day in a corrective pullback from the recent rally, with spillover from lower wheat futures also lending pressure. A fifth straight weekly increase in U.S. ethanol production, as reported by the Energy Department, had little discernable impact on prices. Ethanol production rose 1,000 barrels per day (bpd) during the week ended Oct. 29 to 1.107 million bpd, just 1,000 bpd below the all-time weekly record output. The market awaits weekly USDA export sales tomorrow but may otherwise settle into a holding pattern ahead of the agency’s next Crop Production and Supply and Demand reports Nov. 9. USDA is expected to report net U.S. corn sales between 700,000 MT and 1.4 MMT for the week ending Oct. 28, compared to 890,400 for the previous week.
In its November Crop Production report, USDA is expected to raise its U.S. corn production estimate about 0.2% from an October projection to 15.05 billion bu., based on a Reuters survey of analysts. The estimated average nationwide yield is expected to increase to 176.9 bu. per acre, up 0.1 bu.
Soybeans: January soybeans tumbled 11 3/4 cents to $12.55 1/4, while December soyoil fell 96 points to 61.03 cents per pound. December soymeal gained $3.60 to $340.80 per ton, the highest closing price since $341.20 on Sept. 29. Soybeans and soyoil followed the grain and crude oil markets lower, with Nymex futures sinking over 4.0% to three-week lows. Additionally, timely rains in South America, particularly Argentina, may have improved prospects for recently planted crops. Unwinding of crush spread positions probably powered strength in soymeal futures. And while the soybean harvest is nearing an end, the market may still be facing pressure from new supplies. Limited soybean purchases recently from China are also muting upside potential. Tomorrow’s weekly USDA export sales report is expected to show net U.S. soybean sales of 1 MMT to 2 MMT for the week ended Oct. 28, compared to 1.183 MMT the previous week.
Wheat: December SRW wheat fell 10 1/2 cents to $7.81. December HRW wheat fell 7 1/2 cents to $7.90 3/4. December spring wheat futures fell 31 1/2 cents to $10.44. Profit-taking and corrective pressure pushed wheat futures lower for a second straight day after prices hit multi-year highs earlier in the week. Global wheat fundamentals remain bullish, with tightening global supplies and strong demand. Also, less-than-ideal U.S. winter wheat crop conditions heading into the winter months are favoring the bullish camp. Despite the bullish global backdrop, U.S. wheat markets have been burdened by sluggish export demand, reflecting higher domestic prices compared to other top wheat growers. Demand for U.S. wheat on the world market will have to improve markedly soon to keep a floor under the U.S. wheat futures. Tomorrow’s weekly USDA export sales report is expected to show net U.S. wheat sales of 180,000 to 500,000 MT, following sales of 269,300 MT the previous week.
Cotton: December cotton rose 157 points to 118.82 cents and near the session high. Prices hit a contract and 10-year high yesterday. Cotton futures climbed amid a bullish global supply-demand backdrop, enabling the market to shrug off a sharp drop in crude oil today. The cotton market continues to be underpinned by expectations strong global demand will absorb a hefty U.S. cotton crop this fall. The Federal Reserve said today it will start winding down its monthly bond-buying program, indicating that a strengthening economy will need less and less stimulus from the central bank. That bodes well for the demand side of the cotton ledger. Weekly USDA export sales report tomorrow morning will offer an update on global demand, especially interest from China.
Cattle: December live cattle jumped $1.70 to $131.65, the highest closing price since $132.20 on Sept. 2. January feeders climbed $2.20 to $159.225. Live cattle futures surged to a two-month high in response to strong cash market gains. On cash markets, live steers in five top feedlot areas averaged $127.96, up $1.67 from last week's average, USDA reported. This week’s cash strength may mark a fresh high for 2021 and the highest cash quote since April 2019. Moreover, packers paying up aggressively early in the week suggests they need cattle and will continue buying actively next week as well. Rising wholesale prices are likely the main driver of the cash and futures strength. Choice cutout values today rose $1.11 to an average of $288.49, the highest in almost a month. History suggests prices will work seasonally higher into spring.
Hogs: December lean hog futures rose $1.70 to $75.95, up from the eight-month closing low of $71.975 reached Oct. 27. Hog futures posted a firm corrective bounce from yesterday’s losses, helped by strength in the cattle market and a surge in wholesale pork prices. Pork cutout values rose $6.23 today to $100.44, the highest daily average since $100.78 on Oct. 18, according to USDA data. Until cutout values establish a bottom, futures may remain under pressure, or at least hold minimal upside potential. U.S. hog numbers are down from year-ago levels and are expected to remain constrained into next year, which is reflected in July 2022 futures’ nearly $18 premium to December. But sluggish retail demand and heavily bearish market psychology continue to weigh on futures. The latest CME lean hog index fell 12 cents to $79.04, the lowest since Feb. 22. Carcasses on national direct markets averaged $60.68, down 30 cents.
