Ahead of the Open | September 27, 2021

GRAIN CALLS

Corn: 1 to 2 cents lower.

Soybeans: 1 to 3 cents higher.

Wheat: 1 cent lower to 3 cents higher.

GENERAL COMMENTS: Corn futures fell overnight on expectations for accelerating harvest across the Midwest. Soybeans posted modest gains on hopes for fresh export business. Winter wheat futures faded from an overnight climb to three-week highs. Malaysian palm oil futures fell from five-week highs reached Friday. Nymex crude oil futures were up about 1% after reaching the highest level in over two months. The U.S. dollar index was slightly firmer.

USDA reported daily soybean sales of 334,000 MT to China for 2021-22.

Brazil is expected to harvest a record 2021-22 soybean crop of 143.75 MMT of soybeans during 2021-22, a 5.8% jump from the previous year, based on a Reuters survey of analysts. Ample early season rains should encourage earlier soybean planting, which should also benefit corn and cotton, analysts said.

Hot, dry and windy weather over the weekend exacerbated drying in U.S. HRW wheat areas, reported World Weather Inc., and little rain is expected in the High Plains this week. “The northwestern U.S. Plains, Canada's Prairies and much of the far western U.S. will be dry over the coming week to 10 days,” World Weather said. Showers are expected for eastern wheat areas of the central and western Midwest.

Russian wheat export prices rose for an 11th consecutive week, following higher global benchmarks in Chicago and Paris, Reuters reported. Russian wheat with 12.5% protein loading from Black Sea ports for supply in the first half of October was $304 a MT, free on board (FOB), at the end of last week, up $3 from the previous week, consultancy IKAR said in a note.

Ukraine is wrapping up a bumper wheat harvest. Harvest is basically complete, with producers bringing in 33.0 MMT of wheat and likely to export 24.4 MMT of the grain, up 600,000 MT from the ministry’s previous estimate. Last season, the country harvested 25 MMT of wheat.

The United Nations has issued an international tender to buy about 200,000 MT of milling wheat on behalf of the Ethiopian government.

CORN: USDA will update weekly harvest progress after today’s market close. The crop was 10% harvested as of Sept. 19, slightly ahead of the five-year average of 9% for that date. Reports of a growing number of tar spot, especially in the eastern Corn Belt, has some analysts cutting their corn yield and production forecasts. USDA’s quarterly Grain Stocks Report Sept. 30 is expected to show final 2020-21 U.S. corn stocks of 1.155 billion bu., based on a Reuters survey of analysts. The estimate supplies would be down 40% from Sept. 1, 2020. December corn fell as low as $5.24 overnight. Chart levels to watch include $5.12 3/4, last week’s low, and the 200-day moving average around $5.11 1/4, as well as last week’s high at $5.31.

SOYBEANS: November soybeans overnight rose as high as $12.92 1/2, the highest intraday prices since $12.98 1/2 on Sept. 17. Mostly dry Midwest weather is expected enable stepped-up harvest into early October. The crop was 6% harvested as of Sept. 19, matching the average for the previous five years, USDA reported last week. Speculators have sharply reduced bullish bets in the soybean market in recent months. Managed funds’ net long futures and options position as of Sept. 21 fell to 49,701 contracts, down from a 2021 peak above 180,000 and the lowest since August. 2020.

Chart levels to watch in November soybeans include $12.57 1/2, a three-month low reached Sept. 21, and $13.08, the intraday high so far this month. Other key levels include the 200-day moving average at around $12.74 1/1 and the 40-day moving average at $13.08 3/4.

WHEAT: December SRW futures overnight pushed above the 40-day moving average around $7.25 and rose as high as $7.28 1/2, the highest intraday price since $7.33 1/4 on Sept. 7. The potential that persistent dryness in the Plains may hamper establishment of the winter crop remains a concern. The winter wheat crop was 21% planted as of Sept. 19, above the five-year average for that date of 18%. USDA’s Small Grains Summary Sept. 30 is expected to show a cut in U.S. spring wheat harvested acres.

LIVESTOCK CALLS

CATTLE: Steady-weak

HOGS: Steady-firmer

CATTLE: Continued weakness in wholesale beef prices may weigh on futures, and deferred contracts may face pressure from higher-than-expected August feedlot placements is USDA’s Cattle on Feed Report Friday. USDA estimated 2.104 million head of cattle were moved into feedlots for fattening last month, up 2.3% from August 2020. Placements were expected to decline 1.0%. Sept. 1 U.S. feedlot inventories, at an estimated 11.234 million head, were down 1.4% from the same date a year earlier and a reflection of continued industry contraction. Inventories were expected to decline 2.1%, based on the average analyst estimate.

Choice cutout values on Friday fell $2.28 today to an average of $303.32, down 3.5% for the week and the lowest price since $299.80 on Aug. 9, USDA reports showed. Chart levels to watch in December live cattle include last week’s high at $129.325 and last week’s low at $126.20, along with the 200-day average around $127.40.

HOGS: Futures may extend last week’s climb to two-week highs after USDA’s quarterly Hogs and Pigs Report fell short of trade expectations and signaled tighter supplies into 2022. USDA estimated total U.S. hog inventory as of Sept. 1 at 75.4 million head, down 3.9% from the same date a year earlier and exceeding expectations for a decline of about 1.7%. The number of animals kept for breeding, an indicator of future supplies, was an estimated 6.19 million head, down 2.3%. Analysts on average expected a decline of 1.1%. The June-August pig crop was down 6% from last summer.

Also supportive to futures are signs of stabilization in pork cutout values, which surged $6.48 Friday to $110.77, led by jumps of over $16 in hams and over $10 in loins. Movement totaled nearly 328 loads. Pork cutout values gained 5.1% last week. The latest CME lean hog index fell 42 cents to $91.47. Chart levels to watch in December lean hogs include last week’s high at $77.20, and the seven-month low of $71.275, posted Sept. 16.