Ahead of the Open | October 6, 2021

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GRAIN CALLS

Corn: 1 to 3 cents higher.

Soybeans: Steady to 2 cents higher.

Wheat: Steady to 6 cents higher.

GENERAL COMMENTS: Grain and soybean futures finished slightly higher overnight. Malaysian palm oil futures surged to another record high on tight supplies, while front-month Nymex crude oil was lower after rising as high as $79.78 a barrel, the highest in almost seven years. The U.S. dollar index is firmer.

China’s corn imports in 2021-22 are expected to drop by a third, to 20 MMT, according to a U.S. attache. “As the feed sector sources cheaper feed grain alternatives and growth in feed demand increases at a slower rate, demand for imported corn is expected to moderate,” according to the attache’s report. The attache’s forecast for 2021-22 is 6 MMT below USDA’s official forecast.

IHS Markit estimated the U.S. corn crop at 15.085 billion bu. on an average yield of 176.8 bu. per acre, higher than the firm’s September projections. The new estimates top USDA’s September production estimate of 14.996 billion bu. on a national average yield of 176.3 bu. per acre.

IHS Markit also raised its U.S. soybean crop estimate to 4.421 billion bu. on an average yield projection of 51.1 bu. per acre. Last month, the firm projected the crop at 4.381 billion bu. on an average yield of 50.6 bu. per acre. In September, USDA forecast the crop at 4.374 billion bu. and average yield at 50.6 bu. per acre.

Ukraine's agriculture ministry decreased its forecast for the 2021 grain harvest to 80.25 MT from the previous estimate of 80.63 MT. The data showed the ministry decreased 2021 wheat crop outlook to 31.55 MT from 32 MMT. Despite the drop in crop size, the ministry raised its grain export forecast by 770,000 MT to 61.45 MMT. Wheat exports are expected to hit 24.51 MMT, up 710,000 MT from the ag ministry’s forecast last month.

India's wheat exports in 2021 could quadruple from a year ago to the highest level in eight years as a rally in global prices and higher freight costs make Indian wheat lucrative for Asian buyers, two industry officials told Reuters.

 

CORN: December corn futures held within the past week’s range overnight after closing lower yesterday for the second day in a row. Market bulls and bears are on a level near-term technical playing field, though December futures are in a three-week uptrend. Support levels for December are yesterday’s low of $5.35 1/4 and $5.32. Resistance is seen at last week’s high of $5.48 1/2, which coincides with the 100-day moving average.

SOYBEANS: November soybeans rose as high as $12.55 1/2 overnight, just under yesterday’s high of $12.56 1/4. The contract fell as low as $12.31 yesterday, its lowest level since March 31, before rebounding. If yesterday’s low can hold, potential upside targets include the 20-day moving average of $12.73 3/4 and the 40-day moving average around $12.95 1/2.

WHEAT: Futures faded from last week’s steep gains during the first two days this week but remain supported by tight global supplies. December SRW futures overnight rose as high as $7.52 1/4. Chart levels to watch include the Oct. 4 high at $7.63 1/2, the contract’s highest price since Aug. 17, and the 40-day moving average around $7.25 3/4.

 

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-mixed

CATTLE: Futures’ rebound from five-month lows suggests the market may have exhausted its downside for the time being, though slumping wholesale beef may limit sustained upside. Choice boxed beef fell $1.47 yesterday to an average of $287.71, the lowest since $285.84 on Aug. 3. Movement totaled 171 loads. Boxed beef has been in a nearly uninterrupted slide since late August as retail demand slipped and must stabilize before futures can generate any sustained buying. Initial cash cattle trade is coming in roughly steady with last week’s average of $122.56, which was down $1.08 from the previous week and the fifth straight weekly decline. Chart levels to watch in December live cattle include last week’s high at $128.95 and last week’s low at $125.00, along with the 100-day moving average around $130.95.

HOGS: Futures have dropped three consecutive sessions but settled around the middle of yesterday’s range, possibly signaling consolidation trade following last week’s rally to two-month highs. A downturn in wholesale pork may lend pressure. Pork carcass cutouts fell $4.27 yesterday to an average of $108.13, the lowest in a week and led by a decline of nearly $15 in hams. Carcass base prices on national direct markets fell 75 cents to an average of $71.26. Hog futures have reduced the market’s discount to the CME lean hog index in recent weeks, but traders seem to anticipate sustained seasonal losses through fall and early winter. The cash index is at $94.11, up from a six-month low in late September. Chart levels to watch in December lean hogs include the 100-day moving average around $81.45 and last week’s low at $79.75.

 

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