Ahead of the Open | September 2, 2021
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 4 cents lower to 2 cents higher.
Wheat: 7 cents lower to 4 cents higher.
GENERAL COMMENTS: Corn futures fell to the lowest prices since mid-July in overnight trading on concerns damage from Hurricane Ida will disrupt U.S. Gulf grain exports for weeks. Soybean futures erased overnight declines following stronger-than-expected weekly USDA export sales. Wheat futures were mixed overnight, with SRW contracts dropping to the lowest levels in almost five weeks.
Cargill Inc. confirmed its Westwego, Louisiana terminal was damaged by Hurricane Ida and said it is still unsure how quickly grain loading and shipping operations may resume. Power outages have kept other terminals closed across southern Louisiana and power may not be restored for several weeks. Some of the Mississippi River north of river mile 167.5 near Donaldsonville reopened to vessel traffic yesterday afternoon, but a 75-mile stretch of the river to the south of that remains closed to all vessel traffic due to downed power lines and sunken vessels and grounded barges and ships.
Argentine farm associations are considering a grains trade strike and a halt to cattle trading in response to the government’s decision earlier this week to extend limits on beef exports another two months through the end of October.
Some northern parts of Russia experienced frosts and freezes this week, with more possible this weekend and early next week. But because most spring and summer crops were either maturing, mature or being harvested in those areas, little production impact was expected, World Weather Inc. said.
Global food prices climbed 3.1% from July and up 33% from a year ago, according to the Food and Agriculture Organization (FAO) of the United Nations’ food price index. The rebound followed two consecutive months of decline. Strong gains in sugar, vegetable oils and cereals led the rise.
FAO cut its 2021 global cereal grain production forecast by 29.3 MMT to 2.788 billion metric tons. That would still be a 0.7% increase from 2020. Wheat drove that decline, with FAO cutting its production estimate by 15.2 MMT from July to 769.5 MMT, which is a 0.7% dip from 2020.
Brazil’s ag ministry on Wednesday announced it was investigating a suspected case of bovine spongiform encephalopathy (BSE) in the country. An industry source told Reuters the suspected case was in the state of Minas Gerais. The country last reported a case of “atypical” BSE in May 2019, in a 17-year-old cow.
CORN: USDA reported net weekly U.S. corn sales of 1.16 million metric tons (MMT) for 2021-22, with top buyers including Mexico (464,500 MT), Colombia (352,000 MT) and Canada (292,600 MT). For 2020-21, USDA reported a net sales reduction of 300,800 MT. Expectations ranged from 850,000 MT to 1.6 MMT for 2021-22 and -100,000 to 100,000 for 2020-21. December corn overnight fell to as low as $5.16 3/4, the lowest intraday price since $5.14 1/4 on July 12. Chart levels to watch include the 200-day moving average around $5.02 1/2.
SOYBEANS: Net weekly U.S. soybean sales for 2021-22 totaled 2.13 MMT, led by China (1.26 MMT) and “unknown destinations” (654,000 MT). For 2020-21, net sales of 68,200 MT were down 9% from the previous week but up 9% from the average for the previous four weeks. Expectations ranged from 725,000 MT to 1.4 MMT for 2021-22 and -100,000 to 125,000 for 2020-21. USDA reported daily soybean sales of 126,000 MT to China for 2021-22. November soybeans overnight fell to $12.71 before rebounding, a penny above the two-month low reached yesterday.
WHEAT: Net weekly U.S. wheat sales for the week ended Aug. 26 totaled 295,300 MT, up “noticeably” from the previous week and up 15% from the four-week average, USDA reported. Expectations ranged from 200,000 to 450,000 MT. Exports of 417,100 MT were down 38% from the previous week and down 27% from the four-week average. December SRW futures overnight fell as low as $7.05 1/2, the lowest intraday price since $7.03 1/2 on July 30. Chart levels to watch include the 100-day moving average around $7.00 1/2. December hasn’t traded below the 100-day moving average since mid-July.
LIVESTOCK CALLS
CATTLE: Steady-weak.
HOGS: Steady-firm.
CATTLE: October live cattle firmed late yesterday after earlier falling to a three-week low, but further upside may be limited by eroding beef prices. Choice cutout values fell $3.66 yesterday to $338.45, the lowest in over two weeks. Cash trading has been inactive so far this week. Meatpackers slaughtered an estimated 357,000 head of cattle the first three days this week, up 8,000 from the same period a week earlier and up 1,000 from the same period a year earlier, USDA reported. Net U.S. beef sales of 15,600 MT were up 49% from the previous week and up 24% from the prior four-week average.
HOGS: Lean hog futures also climbed yesterday but remain burdened by a wholesale pork market that’s sunk to the lowest levels in over five months. Carcass cutout values fell $2.47 to $106.54, the lowest daily price since late March. The latest CME lean hog index fell to $103.61, near the lowest since mid-April. Price-supportive factors include strong substitution demand for pork over expensive beef, tight frozen stockpiles and an expected 3% annual decline in fall hog supplies. Hog slaughter totaled 1.43 million head through Wednesday, up from 1.38 million for the same period a week ago and up from 1.42 million for the same period in 2020, USDA estimated. Net U.S. pork sales of 33,500 MT were up 39% from the previous week and up 38% from the prior four-week average.
