Ahead of the Open | October 7, 2021
GRAIN CALLS
Corn: 1 to 2 cents higher.
Soybeans: 2 to 4 cents higher.
Wheat: 4 to 9 cents higher.
GENERAL COMMENTS: Grain and soybean futures ended overnight trading with a firm tone after USDA’s weekly export sales report were on the high end of expectations. Malaysian palm oil futures fell after surging to record highs earlier this week. Nymex crude oil futures also declined from seven-year highs yesterday. The U.S. dollar index is down slightly.
USDA reported daily sales of 261,264 metric tons (MT) of soybeans and 314,256 MT of corn for delivery to Mexico during the 2021-22 marketing year.
Global food prices climbed 1.2% in September, according to the Food and Agriculture Organization of the United Nations’ (FAO’s) food price index. The index was up 33% from September 2020 and a 10-year high. “The latest rise of the FFPI was largely driven by higher prices of most cereals and vegetable oils,” FAO says.
The Ag Economy Barometer produced by CME Group and Purdue University dropped 14 points during September to 124, the lowest since 2020. Producer optimism about both current and future conditions on their farms fell, with a growing number of respondents worried about rising input costs.
USDA data analyzed by the U.S. Meat Export Federation showed the U.S. exported more than $1 billion worth of beef during August, with strong Chinese buying powering the record surge.
CORN: USDA reported net U.S. corn sales totaling 1.265 MMT for the week ended Sept. 30, more than triple the previous week’s sales at 370,400 MT. Prominent buyers included Mexico, at 801,400 MT. The latest weekly sales surpassed trade expectations of 350,000 to 800,000 MT. Overnight, December corn fell as low as $5.31 1/4, the lowest intraday price since $5.27 1/4 on Sept. 30 and just above the 20-day moving average around $5.29 3/4 before rebounding. The most-active contract posted its third straight daily decline yesterday.
SOYBEANS: Net weekly U.S. soybean sales totaled 1.042 MMT, slightly under the previous week’s sales of 1.2 MMT. China was a prominent buyer at 671,300 MT, including 131,000 MT switched from unknown destinations. November soybeans overnight rose as high as $12.46 3/4. Chart levels to watch include $12.31, the six-month low reached Oct. 5, and the 10-day moving average around $12.60 3/4.
WHEAT: Net weekly U.S. wheat sales of 333,200 MT were up 15% from the previous week but down 19% from the average for the previous four weeks. Trade expectations ranged from 200,000 to 500,000 MT. Exports, at 543,400 MT, were up 47% from the previous week and up 22% from the prior four-week average. December spring wheat futures overnight rose to $9.49, a contract high for the second day in a row. December SRW futures rose as high as $7.52 1/2. Upside levels to watch include $7.63 1/2, a seven-week high reached Oct. 4.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firmer
CATTLE: Futures may see followthrough from December live cattle’s higher close yesterday, but weak wholesale beef prices will continue to hang over the market. Choice boxed beef fell $1.09 yesterday to an average of $286.62, the lowest since $285.84 on Aug. 3. Choice beef has tumbled over 17% from a 15-month high reached Aug. 23. On cash cattle markets, prices so far this week have been steady to down slightly from last week’s average steer price of $122.56, which was down $1.08 from the previous week and the fifth straight weekly decline. USDA reported net weekly beef export sales totaling 15,600 MT, down 3% from the previous week, but up 5% from the average for the previous four weeks. China was the lead buyer, purchasing 6,000 MT for the week.
HOGS: Strength in wholesale pork may provide support after the December lean hog contract posted its fourth consecutive daily decline yesterday. Pork cutout values rose $4.73 yesterday to $112.86, led by a gain of over $16 in hams. Movement was about 288 loads. National direct average carcasses fell $1.25 to an average of $70.01. The latest CME lean hog index fell 60 cents to $93.51. Meatpackers slaughtered an estimated 1.418 million head so far this week, up from 1.413 million head during the same period a week ago but down from 1.465 million head for the corresponding period in 2020. Net weekly pork sales of 22,100 MT were down 48% from the previous week and down 34% from the prior four-week average. China was not a noted buyer on the week but took shipment of 4,200 MT of U.S. pork.
