Ahead of the Open | November 4, 2021

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GRAIN CALLS

Corn: 2 to 3 cents higher.

Soybeans: 1 to 4 cents lower.

Wheat: 4 to 8 cents higher.

GENERAL COMMENTS: Corn and wheat futures rose over overnight, while soybeans eased. Malaysian palm oil futures rose over 2.0% to a two-week high, while front-month Nymex crude oil futures rose around $2. The U.S. dollar index is up nearly 400 points this morning.

USDA reported a daily sale of 100,000 MT of soybeans for delivery to Egypt during the 2021-22 marketing year.

The Federal Reserve yesterday said it will begin trimming its monthly bond purchases in November with plans to end them in 2022 but held to its belief that high inflation would prove “transitory” and likely not require a fast rise in interest rates. However, the U.S. central bank noted global supply difficulties as adding to inflation risks, saying those factors “are expected to be transitory,” but would need to ease to deliver the anticipated drop in inflation.

China’s sow herd is 6% larger than normal, according to the deputy director of the country’s ag ministry Animal Husbandry and Veterinary Bureau, resulting in an oversupply of pork. As a result, Beijing is calling for farmers to cull inefficient sows. The ag ministry official says sow stocks won’t return to “reasonable” levels until next year.

Corteva Inc. raised its 2021 sales forecast for a second time this year and posted a smaller-than-expected quarterly loss as the company benefited from higher prices and strong demand for its insecticides and seeds. Higher corn and soybean prices in 2021 boosted the financial outlook for farmers who have started pre-buying seeds and chemicals for next spring amid sector-wide supply-chain problems. Corteva said it expected net sales between $15.5 billion and $15.7 billion, compared with its previous forecast of $15.2 billion and $15.4 billion.

CORN: USDA reported net U.S. corn export sales of 1.224 MMT for the week ended Oct. 28, up 37% from the previous week and up 10% from the average for the previous four weeks. Mexico was a major buyer at 666,300 MT. The sales were at the high end of trade expectations ranging from 700,000 MT and 1.4 MMT, and may provide a small price boost today, but traders are shifting focus to USDA’s next Crop Production and Supply and Demand reports Nov. 9.

December corn overnight rose as high as $5.67 1/2, the first gain in three days. Despite the past two sessions’ weakness, bulls still hold a near-term technical advantage. Upside objectives include closing December futures above solid resistance at this week’s high of $5.86. Downside targets include closing December below support at $5.55.

SOYBEANS: Net U.S. weekly soybean sales totaled 1.864 MMT, up 58% from the previous week and up 19% from the four-week average. China was a prominent buyer at 1.207 MMT (including 510,000 MT switched from unknown destinations). Soybean exports of 2.65 MMT were up 10% from the previous week and up 46% from the previous four-week average. January soybeans extended yesterday’s near-12-cent drop overnight, falling as low as $12.39 1/4, near the bottom of the range over the past week. Chart levels to watch include this week’s low at $12.36 3/4 and last week’s low at $12.26 1/2.

WHEAT: Net U.S. wheat sales of 400,100 MT were up 49% from the previous week and up 4% from the prior four-week average, with Mexico a top buyer at 101,400 MT. The sales were at the high end of trade expectations for 180,000 to 500,000 MT. While the global supply/demand outlook remains bullish, U.S. wheat still faces sluggish export demand, reflecting higher prices compared to other top wheat growers. December SRW futures overnight rose as high as $7.90 after falling 10 1/2 cents yesterday to $7.81, down from the nine-year high of $8.07 reached Nov. 2.

 

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-firm

CATTLE: Futures may see followthrough from yesterday’s gains, after December live cattle rose $1.70 to $131.65, the highest closing price for a front-month contract since mid-2017 on continued cash market strength. Live steers in five top feedlot areas yesterday averaged $127.96 yesterday, up $1.67 from last week's average, USDA reported. Asking prices on this week’s remaining feedlot supplies are at least $2 higher, and packers paying up aggressively early this week suggests they need cattle and will continue buying actively. Choice cutout values rose $1.11 yesterday to an average of $288.49, the highest in almost a month. USDA reported net weekly U.S. beef sales of 16,700 MT, down 13% from the previous week but up 15% from the four-week average. South Korea (6,700 MT) and China (2,800 MT) were prominent buyers.

Bulls have regained a near-term technical advantage and have restarted a four-week uptrend on the daily live cattle charts. Upside targets include closing December futures above solid resistance at $135.00, while down objectives include closing December below solid support at $128.00. Other chart levels to watch include yesterday high at $132.40 and the Oct. 22 low at $128.25.

HOGS: December lean hog futures rose $1.70 yesterday to $75.95 and may extend gains behind signs of resurgence in the wholesale pork market. Pork cutout values rose $6.23 yesterday to $100.44, the highest daily average since $100.78 on Oct. 18. But the upside in futures may be limited by otherwise weak cash fundamentals. The CME lean hog index is down another 34 cents today to $78.70, the lowest level since Feb. 22. Carcasses on national direct markets yesterday averaged $60.68, down 30 cents. Net U.S. pork sales totaled 45,700 MT, up 55% from the previous week and up 72% from the average for the previous four weeks.

Lean hog bears have an overall near-term advantage, as futures remain in a four-week downtrend on the daily bar chart. December futures may have established a rough double-bottom on the daily chart at the September and October intraday lows, $71.275 and $71.775, respectively. If those lows hold, futures may see sideways-to-slightly-higher trade in coming days. The next downside price objective for bears is closing December futures below solid support at the September low of $71.275. For bulls, upside objectives include closing December above solid resistance at $79.00. Other chart levels to watch include yesterday’s low at $74.075 and to 20-day moving average around $76.55.

 

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