After the Bell | October 6, 2021
Corn: December corn fell 5 1/4 cents to $5.32 1/4, its third straight daily decline. Outside markets weighed on the grain and soy complex, as the commodity sector underwent a widespread selloff led by energy markets. The U.S. corn harvest continues gaining momentum, with no major weather threats expected to slow progress over the coming weeks. Seasonal hedge pressure may increasingly pressure futures. But corn futures tend to rise in years when the market strengthens in September, as it modestly did this year, and the recent rebound off September lows suggests an early harvest low may have been established. Tomorrow’s weekly USDA export sales report is expected to show net U.S. corn sales of 350,000 to 800,000 metric tons (MT) for the week ending Sept. 30. Last week, USDA reported net sales at a lower than expected 370,400 MT.
Soybeans: November soybeans fell 8 1/2 cents to $12.42 a bushel, near a six-month low reached yesterday. December soybean meal rose $1.50 to $322.70 per ton, after earlier hitting a 12-month low at $320.10. December soyoil fell 80 points to 60.34 cents a pound, after reaching a six-week high. Some analysts expect USDA to hike its forecasts for this year’s U.S. soybean crop. IHS Markit, for example, increased its U.S. soybean production estimate to 4.421 billion bu. on an average yield projection of 51.1 bu. per acre, up from the firm’s September projections of 4.381 billion bu. and 50.6 bu. per acre. Tomorrow’s USDA export sales report is expected to show U.S. soybean sales at 600,000 to 1.2 MMT, compared to last week’s report showing 1.1 MMT in sales. Seasonal commercial hedge pressure from the accelerating U.S. soybean harvest will likely keep a lid on any rally attempts.
Wheat: December SRW wheat futures gained 1 1/4 cents to $7.46 per bushel, while December HRW climbed 4 cents to $7.45. December spring wheat futures surged 13 1/2 cents to $9.39, after reaching a contract high at $9.43 1/4. Wheat resumed a recent upswing despite weakness in corn and soybean prices, supported by tight domestic and global supplies. U.S. wheat stockpiles at the start of 2021-22 fell to a 14-year low. Reports that Ukraine trimmed its latest estimate of its domestic grain harvest underscored the shrinking global supply picture. Elevated global wheat prices may spur exports from India’s large holdings, with some saying wheat exports from the subcontinent could quadruple. Tomorrow’s USDA export sales report is expected to show net U.S. wheat sales at 200,000 to 500,000 MT. Last week’s sales were 290,100 MT, at the low end of trade expectations.
Cotton: December cotton futures rose 213 points to $1.1106 cents per pound and posted a contract high for the sixth day in the past seven. October futures ended at $1.1310, the highest settlement since September 2011. Underlying cotton demand remains strong, although a part of the current price strength is likely being driven by panicked short position holders bailing out of the market. The U.S. market is well-supplied and a large fall harvest is expected, so the rally appears mostly demand-driven. The latest futures surge was triggered by last week’s USDA export sales report, which showed net U.S. cotton sales of 571,400 running bales during the week ended Sept. 23, up 65% from the previous week and up 92% from the average for the previous four weeks. That report indicated strong buyer response to a recent price drop. Tomorrow’s report will cover the week ended September 30, when the market was rising sharply, which may portend weaker export figures.
Cattle: December live cattle rose 37.5 cents to $128.225 per hundredweight, the highest closing price since $128.625 on Sept. 23. November feeder cattle rose $1.25 to $158.125. Cattle futures extended a corrective bounce from last week’s slump to five-month lows, driven in part by beliefs the market has exhausted downside momentum and may be shifting into a sideways-higher pattern over the short-term. Further upside likely will be limited due to weakness in the wholesale market, indicating costly beef may be curbing consumer demand. Choice boxed beef fell $1.09 today to an average of $286.62, the lowest since $285.84 on Aug. 3. Choice beef has tumbled over 17% from a 15-month high reached Aug. 23, and likely must stabilize before futures generate any sustained buying. On cash cattle markets, prices so far this week have been roughly steady to down slightly from last week’s average steer price of $122.56, which was down $1.08 from the previous week and the fifth straight weekly decline.
Hogs: December lean hogs fell 82.5 cents to $81.725 per hundredweight, the fourth consecutive daily decline and the lowest settlement since Sept. 27. Futures extended a corrective setback following last week’s rally to two-month highs. Today’s high-range close suggested the correction may have run its course, and a jump in wholesale pork prices may lend further support. Pork cutout values rose $4.73 today to $112.86, led by a gain of over $16 in hams. Movement was about 288 loads. National direct average carcasses fell $1.25 to an average of $70.01. The latest CME lean hog index rose 6 cents to $94.11, the sixth increase in the last seven trading days. Meatpackers slaughtered an estimated 1.418 million head so far this week, up from 1.413 million head during the same period a week ago but down from 1.465 million head for the corresponding period in 2020. Traders will examine tomorrow’s weekly USDA export sales report for signs of continued strength in overseas pork demand.
