Ahead of the Open | October 1, 2021

GRAIN CALLS

Corn: 2 to 4 cents higher.

Soybeans: Steady to 2 cents lower.

Wheat: 8 to 12 cents higher.

GENERAL COMMENTS: HRW wheat futures overnight extended a rally to the highest levels in over six weeks and SRW and spring wheat also climbed following USDA’s larger-than-expected cuts to the 2021 crop and Sept. 1 stocks. Corn futures posted modest gains overnight, while soybeans fell.

Much-needed rain fell overnight in HRW wheat areas and more is expected through tomorrow from the Texas and Oklahoma Panhandles through eastern crop areas of Kansas and Oklahoma, World Weather Inc. said. The rain “will further raise topsoil moisture, which will be welcome and beneficial for improvements to planting, emergence, and establishment of the winter wheat crop,” the forecaster said.

Soybean crush hit a four-year low in August, based on analyst estimates ahead of today’s report. U.S. processors likely crushed 169.0 million bu. (5.070 million short tons) of soybeans during August, according to analysts surveyed by Reuters. That figure would mark a 2.7-million-bu. improvement from July, but still be down 5.7 million bu. from August 2020 and would represent the smallest August crush in four years.

Corn use for ethanol is expected slide from July to August. About 422.0 million bu. of corn was used for ethanol production during August, based on a Bloomberg survey of analysts. The estimate would be up 2.7% from August 2020 but down 6.0% from July’s 449.1 million bushels.

Russian wheat export tariffs will reach a new high of $57.80 per MT for the week of Oct. 6-12, a $4.30 jump from the week prior. The weekly formula-based duties intended to curb food price inflation have climbed steadily since their June launch.

Ukraine has harvested 47 MMT of grain, about two-thirds of an expected record 80.8 MMT crop this year, the country’s ag ministry reports. Ukraine’s grain exports of 14.36 MMT so far this year are running 18.3% ahead of year-ago.

China imported 83,000 MT of U.S. beef during the first eight months of 2021, a ninefold increase from the same period last year, according to Chinese customs data. The U.S. surpassed Australia as the top exporter of grain-fed beef to China. Political tensions led to China limiting purchases from Australia.

CORN: December corn futures overnight rose as high as $5.41 and the contract is poised to end this week above last week’s close of $5.26 3/4. The market’s relatively strong performance despite a bearish USDA Quarterly Stocks Report suggests prices may have further upside. December corn also ended September with a small gain. Based on price action back to 1980, there were 15 years when December corn finished higher in September; in 12 of those years, the contract recorded net gains in October. Chart levels to watch include yesterday’s high at $5.48 1/2 and the 100-day moving average around $5.49 1/4.

SOYBEANS: November futures fell as low as $12.50 1/2 overnight and is poised to end below last week’s close at $12.85. Prices may remain under pressure after USDA’s quarterly Grain Stocks Report showed Sept. 1 U.S. soybean stocks totaling 256 million bu., down 51% from last year but 82 million bu. higher than expected. Chart levels to watch include yesterday’s low at $12.49 and the June low at $12.40 1/2.

WHEAT: December HRW futures rose as high as $7.43 1/2 overnight, the highest intraday price since $7.53 1/4 on Aug. 17. Other chart levels to watch include the contract high at $7.69. Lower than expected harvest and stocks figures in USDA reports yesterday may continue to support wheat futures. USDA estimated Sept. 1 U.S. wheat stocks at a lower-than-expected 1.780 billion bu., a drop of 18% from 2.158 billion bu. on the same date a year earlier and the lowest Sept. 1 supplies since 2007.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-firmer

CATTLE: Futures may face continued pressure from weaker boxed beef prices. December live cattle yesterday fell $1.325 to $125.725, the lowest closing price since May 4. Choice cutout values fell $2.35 yesterday to an average of $294.98, the lowest since early August. Seasonal patterns suggest the breakdown could end soon, but that might not happen amid signs high retail prices have strangled consumer demand. Wholesale weakness has worked its way into the cash markets, with live slaughter-ready steers in top feedlot areas averaging $122.66 yesterday, down from an average of $123.64 last week. Cattle slaughter so far this week totaled 473,000 head, down 0.8% from the same period last week and down 0.6% from the comparable period in 2020.

HOGS: Futures may extend this week’s sharp gains on technical strength and firm wholesale pork prices. December lean hogs yesterday rose $1.80 to $85.40, the highest closing price since late July. Hog futures have rallied over 16% since Sept. 22 behind stronger exports and improving cash market fundamentals. Pork carcass cutout values rose $1.18 yesterday to an average of $116.29, led by a gain of over $14 in bellies. Movement totaled 280 loads. The latest CME lean hog index slipped 2 cents to $92.90. Carcass values fell 73 cents to an average of $73.78 on national direct markets. Meatpackers slaughtered an estimated 1.886 million head of hogs so far this week, up 0.9% from the same period last week but down 2.4% from the same period in 2020, USDA reported.