Ahead of the Open | October 25, 2021
GRAIN CALLS
Corn: 1 to 2 cents higher.
Soybeans: 9 to 10 cents higher.
Wheat: 5 to 10 cents higher.
GENERAL COMMENTS: Soybean futures firmed around a dime overnight, while HRS and HRW wheat posted new contract highs. HRW wheat reached the highest level in over seven years. Corn futures neared a three-week high. Malaysian palm oil futures rose nearly 1.0%, while front-month Nymex crude oil futures gained over $1. The U.S. dollar index was slightly firmer overnight, but has extended gains this morning.
China sold 891,938 (88.5%) of the state-owned wheat reserves put up for auction at an average price of 2,366 yuan ($371) per metric ton. The average price was well under last Friday’s price for corn (2,640 yuan) and wheat (2,610 yuan) in Shandong. This marked the first wheat auction of 2021-22.
Russian wheat with 12.5% protein loading from Black Sea ports for supply in the first half of November was $312 per metric ton free on board (FOB) at the end of last week, up $2 from the previous week, according to Russia-based consultancy IKAR. SovEcon, another Russia-based consultancy, pegged wheat prices up $3 to $316 per metric ton.
Cattle feedlot placements unexpectedly declined in September, a bullish development for 2022 futures. Feedlot operators placed 2.163 million head of cattle on feed during September, down 2.9% from the same month a year earlier, according to USDA’s Cattle on Feed Report Friday. Analysts on average projected an increase of about 1.4%, based on a Reuters survey. An estimated 11.55 million head of cattle were on feed as of Oct. 1, down 1.4% from a year earlier and larger than the 0.6% decline analysts expected. The number underscores the industry’s herd contraction in recent years and indicates beef supplies in the pipeline for 2022 will remain limited.
CORN: December corn futures gained 2.3% last week and overnight rose as high as $5.42, the highest intraday price since $5.44 3/4 on Oct. 6. Commercial hedge pressure may ease as the corn harvest winds down, and there’s growing confidence the market established a near-term low and may trend sideways-to-higher the next few weeks. USDA’s weekly crop progress report this afternoon will show further harvest advancement, though rains have stalled harvest in some areas. Chart levels to watch in December futures include last week’s low at $5.40 and the 100-day moving average around $5.46.
SOYBEANS: November soybeans overnight rose as high as $12.35 1/4 after closing Friday at $12.20 3/4, up 0.2% for the week. Chart levels to watch include last week’s high at $12.49 1/2 and the 10-day moving average around $12.34 3/4.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-firm
CATTLE: In addition to the bullish Cattle on Feed numbers, futures may gain support from a firmer cash market and signs of stabilization in boxed beef prices. Choice cutout values rose $1.16 Friday to an average of $281.82, up 0.6% from Oct. 15 and the first weekly gain in eight weeks. Live steers in five top feedlot areas averaged $124.32 Friday, up 0.4% for the week and the third consecutive weekly gain. But cattle futures’ technical posture eroded with last week’s 2.0% decline. Chart levels to watch include last week’s low at $128.25 and the 200-day moving average around $128.40.
HOGS: Lean hog futures may be due for a corrective bounce after plunging 6.3% last week. Cash fundamentals remain soft, but the wholesale pork market showed signs of stabilizing. Pork cutout values ended last week at $98.27, down from $101.32 a week earlier but up from a 7 1/2-month low at $96.87 reached Oct. 20. The CME lean hog index is down $1.13 today after ending last week near an eight-month low. Carcasses on national direct markets ended last week at $65.63, down from $67.33 a week earlier. Chart levels to watch in December lean hogs include last week’s low at $72.875, the lowest intraday price since $72.50 on Sept. 22, and $71.275, a seven-month low reached Sept. 16.
