Ahead of the Open | October 15, 2021
GRAIN CALLS
Corn: 5 to 7 cents higher.
Soybeans: 7 to 8 cents higher.
Wheat: 7 to 10 cents higher.
GENERAL COMMENTS: Grain and soybean futures rose overnight in a continued corrective bounce from steep losses earlier this week and as USDA weekly export sales were toward the high end of expectations. Malaysian palm oil futures rose nearly 2.0%, while Nymex crude oil futures rose nearly 1.0% and hit seven-year highs above $82 a barrel. The U.S. dollar index is little changed.
USDA reported daily sales of 396,000 metric tons (MT) of soybeans for delivery to unknown destinations, another 326,750 MT of soybeans “received during the reporting period” for delivery to unknown destinations and 132,000 MT of soybeans for delivery to China, all for the 2021-22 marketing year. That marked the third straight day USDA reported daily soybean sales.
U.S. soybean crushings likely fell to 155.1 million bu. in September, the lowest in three months and down about 4.0% from the same month in 2020, based on a Reuters survey of analysts ahead of a monthly National Oilseed Processors Association (NOPA) report today.
Chinese corn prices have dropped around 15% from record levels in March and are virtually on par with wheat prices for the first time in a year, prompting some feed makers and livestock/poultry producers to start using more corn in feed rations.
China plans to auction 1 MMT of wheat from state-owned reserves on Oct. 20, the first sales of state reserves since May. While corn is starting to regain some of the share in feed rations it lost to wheat over the past year, some feed makers and livestock/poultry producers are waiting to see how the wheat auctions affect prices of both grains before making a switch away from wheat as feed.
Rains in central Argentina have helped farmers plant 2021-22 corn, with 23.2% of expected area sown so far, Reuters reported, citing a Buenos Aires Grain Exchange report. The key corn-growing provinces of San Luis and Cordoba are enjoying good ground moisture, the exchange said.
CORN: USDA reported net U.S. corn sales of nearly 1.04 MMT for the week ended Oct. 7, down 18% from the previous week, but up 85% from the average for the previous four weeks. Mexico was a top buyer, at 790,200 MT. Trade expectations ranged from 700,000 MT to 1.6 MMT. December corn rose as high as $5.24 1/2 overnight but was still poised to end lower than last week’s close of $5.30 1/2. Chart levels to watch include this week’s low at $5.06 3/4 and the 200-day moving average around $5.19 1/4, which December settled above yesterday.
SOYBEANS: Net U.S. soybean sales totaled 1.15 MMT, up 10% from the previous week and up 9% from the prior-week average, with China a top buyer (640,000 MT, including 264,000 MT switched from unknown destinations). Expectations ranged from 600,000 MT to 1.4 MMT. November soybeans rose as high as $12.17 1/2 overnight, still down from $12.43 at the end of last week. Chart levels to watch include this week’s low at $11.84 1/2, a 6 1/2-month low, along with the 10-day moving average at $12.26 1/4.
WHEAT: Net weekly U.S. wheat sales totaled 567,600 MT, up 70% from the previous week, up 42% from the prior four-week average and surpassing expectations for 250,000 to 500,000 MT. December SRW futures rose as high as $7.35 3/4 overnight, up from last week's close at $7.34. Other chart levels to watch include this week's low at $7.12 3/4 and this week's high at $7.43 3/4. December spring wheat futures overnight rose to $9.71, a contract high for the sixth time in the last eight trading sessions.
LIVESTOCK CALLS
CATTLE: Steady-firm
HOGS: Steady-weak
CATTLE: Live cattle settled near a six-week high yesterday and are poised for a breakout higher with support from a steady-to-firmer cash market tone this week. Live steers averaged $123.84 in top feedlot regions, up from last week’s average of $122.96. Choice cutout values rose 30 cents yesterday to $280.32, but are still down from $283.27 at the end of last week. Net U.S. beef sales totaled 15,700 MT for the week ended Oct. 7, up 1.0% from the previous week, but unchanged from the four-week average. Japan and China were prominent buyers at a combined 7,800 MT.
December live cattle's close yesterday at $130.30 was the contract’s highest settlement since $130.925 on Sept. 3, but the market is little changed from last Friday’s close at $130.25. Chart levels to watch include this week’s intraday high at $130.60 and the 100-day moving average just above $131.00, along with this week’s low of $128.55.
HOGS: Futures are on track for a second consecutive weekly decline, pressured by eroding technicals and soft cash market fundamentals, though export strength could support prices. Pork carcass cutout values rose $1.21 yesterday to an average of $106.06 but are still down nearly $1.00 for the week. Movement totaled 373 loads. The next CME lean hog index is quoted at $88.82 today, the lowest price since March 11 and over $11.00 above December lean hogs, which took over lead-month status with the October contract’s expiration yesterday. National direct carcasses yesterday averaged $68.32, down from $69.26 at the end of last week. USDA today reported net weekly U.S. pork sales of 33,500 MT, up 51% from the previous week and up 9% from the four-week average.
December hogs yesterday fell as low as $77.25, the lowest intraday price since $75.65 on Sept. 24 and just above the top of a Sept. 27 chart gap at $77.20. Other chart levels to watch include the 200-day moving average around $78.10.
