After the Bell | October 8, 2021

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Corn: December corn futures fell 3 1/2 cents to $5.30 1/2 a bushel, down 2.0% for the week and the lowest closing price since $5.26 3/4 on Sept. 24. Corn futures gave up some ground this week as the near-term technical posture weakened a bit, including December futures dipping below the key 40-day moving average. Such may prompt some chart-based selling interest early next week. With corn harvest nearing full swing next week, commercial hedge pressure is also likely to limit price gains in futures. However, World Weather Inc. today said several waves of rain are expected for the Corn Belt next week, which may hamper harvesting activity. A strong disturbance will generate more widespread rain Tuesday and Wednesday. The Oct. 12 USDA Crop Production report is expected to show slight reductions to the U.S. corn harvest and average yield, compared to last month’s estimates from the agency. Reuters reported an average of analysts’ estimates for U.S. corn production at 14.973 billion bu. The average U.S. corn yield is expected to be cut a bit, to 176 bu. per acre.

Soybeans: November soybeans fell 4 1/4 cents to $12.43 a bushel, down 0.3% on the week. December soyoil fell 55 points to 61.51 cents per pound, up 269 points on the week. December soymeal fell 60 cents to $318.7 per ton, down $8.20 for the week. Ideas that recent soybean weakness may have sparked renewed interest from Chinese buyers reportedly gave the soybean complex an early Friday boost, but bulls couldn’t sustain the strength despite concurrent gains in crude oil futures. Given the large soybean stocks figure posted on last Friday’s Quarterly USDA Grain Stocks report, and the indicated upward revisions to supplies likely coming on in USDA’s Oct. 12 Crop Production and Supply and Demand reports, bears were apparently confident enough to remain heavily committed to the short side of the soy complex. The Oct. 12 reports will likely set the market tone for soybean and product prices through the balance of October.

Wheat: December SRW wheat dropped 21 1/4 cents to $7.34 and December HRW wheat fell 22 cents to $7.37 1/2. December spring wheat futures rose 4 1/4 cents to $9.46 1/2 a bushel, after reaching a contract high for the third straight day. Price action next week will be directed by USDA’s Oct. 12 crop reports. USDA will probably lower its U.S. ending- stocks forecast as it incorporates the Sept. 1 stocks and final 2021 crop estimates into the 2021-22 balance sheets. Traders also expect USDA to cut its world wheat ending stocks forecast. While the wheat data should be neutral to friendly, much of the post-report reaction could be dictated by corn and beans, especially if that data is bearish. U.S. winter wheat acres are likely to increase.

Cotton: December cotton fell 101 points to $1.1060 per pound, after earlier rising to $1.1648, a contract high for the eighth time in the past 10 session. The most-active contract gained 6.8% this week. Cotton futures fell after U.S. job growth in September was a disappointing, with non-farm payrolls up 194,000, well short of expectations for a gain of about 500,000. Weaker-than-expected job growth raises questions about the economy and demand for commodities. Weakness was mitigated by a rally in crude oil, which topped $80 a barrel for a seven-year high. A critical question for next week is whether the rally can be sustained or has reached an exhaustion point. USDA will update harvest progress Monday. The U.S. crop was 11% harvested as of Sept. 26, about 3 percentage points behind the average pace.

Cattle: December live cattle futures rose 15 cents to $130.25, the highest closing price since $120.925 on Sept. 3 and a gain of 4.0% on the week. November feeder cattle futures fell 45 to $161.15, up 5.4% on the week. A good week for the cattle futures market bulls, including technically bullish weekly high closes in December live cattle and November feeder cattle futures that will likely prompt some follow-through chart-based buying early next week. Slightly firmer cash cattle trade this week and strong U.S. beef exports also land in the camp of the cattle market bulls looking to continue to push prices north next week. Live steers in top feedlot areas averaged $122.96 today, up from the average of $122.56 last week.

While U.S. beef exports have been strong, wholesale beef prices continue to decline, suggesting domestic retail demand may have peaked for the time being. Choice boxed beef fell $2.03 today to an average of $283.27, down 3.1% on the week and the lowest since $281.00 August 2. The wholesale beef market needs to turn around in the coming weeks to sustain steady-firmer futures and cash cattle prices. Meatpackers slaughtered an estimated 657,000 head of cattle this week, up 3.1% from both last week and the same week in 2020, USDA reported.

Hogs: October lean hogs rose 40 cents to $90.25 per hundredweight, while December fell 52.5 cents to $81.50, down 4.3% from last Friday. The cash hog and wholesale pork markets often conclude a seasonal bounce begun in early September in mid-October. We believe sustained beef losses from extreme highs greatly delayed the start of that rise this year. With wholesale beef prices under sustained pressure, this doesn’t bode particularly well for the short-term hog/pork outlook either. Pork cutout values today fell $5.27 to an average of $106.99, down 5.6% from the end of last week and the lowest price since $104.29 on Sept. 23. Carcasses on national direct markets fell 92 cents to $69.26, down 5.0% on the week. The latest CME lean hog index was $92.59, near a six-month low reached in late September.

Still, the swine markets may remain relatively firm if early-fall demand for pork remains relatively robust. Today’s close in the October futures contract (which expires Oct. 14), indicates the industry anticipates sustained cash losses. History suggests this week’s slaughter, at an estimated 2.597 million head, might mark a temporary peak, before surging again just before Thanksgiving. The slaughter total this week was up 3.2% from last week but down 4.8% from the same week in 2020.

 

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