Ahead of the Open | October 18, 2021
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 5 to 7 cents lower.
Wheat: Steady to 3 cents lower.
GENERAL COMMENTS: Soybean futures weakened overnight on a pullback from the corrective buying late last week. Corn futures dropped late in the overnight session, while wheat futures are mostly lower. Malaysian palm oil futures rose nearly 2.0%, while Nymex crude oil futures rose over 1.0% and reached a seven-year high just under $84 a barrel. The U.S. dollar index is little changed.
China’s economy grew 4.9% in the third quarter, which was below expectations of 5.2% and the weakest performance in a year. China’s economic growth was the slowest pace since 1990, excluding the pandemic.
China imported 640,000 MT of wheat in September, down 40% from year-ago, as elevated international prices and falling domestic corn prices curbed demand. But for the first nine months of the year, China’s wheat imports rose 25.3% from the same period last year.
China produced 12 MMT of pork in the third quarter, up 43% from last year and the highest output for that quarter in three years. But pork production unexpectedly declined from the second quarter. Through September, China’s pork production stood at 39.2 MMT, up 38% from the same period last year, as slaughter in the first nine months of the year rose 36%.
Ukraine exported 16.5 MT of grain so far in 2021-22, against 14.8 million MT at the same stage a year earlier, Reuters reported, citing agriculture ministry data.
Russian wheat export prices were stable last week after 13 consecutive weeks of higher prices, the IKAR agriculture consultancy said. Russian wheat with 12.5% protein loading from Black Sea ports for supply in early November was $310 per MT free on board (FOB) at the end of last week, unchanged from the previous week.
Ethiopia tendered to buy around 400,000 MT of milling wheat in an international tender.
CORN: December corn futures fell 0.9% last week and overnight dropped as low as $5.23. U.S. farmers will be winding down harvest over the next few weeks. The crop was 41% harvested as of Oct. 10, ahead of the 31% average for the previous five years. USDA will update harvest progress after the close of trading Oct. 18. Chart levels to watch include last week’s low at $5.06 3/4 and the 200-day moving average around $5.19 1/4.
SOYBEANS: November soybeans fell 2.0% last week and overnight dropped as low as $12.10 1/2. While soybeans finished last week strong, further upside likely requires a sustained pick-up in exports. Chart levels to watch in November soybeans include last week’s low at $11.84 1/2, a 6 1/2-month low and the 10-day moving average at $12.24.
WHEAT: December SRW futures fell as low as $7.30 1/4 overnight after ending unchanged last week. USDA’s next Crop Progress Report this afternoon will update seeding and emergence of the winter wheat crop. As of Oct. 10, the winter wheat crop was 60% planted, even with the five-year average for that date.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
CATTLE: December live cattle futures closed at a six-week high last Friday behind firmer cash markets, but additional upside this week will hinge in part on the wholesale beef market, which fell to a 2 1/2-month low last week. Live steers at the end last week averaged $123.85 in top feedlot regions, up from the previous week’s average of $122.96. Slumping boxed beef prices suggest that high retail prices have curbed retailer demand. Choice cutout values fell 8 cents Friday to $280.24, down from $283.27 at the end of last week. December live cattle’s close at $130.30 last Friday was the contract’s highest settlement since $130.925 on Sept. 3. Other chart levels to watch include last week’s intraday high at $130.60 and the 100-day moving average just above $131.00, along with last week’s low of $128.55.
HOGS: Futures late last week showed signs of stabilizing after dropping sharply during the first half of October but may remain under pressure from weak cash fundamentals. Pork carcass cutout values fell $4.74 Friday to $101.32, down from $106.99 at the end of the previous week. Movement was 334.38 loads. The CME lean hog index is quoted at $87.59 today, the lowest since mid-March but still over $9.00 above December hog futures’ settlement at the end of last week. Carcass prices on national direct markets Friday averaged $67.33, down from $69.26 at the end of the previous week. Chart levels to watch in December lean hogs includes last week’s low at $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 $78.15.
