Ahead of the Open | September 28, 2021
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 2 to 4 cents lower.
Wheat: Steady to 2 cents lower.
GENERAL COMMENTS: Corn and soybean futures fell overnight gains as harvest accelerated across the Midwest. Wheat futures were also weaker. Malaysian palm oil futures rose over 1% and Nymex crude oil futures were up nearly 1% and approaching the 6 1/2-year highs reached in July. The U.S. dollar index was slightly firmer.
USDA announced daily corn sales totaling 150,000 MT to Mexico for 2021-22 delivery.
USDA rated 59% of the U.S. corn crop “good” or “excellent” at the start of this week, unchanged from the previous week. Soybeans were rated 58% “good” to “excellent,” also unchanged from the previous week. When USDA's weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop was unchanged at 357.2 points. The soybean crop slipped 0.7 points to 349.2. The CCI rating is now 9.2 points below the five-year average for corn and 9.5 points below for soybeans.
Crop consultant Michael Cordonnier cut his estimate for the U.S. corn yield by one bu. to 175 bu. per acre and projected a harvest of 14.87 billion bu., both under current USDA forecasts. Crop maturity is being “pushed along” by warm, dry weather, he said in his weekly report. “A quick maturing of the crop can cut short the grain filling process, resulting in lighter test weights and slightly lower yields,” he said. Also concerning: “excessive foliar diseases, especially tar spot in the eastern Corn Belt.”
Cordonnier maintained his U.S. soybean yield projection at 50.3 bu. per acre for a 4.34 billion bu. crop, with a neutral to slightly lower bias. Earlier this month, USDA estimated the yield at 50.6 bu. per acre.
A series of weather disturbances is expected to produce rains that could improve soil moisture in the HRW wheat region this week, World Weather Inc. said. Western hard red winter wheat areas, including the northwestern Texas panhandle and far western Kansas, will receive the lowest rain amounts and be most in need of greater rainfall after this event, the forecaster said. “There will be at least some rain in this part of the region, though,” the forecaster said.
Chinese corn prices are likely to retreat in 2021-22 as supplies increase from a bumper crop, Li Xigui, an analyst with the China National Grain and Oils Information Center (CNGOIC), said yesterday. Chinese corn prices have already pulled back 13% from record levels hit in May. He expects China to import 20 MMT of corn in 2021-22, down from 29 MMT for 2020-21.
CORN: Late yesterday, USDA reported the U.S. corn crop was 18% harvested as of Sept. 26, up from 10% the previous week and above the five-year average of 15% for this date. Analysts on average expected the crop at about 19% harvested. USDA’s Sept. 30 quarterly Grain Stocks Report is expected to show Sept. 1 corn stocks at 1.155 billion bu., which would be down 40% from Sept. 1, 2020, and the smallest Sept. 1 stocks figure since 2013. December corn yesterday gained 12 3/4 cents to $5.39 1/2, the highest settlement since $5.42 3/4 on Aug. 30. Chart levels to watch include $5.12 3/4, last week’s low, and the 200-day moving average around $5.12.
SOYBEANS: The U.S. soybean crop was 16% harvested as of Sept. 26, up from 6% a week earlier and up from the average for the previous five years of 13%. 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 around $12.75 3/4 and the 40-day moving average at $13.07.
WHEAT: The U.S. winter wheat crop was 34% planted at the start of this week, up from 21% the previous week and about two percentage points ahead of the five-year average, USDA said yesterday. Planting progress matched trade expectations. USDA’s quarterly Grain Stocks Report is expected to show U.S. wheat supplies as of Sept. 1 at 1.852 billion bu., down 14% from last year and the smallest Sept. 1 wheat stocks number since 2007. Overnight, December SRW futures rose as high as $7.26 1/2, just under the three-week high of $7.28 1/2 reached yesterday. Chart levels to watch include the 40-day moving average around $7.24 3/4 and the September high of $7.33 1/4.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firm
Chart levels to watch in December live cattle include last week’s high at $129.325 and last week’s low at $126.20, as well as the 40- and 200-day moving averages around $129.60 and $127.50, respectively.
HOGS: CME lean hogs will trade with an expanded limit of $7.00 today after December futures yesterday gapped higher and soared the initial daily limit of $4.75, sparked by lower-than-expected numbers in USDA’s quarterly Hogs and Pigs Report. Wholesale pork market strength may help futures extend the rally. Pork cutout values rose $1.18 yesterday to $111.95, the highest since Aug. 27. National direct market carcasses averaged $75.74, down $1.19 from Friday. The CME lean hog index is up 4 cents to $91.51, about $1.00 above October futures.
December lean hogs yesterday closed above the 100-day moving average for the first time since Sept. 7 and may have broken a downtrend starting at the contract high of $89.55 posted June 10. Upside targets include $83.60, the intraday high for the past six weeks, and $84.375, the high for August. Downside levels to watch include the 40-day moving average around $79.40.
