Ahead of the Open | October 11, 2021

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GRAIN CALLS

Corn: Steady to 1 cent higher.

Soybeans: 1 to 2 cents higher.

Wheat: 2 to 4 cents higher.

GENERAL COMMENTS: Grain and soybean futures climbed in narrow-range trading overnight as the market waits for USDA’s crop production updates tomorrow. Malaysian palm oil futures were down slightly after soaring 10.0% last week to a record high. Nymex crude oil futures extended a recent rally, rising over 1.5% and surpassing $82 a barrel, a seven-year high. The U.S. dollar index was firmer.

The grain trade awaits USDA’s Crop Production and Supply and Demand reports tomorrow. USDA is expected to slightly lower its forecasts for the U.S. corn crop and average yield and increase its estimates for the soybean crop.

The Northern U.S. Plains and eastern Canadian Prairies received welcome rain over the week, and more rainfall is expected the middle of this week, according to World Weather Inc. The rain “will seriously bolster soil moisture, easing drought but delaying fieldwork,” the forecaster said. Temperatures in the Central and Southern U.S. Plains climbed into the 90s or 100s Fahrenheit over the weekend.

Cargill shifted some soybean exports to Texas as hurricane-related repairs to Louisiana facilities continue. For the first time in about six months, a cargo of around 55,000 MT of U.S. soybeans was shipped from Cargill’s Houston terminal, a facility that typically loads wheat and sorghum. Several other shipments of beans are expected to depart from the Houston facility.

Russia exported 4.3 MMT of wheat in September and will ship 3.3 MMT of the grain this month, down 14% and 29%, respectively, compared to the same months a year earlier, the ag consultancy SovEcon estimated. Exports for the current marketing year are down nearly 24%, reflecting higher tariffs.

China's sow herd declined for the first time in nearly two years, contracting 0.5% in July from the previous month, state media said, after a plunge in hog prices pushed many farmers to get rid of unproductive sows, Reuters reported. Prices have plummeted in recent months amid an abundance of supply due to efforts by the world's biggest pork producer to rapidly rebuild its breeding herd following a devastating epidemic of African swine fever during 2018 and 2019.

China’s live hog futures climbed the daily limit of 8% today, with futures prices tracking rising spot prices. Live hog prices on the Dalian Commodity Exchange hit a one-month high of $2,374.44 per MT, the biggest intraday gain since the contract launched in January.

 

CORN: USDA on Tuesday is expected to trim its estimate of the U.S. corn crop by about 0.2%, to 14.973 billion bu., based on a Reuters survey of analysts. The average U.S. yield is expected to be cut 0.2% to 176 bu. per acre. The weekly USDA crop progress report will be delayed till tomorrow due to the Columbus Day holiday. Large speculators raised their net long position in corn futures and options to the highest level since Aug. 31, CFTC data showed. December futures overnight rose as high as $5.32 1/4, after falling 2.0% last week to $5.30 1/2, the lowest closing price since $5.26 3/4 on Sept. 24.

SOYBEANS: Based on the Reuters survey, USDA is expected to increase its estimate of the U.S. soybean harvest by 0.9%, to 4.415 billion bu. on Tuesday, while the average yield is expected to rise 1.0%, to 51.1 bu. per acre. November soybeans overnight rose as high as $12.51 1/4, after falling 0.3% last week to $12.43 a bushel. Chart levels to watch include last week’s low at $12.31, a six-month low, and the 20-day moving average around $12.68.

WHEAT: USDA is expected lower its U.S. ending- stocks forecast as it incorporates Sept. 1 stocks and final 2021 crop estimates into the 2021-22 balance sheets. Traders also expect USDA to cut its world wheat ending stocks forecast. December SRW wheat rose as high as $7.39 1/2 overnight after declining 2.8% last week to close at $7.34.

 

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-mixed

CATTLE: Live cattle future may extend last week’s 4.0% rally to five-week highs on strengthening technical patterns and firming cash markets, though slumping boxed beef prices could limit the upside. Choice boxed beef fell $2.03 Friday to an average of $283.27, down 3.1% on the week and the lowest since $281.00 August 2. Declining boxed beef suggests soft retail demand and the market likely needs to stabilize before futures generate sustained buying interest. Meatpackers slaughtered an estimated 657,000 head of cattle last week, up 3.1% from both the previous week and the same week in 2020, USDA reported.

Chart levels to watch include last week’s high at $130.60, which is just under the 40-day moving average around $130.70, along with the 100-day moving average around $131.00

HOGS: Futures may face pressure from eroding cash fundamentals and followthrough from last week’s 4.3% drop, though shrinking supplies may limit downside. Pork cutout values Friday fell $5.27 to an average of $106.99, down 5.6% on the week and the lowest price since $104.29 on Sept. 23. Carcasses on national direct markets fell 92 cents to $69.26, down 5.0% on the week. The CME lean hog index is at $91.95, down 64 cents. Still, futures may be underpinned if fall demand for pork remains relatively robust. Last week’s slaughter at an estimated 2.597 million head may have marked a temporary peak, based on historical patterns. Slaughter last week was up 3.2% from the week before but down 4.8% from the same week in 2020.

Chart levels to watch in December lean hogs include the 100-day moving average around $81.45 and last week’s low at $80.55, along with last week’s high at $85.20.

 

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