Ahead of the Open | August 25, 2021
Corn: Steady to 3 cents lower.
Soybeans: Steady to 5 cents lower.
Wheat: Winter wheat 5 to 10 cents lower; spring wheat 1 to 4 cents lower.
GENERAL COMMENTS: SRW futures fell to the lowest levels in over three weeks overnight as wheat markets extended a pullback from a recent surge to contract highs. Corn and soybean futures fell as rains soaked the central Midwest overnight. Malaysian palm oil futures rose nearly 1.5%, while Nymex crude futures were up about 1%, extending this week’s rally from three-month lows. The U.S. dollar index is higher this morning.
Rain reached central Minnesota to southeast Iowa to Michigan yesterday, with some areas receiving as much as 1.8 inch, according to World Weather Inc. The rain should help stabilize crops in dry areas of the western Corn Belt and help crops in the eastern Belt fill kernels and pods. But the storms also caused some damage due to high winds, hail and heavy rains. Traders are also keeping an eye on a tropical storm in the western Gulf of Mexico that could make landfall in Texas or Louisiana early next week.
Germany’s all wheat crop will likely total 21.37 million metric tons (MMT) this year, a 3.6% decline from the year prior, due to adverse weather, according to the country’s ag ministry. A cold spring was followed by a hot, dry stretch early this summer, then rains and storms disrupted harvest and raised quality concerns over the crop.
Romania harvested a record 11.4 MMT wheat crop this season, up from last year’s 6.4-MMT crop, the country’s ag ministry reported. Romania is one of the EU’s bigger exporters of grain, with much of its wheat heading to Middle Eastern countries like Egypt.
Importers in the Philippines tendered to buy 168,000 MT of animal feed wheat. Morocco received no offers in its tender to buy around 363,000 MT of durum wheat from the U.S. as part of a reduced tariff import quota tender. Tunisia tendered to buy 100,000 MT of soft wheat and 100,000 MT of animal feed barley from optional origins.
CORN: December futures held within yesterday’s ranges overnight, after posting the contract’s first gain in four days, a bounce-back from six-week lows. Traders will watch for potential export news, after Mexico purchases were announced two consecutive days. Chart levels to watch include Monday’s low at $5.32 1/2, the lowest intraday price since $5.27 1/2 on July 13.
SOYBEANS: The soy complex appears to be heading for a profit-taking setback after November soybeans rallied 39 cents yesterday to $13.31 3/4, while nearby soyoil surged nearly 200 points and soymeal climbed over $8. Traders will continue to watch for additional potential export business from China. Brazil will likely export 5.986 MMT of soybeans this month, according to Anec, the country’s grain exporters’ association. That’s a 263,000-MT decline from its forecast last week.
WHEAT: December SRW futures fell as low as $7.18 1/2 overnight, the contract’s lowest intraday price since $7.13 on Aug. 2 and a drop of over 8% from the contract high of $7.86 1/2 reached Aug. 13. Chart levels to watch include the 40-day moving average around $7.05 1/2.
LIVESTOCK CALLS
CATTLE: Steady-mixed.
HOGS: Steady-weaker.
CATTLE: Live cattle futures may face followthrough pressure after rising to contract highs yesterday before fading late to end slightly lower amid signs markets for wholesale beef and slaughter-ready animals may be near short-term tops. Choice beef cutout values fell 45 cents yesterday to $347.58, after surging 31% over the previous five weeks. Prices are still near the highest levels since May 2020. Live steers in five top feedlot regions yesterday averaged $127.99, up from last week’s average of $125.47. Beef demand may be poised for a dip as retailers wrap up purchases ahead of the Labor Day holiday. Live cattle bulls have the solid near-term technical advantage. Market bulls' next upside price objectives include closing October above solid resistance at $135.00.
HOGS: Futures may see further pressure from yesterday’s drop to near two-week lows and a slide in wholesale prices. Pork carcass cutouts yesterday averaged $111.01, down $2.25 on the day and the lowest daily price since $110.04 on June 25, though carcasses on national direct markets rose $4.14 to an average of $96.82. Meatpackers slaughtered an estimated 911,000 head the first two days this week, down 4% from the same period last week. The CME lean hog index is projected down to $107.38, still well above cash market. October lean hogs yesterday fell as low as $86.05 on Tuesday, the lowest intraday price since $84.50 on Aug. 13.
