Ahead of the Open | November 22, 2021

GRAIN CALLS

Corn: 4 to 6 cents higher.

Soybeans: 4 to 5 cents higher.

Wheat: 15 to 20 cents higher.

GENERAL COMMENTS: Winter wheat futures extended a rally to nine-year highs overnight amid ongoing concern over tightening global supplies. Corn and soybean futures also rose to start the holiday-shortened week. Malaysian palm oil futures fell about 0.6%, while front-month Nymex crude oil fell below $75.00 to a seven-week low. The U.S. dollar index is up and near a 16-month high.  

China's October soybean imports from the U.S. fell sharply from a year earlier due to poor crusher demand and limited exports. China brought in 775,331 MT of U.S. soybeans in October, down 77% from 3.4 MMT a year earlier, according to data released from the General Administration of Customs. Soybean shipments from the U.S. usually pick up in the fourth quarter of the year.

La Nina continued strengthen this month, leading to higher-than-expected rains in South America and some relief from dryness in Canada and the Northern U.S. Plains, World Weather Inc. said. In the winter months, La Nina-driven changes are expected to “stagnate” for North America, which signals a below-average precipitation bias for the west-central and southwestern Plains and southeastern states.

Russia-based consultancy SovEcon estimates the country will export 3.9 MMT of grain this month, which would be up fractionally from last month but well below the 5 MMT shipped last year. It forecasts Russian wheat exports at 3.2 MMT this month, down from 4.3 MMT in November 2020 due to high export taxes.

CORN: December corn futures rose as high as $5.76 3/4 overnight after declining 1.1% last week and closing at the lowest closing price since Nov. 11. The U.S. harvest is largely complete and the market is looking to exports and other markets for near-term direction, with strong demand from domestic ethanol producers and signs of better exports supporting futures. USDA’s weekly Crop Progress report Nov. 22 will likely show the corn harvest close to finished.

SOYBEANS: January soybean futures overnight rose as high as $12.69 1/2 after climbing 1.5% last week to $12.63 1/4, the second straight weekly gain. Soymeal futures also built on last week’s rally amid concern over a shortage of the livestock feed additive lysine. Traders will watch for any further China business after a flurry of purchases around the middle of this month. Weather conditions in South America remain mostly favorable for crop development. Brazil is expected to be wettest in the north this week, with a few showers bringing 0.20 to 0.75 inch reaching Rio Grande do Sul to Mato Grosso do Sul and Sao Paulo. Brazil’s weather “will remain very good for most crop areas in the nation, but net drying in portions of the interior south and far south will be closely monitored,” the forecaster said. “No area will become (critical) during the next two weeks, but pockets of firming soil should be anticipated.”

WHEAT: March HRW futures reached a contract high overnight at $8.63 and December touched $8.58 3/4, the highest price for a nearby contract since December 2012. December SRW futures hit $8.43 3/4, also a nine-year high and March futures posted a contract high at $8.55 1/2 after gaining 5 3/4 cents last week. The potential heavy rains may damage Australia’s crop are exacerbating supply concerns. In the U.S., dry conditions in the U.S. Plains are stressing the HRW crop ahead of winter dormancy.

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-weak

CATTLE: Live cattle futures closed last week at a 2 1/2-month high on continued cash market strength, though followthrough may be limited with meatpackers operating a on a reduced schedule around the Thanksgiving holiday. Cash cattle markets extended recent strength, with live steer prices ending last week slightly over $133.00, up nearly $2.00 from last week. Wholesale beef’s late-week rebound suggests improving demand. Choice cutout values rose $2.25 Friday to $278.41, down 2.1% from $284.30 at the end of last week but up from a 3 1/2-month low the day before. Meatpackers slaughtered an estimated 677,000 head of cattle last week, up 3.4% from last week and up 1.7% from the same week in 2020. Slaughter so far this year is running 3.0% under last year’s levels. December live cattle ended last week at $133.50, the highest settlement for a nearby contract since April 2017.

USDA’s latest Cattle on Feed Report Friday is considered largely price-neutral. An estimated 2.245 million head of cattle were placed in U.S. feedlots during October, up 2.4% from the same month in 2020 and slightly higher than trade expectations for an increase of about 2.2%. The number of cattle on feed as of Nov. 1 totaled 11.95 million head, down 0.2% from 11.97 million head a year earlier, matching expectations. Marketings fell 4.5% to 1.788 million head, larger than expected.

HOGS: February lean hogs ended last week at $82.475, up 2.4% from the previous week and the fourth consecutive weekly gain. Ideas the market has established a near-term seasonal low supported futures last week, but weak cash fundamentals may limit price upside this week. The latest CME lean hog index is down $1.81 to $73.46, the lowest since early February. Wholesale pork extended its slump last week, but movement was generally strong, indicating good demand at lower prices. Pork cutout values rose 13 cents Friday to an average of $89.82, down from $94.71 at the end of last week. Movement totaled 237 loads. Carcass values on national direct markets averaged $54.95, down from $58.00 at the end of the previous week. Meatpackers last week slaughtered an estimated 2.635 million head, up 0.8 % from the previous week but down 3.4% from the same week in 2020. Year-to-date, slaughter is running 2.1% under 2020 levels.