Ahead of the Open | November 2, 2021
Corn: 1 to 3 cents higher.
Soybeans: 3 to 8 cents lower.
Wheat: 4 to 8 cents higher.
GENERAL COMMENTS: U.S. wheat futures extended rallies to multiyear highs overnight as European wheat futures posted a record high amid stronger demand and tightening global stockpiles. Corn futures rose to a 2 1/2-month high, while soybeans firmed but held in narrow ranges. Malaysian palm oil futures rose slightly while Nymex crude oil fell slightly. The U.S. dollar index is little changed this morning.
StoneX raised its U.S. corn crop estimate by 97 million bu. from last month to 15.119 billion bu. on a national average yield of 177.7 bu. per acre, up 1.1 bu. from its September figure. The brokerage increased its soybean crop estimate by 54 million bu. to 4.490 billion bu. on an average yield of 51.9 bu. per acre, up 0.6 bu. from last month.
U.S. soybean crushings declined to 164.1 million bu. in September, down 2.4% from August and down 3.5% from the same month in 2020, USDA reported yesterday in a monthly report. September crushings were slightly above trade expectations. In a separate report, USDA estimated corn processed for ethanol in September at 407.5 million bu., down 1.6% from August but up 1.3% from September 2020.
Argentina’s weather has been “problematic” early in the growing season and planted acres are not expected to be as much as originally thought. As a result, Crop Consultant Dr. Michael Cordonnier lowered his Argentine soybean crop estimate by 1 MMT to 50 MMT. He kept his Argentine corn crop estimate at 53 MMT. Cordonnier also kept his Brazilian soybean and corn crop estimates unchanged at 144 MMT and 118 MMT, respectively.
Ukrainian farms had sown almost 6.1 million hectares of winter wheat for the 2022 harvest as of Nov. 1, equating to 91% of the expected area of 6.66 million hectares, the agriculture ministry said today. In October, the ministry forecast the sowing area for wheat at 6.68 million hectares.
CORN: USDA reported the U.S. corn crop was 74% harvested as of Sunday, up from 66% the previous week and ahead of the 66% five-year average for that date. The report was expected to show 75% of the crop harvested. December corn overnight rose as high as $5.83, the highest intraday price since $5.94 1/4, the August high. Bullish traders hold a near-term technical advantage, with upside objectives including resistance at $5.90 and the August high, along with the psychologically important $6.00 level. But the market is in overbought territory, with a reading over 73 on the Relative Strength Index (RSI).
SOYBEANS: The soybean crop was 79% harvested at the start of this week, up from 73% a week earlier and slightly behind the average of 81% for the previous five years, USDA said. Analysts expected the harvest to be 81% finished. January soybeans overnight rose to $12.57 but remained within yesterday’s range. A push above the 40- and/or 50-day moving ranges around $12.62 and $12.72, respectively, or above last week’s high at $12.66 1/4, could generate fresh upward momentum. But it may also take a sustained pick-up in exports to shake the market out of its sideways-to-lower pattern.
WHEAT: The winter wheat crop was rated 45% “good” or “excellent,” down from 46% a week ago. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped 4.2 points to 328.7. Decline in the HRW crop was led by Texas, though crops in Kansas, Colorado, Nebraska and Montana also dropped. The SRW crop inched up 1.3 points to 366.5. The HRW CCI rating is 13.4 points below its five-year average, while the SRW rating is 0.8 points above average.
December SRW futures overnight reached $8.07, the highest for a nearby contract since December 2012, when prices topped $8.50. December spring wheat hit $10.86 1/2, a contract high for the third day in a row and the highest since 2011.
CATTLE: December live cattle futures fell for the third straight session yesterday and closed at the lowest level in over a week as the market’s technical posture eroded. Choice cutout values climbed near a four-week high yesterday, up $1.86 to $287.58, but movement was light at 82 loads, raising doubts over the sustainability of demand. Continued strength in the cash cattle market could help stem recent futures weakness. Live steers in top feedlot areas averaged $126.29 last week, up from $124.39 from the previous week and the fourth consecutive weekly gain.
Bulls and bears are on a level near-term technical playing field. Live cattle bulls' next upside price objective is to close December futures above solid resistance at $133.00. For bears, downside objectives include a close below solid support at $127.00. Other chart levels to watch include last week’s high at $131.925, the Oct. 22 low at $128.25 and the 200-day moving average around $128.70.
HOGS: December lean hog futures posted a modest gain yesterday as the market saw little carryover from sharp gains late last week. Cash market fundamentals remain soft, though the wholesale pork market’s downturn may be sparking a pick-up in retail demand. USDA reported pork cutout values down $4.08 yesterday $92.44, the lowest since $91.41 on March 3 and led by a drop of nearly $21 in hams. Movement totaled nearly 336 loads. The national direct cash carcass price fell 67 cents to $61.03. The CME lean hog index is down another 73 cents today to $79.16, the lowest since late February.
Lean hog bears have an overall near-term advantage, with prices are in a four-week-old downtrend on the daily bar chart. The next upside price objective for bulls is to close December futures above solid resistance at $80.00. The next downside price objective for bears is closing December below solid support at the September low of $71.275. Other chart levels to watch in December lean hogs include last week’s high at $77.25 and the 20-day moving average around $77.25.