Ahead of the Open | November 1, 2021
GRAIN CALLS
Corn: 3 to 4 cents higher.
Soybeans: 2 to 5 cents lower.
Wheat: 7 to 15 cents higher.
GENERAL COMMENTS: SRW wheat futures rallied to the highest levels in nearly nine years overnight and HRW and spring wheats also surged amid reports of large export purchases. Corn futures notched a 2 1/2-month high, while soybeans eased. Malaysian palm oil futures fell about 1.5%, while Nymex crude oil rose about 0.5%. The U.S. dollar index is little changed this morning.
USDA reported daily soybean sales of 132,000 MT to China for 2021-22 delivery.
Speculators added long positions in grains and oilseeds. Investors’ interest in corn continues to be much stronger than that for soybeans. In the week ended Oct. 26, money managers increased their net long position in CBOT corn futures and options to 244,790 contracts from 219,568 a week earlier based on data from the U.S. Commodity Futures Trading Commission.
Farmers in France have stepped up fertilizer purchases this month amid fears of shortages as they wrestle with mounting costs that could affect next year's harvests, the French unit of fertilizer group Yara said, Reuters reported. Soaring gas prices have unsettled nitrogen fertilizer markets, leading manufacturers including Yara to reduce output and causing fertilizer prices to surge.
That has raised the prospect of some farmers planting fewer fertilizer-intensive crops such as corn or spreading less of the nutrient, adding uncertainty to grain markets that have reached multi-year highs in 2021 on supply concerns.
Russian wheat export prices gained further last week, amid higher prices for wheat in Chicago and Paris and demand from Egypt, the world's largest wheat importer. Russian wheat with 12.5% protein loading from Black Sea ports for supply in the first half of November was $317 per MT free on board (FOB) at the end of last week, up $5 from the previous week, the IKAR consultancy said.
Saudi Arabia’s main state wheat buying agency, the Saudi Grains Organization (SAGO), said today it bought about 1.268 MMT of milling wheat at an average price of $377.54 per MT. Egypt tendered to buying wheat over the weekend, with results expected later today.
SOYBEANS: January soybeans overnight fell as low as $12.36 3/4, after ending last week at $12.49 1/2, up 18 3/4 cents (1.5%) from the previous Friday. Exports will be one key to market direction this week, with new China purchases likely needed to push prices out of the range of the past two weeks. USDA’s monthly oilseed crushings report this afternoon is expected to show U.S. soybean crushings declined to 4.907 million short tons, or 163.6 million bu., in September, according to the average forecast. Chart levels to watch in January soybeans include last week’s high and low at $12.66 1/4 and $12.31 1/2, respectively, and the 40-day moving average around $12.62 3/4.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firm
CATTLE: Futures ended last week on a soft note, with December live cattle fading to a loss, but the lead contract still gained 0.7% on the week and 2.8% for the month. Firmer cash fundamentals should remain supportive, including boxed beef prices that appear to be in a modest uptrend. Choice beef cutout values ended last week at $285.72, up 1.4% on the week and the highest since $286.62 on Oct. 6. Live steers in five top feedlot regions Friday traded at an average of $126.29, up nearly $2.00 from last week’s $124.39 average and the fourth consecutive end-of-week gain. Meatpackers slaughtered an estimated 668,000 head of cattle last week, up 1.1% from last week and up 4.4% from the same week last year. Slaughter so far in 2021 is up 3.2% from 2020 levels at this point.
December live cattle on Friday posted the first decline in four days, a possible sign futures lost some upward momentum and may trade sideways early this week. The contract closed slightly above some potentially key chart support levels, including the 40- and 200-day moving averages at $128.95 and $126.65, respectively. Other chart levels to watch include last week’s high at $131.925 the Oct. 22 low at $128.25.
HOGS: Futures may be poised for a steady-to-firmer start to the week after December futures jumped 3.8% last week to $76.075, the first weekly gain in the last four and the highest closing price since $77.40 on Oct. 19. Wholesale pork appears to have established a bottom after slumping most of October, suggesting prices have fallen enough to stir a pick-up in retail demand. Pork cutout values ended last week at $96.52, down from $98.27 at the end of the previous week but up from nearly eight-month lows earlier in the week. Movement was strong at 379 loads. Carcasses on national direct markets fell 82 cents to $61.70, down 6.0% last week. The CME lean hog index fell another 81 cents today, and below $80.00 for the first time since Feb. 24. The outlook for smaller U.S. pork supplies continues to support deferred futures.
Last week’s hog slaughter totaled an estimated 2.551 million head, down 1.8% from the previous week and down 5.3% from the same week a year ago, USDA reported. So far this year, slaughter is running 2.0% below last year’s levels at this point. Chart levels to watch in December lean hogs include last week’s low at $71.775, last week’s high at $77.25 and the 20-day and 40-day moving averages around $77.60 and $77.80, respectively.
