Ahead of the Open | October 4, 2021
GRAIN CALLS
Corn: 2 to 3cents lower.
Soybeans: 8 to 10 cents lower.
Wheat: SRW futures steady to 1 cent higher; HRW, spring wheat 2 to 4 cents lower.
GENERAL COMMENTS: Soybean futures fell to the lowest prices in over six months overnight on followthrough weakness from last week’s 3.0% slide. Corn futures were also lower, while wheat futures were mixed, with SRW contracts rising to the highest level since mid-August. Malaysian palm oil futures were up nearly 2.0%, while Nymex crude oil was higher. The U.S. dollar index was weaker.
USDA reported a daily sale of 426,800 metric tons of corn for delivery to Mexico during the 2021-22 marketing year.
USDA this afternoon will update harvest progress for corn and soybeans and planting progress for winter wheat. As of Sept. 18, the U.S. corn crop was 18% harvested, up from 10% the previous week and ahead of the five-year average of 15% for this date. The U.S. soybean crop was 16% harvested, up from 6% a week earlier and up from the average for the previous five years of 13%. Winter wheat planting was 34% complete, up from 13% the week prior and two percentage points ahead of the five-year average.
The central and southwestern U.S. Plains are likely to be dry over the next seven days, allowing for aggressive fieldwork after last week’s rains, World Weather Inc. said. Also, West Texas received too much rain in some areas over the weekend, while the Delta is expected to remain too wet most of this week, which may raise concern over harvest and quality of the cotton crop.
Dry weather may limit winter wheat plantings in Russia, according to several analysts, with sowing running behind the normal pace. SovEcon estimates the area sown to winter wheat could fall 700,000 hectares to 1.2 million hectares from year-ago levels, while the consultancy IKAR forecasts plantings will slide 500,000 hectares to 1.0 million hectares from last year’s 17.8 million hectares (44.0 million acres).
Canada’s canola crop was the smallest in 13 years, boosting prices and leaving Canada’s customers with limited alternatives. Domestic crushers are also scrambling to buy as much canola as possible. Canada exported just 388,000 MT of canola for the first seven weeks of the 2021-22 crop year that started in August, a 71% retreat from year-ago.
Pakistan bought 550,000 MT of wheat in an international tender.
CORN: December corn futures overnight held within last week’s range after ending last week at $5.41 1/2, up 2.8% on the week. Chart levels to watch include last week high and low at $5.48 1/2 and $5.24, respectively, along with the 100-day moving average around $5.48 3/4. Today’s weekly USDA Crop Progress Report is likely to show a strong jump in the percentage of the crop harvested.
SOYBEANS: November soybeans overnight dropped under the June low at $12.40 1/2 and fell as low as $12.35, the lowest intraday price since $11.84 on March 31. December soybean meal fell as low as $325.80, the lowest since early November. Soybean futures may extend last week’s slide with harvest accelerating, yields reported to be generally strong and technicals breaking down. Fresh Chinese buying or strength in corn may limit soybean downside.
WHEAT: December SRW futures overnight rose as high as $7.59, the highest intraday price since $7.78 1/4 on Aug. 17. The lead contract rose 4.4% last week, the third consecutive weekly gain. December HRW futures gained 5.5% last week and ended at $7.59 1/2, the highest settlement in the lifetime of the contract. Wheat futures may be poised for more upside after USDA last week estimated U.S. Sept. 1 stockpiles at a 14-year low, underscoring the tightening global supply outlook.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-firm
CATTLE: Futures may see followthrough pressure from last week’s declines on weak technicals and an ongoing slump in wholesale beef. December live cattle settled Friday at $125.20, down 2.3% on the week and lowest closing price since $124.975 on April 29. Choice boxed beef fell $2.62 Friday to $292.36, the lowest since $289.34 on Aug. 4. Live steers in five top feedlot areas averaged $122.65 Friday, down from $123.64 a week earlier. End-of-week steer prices are down 2.6% from a peak of $125.98 on Aug. 27. Cattle slaughter last week was an estimated 637,000 head, down 0.6% from the week before and down 4.1% from the same week in 2020, USDA reported.
HOGS: Strength in wholesale pork and a tightening supply outlook may help hog futures extend last week’s rally. December lean hogs on Friday settled at $85.175, up 11.0% on the week. Pork carcass cutout values fell $2.90 Friday to an average of $113.39, up 2.4% for the week, according to USDA data. Movement was strong at about 332 loads. A few key chart levels may pose resistance to further upside in December futures, including the contract’s July high at $86.25 and the contract high at $89.55, reached June 10. Last week’s hog slaughter, at an estimated 2.52 million head, was down 2.1% from the previous week and down 3.4% from the same week in 2020.
