After the Bell | November 5, 2021
Corn: December corn futures fell 6 1/4 cents to $5.53, the lowest closing price since $5.43 1/2 on Oct. 26 and a decline of 2.7% for the week. December futures posted its fourth straight lower close, and the market’s eroding technical standing may produce followthrough pressure early next week. USDA’s Crop Production and Supply and Demand reports Nov. 9 will be the biggest keys to market direction next week. USDA is expected to raise its U.S. corn harvest 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. Potential changes to ethanol use, exports and 2021-22 ending stocks are also worth examining. Corn futures likely established a near-term low in mid-October, but whether the market can resume a recent rally to 2 1/2-month highs will depend in part on export and ethanol demand.
Soybeans: January soybean futures fell 17 1/4 cents to $12.05 1/2, a 3.5% decline on the week and the contract's lowest closing price since $11.86 on March 30. December soymeal slid $3.10 to $332.70 per ton. December soyoil slumped 80 points to 58.78 cents per pound. Soybeans closed at a seven-month low on expectations for larger U.S. production and a mostly favorable start to South America’s growing season. USDA is expected boost its estimate for the U.S. soybean crop to an all-time high, at 4.484 billion bu., based on the Reuters survey. That would be up 0.8% from the 4.448 billion bu. crop USDA projected in the October report. The average U.S. soybean yield is expected to be revised up to 51.9 bu. per acre from USDA’s current 51.5 bu. per acre forecast. Late today, USDA released baseline data for its long-term outlook report published in February. We are projecting spring 2022 soybean plantings at 88.4 million acres, so we view the USDA figure at 87.5 million as supportive for futures.
Wheat: December SRW wheat futures fell 7 1/4 cents to $7.66 1/2, down 6 1/4 cents for the week. December HRW wheat futures fell 7 1/4 cents to $7.78 3/4, down 7 cents on the week. December spring wheat futures fell 7 1/2 cents to $10.09 1/2, down 40 3/4 cents on the week. After scoring contract and multi-year highs early this week, wheat futures markets eroded to post technically bearish weekly low closes. The weak finishes to the trading week set the table for followthrough selling pressure early next week, though wheat futures remained underpinned by a tighter outlook for global supplies. USDA, in its monthly Supply and Demand Report Nov. 9, is expected to cut its estimate for global wheat stockpiles. U.S. stocks at the end of the 2021-22 marketing year are forecast to decline to 276.5 MMT, based on a Reuters survey, down from USDA’s current projection of 277.2 MMT. USDA may also lower U.S. exports in next week’s report.
Cotton: December cotton futures gained 41 points to 116.87 cents and for the week gained 205 points. Cotton futures continued to consolidate today following the rally to 10-year highs early this week. The late-week price action formed a minor bullish pennant pattern on the daily bar chart for December futures. Cotton traders await the Nov. 9 USDA Crop Production and Supply and Demand report. A Bloomberg survey showed a forecast for U.S. cotton production at an average of 18.04 million bales. That compares with a forecast of 18.0 million bales in last month’s USDA report. U.S. exports are pegged at an average 15.59 million bales versus 15.50 million seen in last month’s report.
Cattle: December live cattle futures rose $1.175 to $131.80, up 2.0% for the week and the highest settlement since $132.20 on Sept. 2. January feeder cattle rose $1.425 to $159.60, up 2.2% on the week. Continued cash market strength vaulted live cattle futures to the highest close in over two months, as reports packers paid as much as $130 per hundredweight in late-week trading contributing to today’s gains. Late today, USDA reported live steers in five top feedlot areas averaged $128.12, up from $126.29 at the end of last week. The recent resurgence in wholesale prices seemingly reflects improved export demand for U.S. beef, which in turn has prompted accelerated buying from packers. Grocers may also be buying more aggressively for the first weekend of December, a prime period for beef features. Choice beef cutout values fell 68 cents today to $289.54, up 1.3% for the week and near a five-week high. Next week, the marketplace will watch for shifts in boxed beef prices and the strength of packer bids. Cattle slaughter this week totaled an estimated 650,000 head, down 2.8% from last week and down 0.3% from the same week a year ago. So far this year, cattle slaughter is still running 3.1% ahead of the same period in 2020.
Hogs: December lean hog futures fell $1.325 to $76.55, but still rose 0.6% on the week for the second consecutive weekly gain. A strengthened technical posture combined with beliefs the market has established a near-term low may carry over into early futures trading next week. Further improvement in wholesale pork may also lend support. Pork cutout values fell $1.36 today to $96.33, down from $96.52 at the end of last week but up from an eight-month low Nov. 1. Futures will need to see further signs of improving demand to sustain buying interest. Other cash benchmarks remained soft this week, with the latest CME Lean Hog Index at $78.32, the lowest level since late February. National direct carcasses rose 8 cents to $59.90, down from $61.70 a week ago. Meatpackers this week slaughtered an estimated 2.611 million head, up 2.4% from the previous week but down 3.2% from the same week in 2020. Year-to-date, slaughter is running 2.0% under 2020 levels.
