Ahead of the Open | August 23, 2021
GRAIN CALLS
Corn: 1 to 2 cents higher.
Soybeans: 13 to 14 cents higher.
Wheat: 4 to 12 cents higher.
GENERAL COMMENTS: Grain and soybean futures rose overnight in a technical bounce from last week’s losses and spillover from firming crude oil. Malaysian palm oil futures rose over 1% after reversing early declines and Nymex crude futures jumped over 3% after sinking under $62 a barrel to a three-month low earlier overnight. The U.S. dollar index is weaker this morning.
USDA today reported a sale of 458,600 MT of U.S. corn for delivery to Mexico during the 2021-22 marketing year.
Following the conclusion of the Pro Farmer Midwest Crop Tour, we estimate the 2021 U.S. corn crop at 15.116 billion bu. with an average yield of 177.0 bu. per acre. That’s higher than the USDA’s August estimated average of 174.6 bu. per acre. We estimate the U.S. soybean crop at 4.436 billion bu. on a national average yield of 51.2 bu. per acre.
Rains fell over the western Corn Belt and Northern Plains over the weekend, with the driest areas of North Dakota, Minnesota and Iowa recording some of the greatest accumulation. Lighter, spottier rains also fell in the eastern Corn Belt. “The moisture brought relief to drought, although much more moisture is needed. There has been and will continue to be a short-term bout of improved late season crop development, especially for corn, soybeans and flax,” World Weather Inc. said. More rains are likely for the Northern Plains and Great Lakes region this week.
Russian wheat prices climbed for the sixth week in a row last week, with domestic supply concerns lifting prices. The consultancy IKAR reports Russian wheat with 12.5% protein loaded from Black Sea ports for supply in September climbed $8 from the previous week by week’s end to $295 per metric ton free on board. The consultancy SovEcon reported an even stronger $13 rise to $299 per metric ton.
Reports by Bloomberg and Reuters late Friday indicate that EPA is ready to send forward to the Office of Management and Budget (OMB) for review of their proposed levels under the Renewable Fuel Standard (RFS) for 2021 and 2022. The rule will reportedly arrive today. Commodity markets were under pressure as both news services reported that it was possible that levels EPA is proposing would be lower for 2021 biofuels than the levels that were finalized for 2020. However, the reports also indicated that some lawmakers were advised the totals could be nearly unchanged. But Reuters later reported that the levels for 2022 would be higher than those for 2021 or 2020.
CORN: Technicals turned bearish last week as December corn fell 36 cents on the week and dropped to the lowest prices in over five weeks. The new-crop contract traded within last week’s range overnight. Chart levels to watch include Friday’s low at $5.32 1/2.
SOYBEANS: November soybean futures sank 45 cents last week and hit a seven-week low, though the new-crop contract held within Friday’s range overnight. Chart levels to watch include $12.77 1/4, Friday’s low.
WHEAT: Technicals also softened in wheat futures after December SRW contracts lost 46 cents and December HRW lost 39 1/4 cents on the week. Wheat markets may find support from expectations rains this week in the Northern U.S. Plains may delay the harvest.
LIVESTOCK CALLS
CATTLE: Steady-firmer.
HOGS: Steady-mixed.
CATTLE: Futures may find support from ongoing wholesale beef strength and slightly smaller-than- expected numbers in USDA’s latest Cattle on Feed Report Friday. An estimated 1.739 million head of cattle were placed in feedlots for fattening during July, down 8.1% from the same month in 2020, USDA reported. Feedlot placements were expected to decline about 7.9% year-over-year, based on the average analyst estimate. Cattle of feed as of Aug. 1 totaled 11.07 million head, down 1.8% from a year earlier and in-line with analyst expectations. Choice cutout values on Friday averaged $345.06, the highest since May 2020. Slaughter-ready steers averaged $125.48, up from $122.84 at the end of the previous week.
HOGS: October futures jumped 2.4% last week, but a soft tone in wholesale pork may limit additional gains early this week. Carcass cutout values averaged $119.26 at the end of last week, down from $125.68 a week earlier. National direct carcasses averaged $96.40, down from $97.97 a week earlier. The CME lean hog index eroded late last week, to about $107.57. Meatpackers slaughtered 2.452 million head of hogs last week, up 45,000 from the previous week.
