Ahead of the Open | October 26, 2021

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GRAIN CALLS

Corn: 1 to 3 cents lower.

Soybeans: 1 to 3 cents lower.

Wheat: 3 to 7 cents lower.

GENERAL COMMENTS: Wheat futures led grain and soy complex declines overnight, with HRW pulling back from yesterday’s rise to seven-year highs even as USDA reported unexpectedly low ratings for the winter wheat crop. Malaysian palm oil futures rose for a second day while front-month Nymex crude oil futures firmed slightly and were holding near seven-year highs. The U.S. dollar index is holding near unchanged this morning.

USDA reported two daily soybean sales for the 2021-22 marketing year – 199,000 MT sold to China and 125,730 MT sold to Mexico. Those sales may help curb seller interest in futures this morning.

The ag attache in Argentina projects the country’s 2021-22 corn crop at a record 54.5 MMT, 1.5 MMT greater than USDA’s October forecast on expectations planted acreage will be 300,000 hectares more than USDA has in its current balance sheet. It expects the country’s corn exports to reach 40 MMT, 2 MMT higher than USDA’s forecast. The post forecasts Argentina’s wheat crop at a record 20 MMT with exports of 13.5 MMT, both matching USDA.

South American consultant Michael Cordonnier continues to project Brazil’s 2021-22 soybean crop at a record 144 MMT, though he has a neutral to higher bias as the crop is off to a better-than-average start. Soil moisture is favorable “nearly everywhere in Brazil” and the planting pace is rapid. He kept his Brazilian corn crop estimate at 118 MMT, which would also be a record.

Archer-Daniels-Midland Co.’s third-quarter profits more than doubled, boosted by strength in agricultural services and oilseeds. Net earnings rose about 134% to $526 million in the three months ended Sept. 30 compared with the year-earlier period. Revenue rose to $20.34 billion from $15.13 billion.

Fonterra raised the forecast range for the price it pays farmers for milk in the 2021-22 season, citing a below-average increase in global supply and firm demand. The New Zealand-based dairy company said higher feed costs had slowed U.S. production, dragging down global supplies to below-average levels.

 

CORN: Widespread Midwest rainfall will slow harvest this week, though progress so far has been ahead of normal. USDA late yesterday reported the U.S. corn harvest was 66% complete as of Oct. 24, up from 52% the previous week and ahead of the 53% average for the previous five years. Progress was slightly above trade expectations for 65% harvested. December futures fell as low as $5.35 1/2 overnight, after ending unchanged yesterday at $5.38. Chart levels to watch include yesterday’s high at $5.42, the contract’s highest intraday price since Oct. 6, along with last week’s low at $5.40 and the 100-day moving average around $5.45 1/2.

SOYBEANS: Soybean harvest was 73% complete as of Oct. 24, up from 60% a week earlier and ahead of the 70% five-year average, but slightly below trade expectations of about 74%. November soybean futures overnight fell as low as $12.32 1/2, after jumping 16 3/4 cents yesterday to $12.37 1/4. Chart levels to watch include last week’s high at $12.49 1/2 and the 10- and 40-day moving averages around $12.23 and $12.57 3/4, respectively.

WHEAT: In its initial condition ratings for 2021-22 U.S. winter wheat, USDA reported the crop in 46% “good” or “excellent” condition, up from 41% a year ago and well-below trade expectations for 56%. The winter wheat crop was 80% planted, up from 70% a week ago and matching the five-year average.

When USDA’s initial crop condition ratings of the season are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop starts with a 332.9 rating, 21.2 points higher than last year but 8.5 points below the five-year average. The SRW crop begins with a 365.2 rating, 1.1 points higher than last year and 4.4 points above the five-year average.

 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-weaker

CATTLE: Live cattle may extend yesterday’s gains on indications the wholesale beef market has established a near-term bottom. Choice cutout values rose $1.22 to an average of $283.04, the highest since $283.27 on Oct. 8, USDA data showed. Cutout strength could help cash markets continue recent strength. Live steers in the five top feedlot areas last week averaged $124.39, up 55 cents for the week and the third consecutive weekly gain. Longer-term, the unexpected decline in September feedlot placements, as USDA reported in its monthly Cattle on Feed Report, signal limited beef supplies in 2022. December live cattle futures yesterday settled $1.20 higher at $129.525, but faded late in the day, which may mute followthrough strength. Chart levels to watch include last week’s low at $128.25 and the 40- and 100-day moving averages around $129.25 and $131.15, respectively.

HOGS: Poor cash fundamentals likely will weigh on lean hog futures, with the wholesale pork market taking another nosedive yesterday. Pork cutout values fell $3.69 to an average of $94.58, the lowest since $93.52 on March 4. Today’s CME lean hog index is down another 72 cents to $82.98. Carcasses on national direct markets fell $1.97 to an average of $63.66, after dropping 2.5% last week. But lean hogs remain near technically oversold levels even after the December contract’s second straight daily gain yesterday, which may limit downside pressure. 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.

 

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