Ahead of the Open | September 30, 2021
GRAIN CALLS
Corn: Steady to 1 cent higher.
Soybeans: 1 to 3 cents higher.
Wheat: 3 to 6 cents higher.
GENERAL COMMENTS: Corn, soybean and wheat futures were firmer and traded in narrow ranges overnight ahead of USDA’s quarterly Grain Stocks Report and Small Grains Summary at 11:00 a.m. CT. Malaysian palm oil futures rose over 3% to a record high on strong demand. Nymex crude oil futures were down over 1.0% and the U.S. dollar index was near unchanged.
USDA quarterly Grain Stocks Report today is expected to show Sept. 1 corn, soybean and wheat stocks at multiyear lows. Analysts have consistently missed quarterly stocks targets, especially for corn, and the report’s potential for surprises could spark sharp price moves. In the Small Grains Summary, analysts expect USDA’s final all wheat crop estimate to come in around 1.680 billion bu., with the spring wheat crop estimate falling to around 327 million bushels.
At least half the soybean crushing plants in northern and northeastern China have been shut since last week and will stay closed until at least after the National Day holiday on Oct. 1 due to the country’s power outages, Reuters reported. The shutdowns led to a spike in feed costs as supplies tighten, compounding troubles for struggling Chinese livestock producers and hog farmers.
China set its low tariff rate quotas (TRQ) for wheat, corn, cotton and rice imports in 2022 at the same level as 2021: 9.64 MMT for wheat, 7.20 MMT for corn, 894,000 MT for cotton and 5.32 MMT for rice, the state planner said. The Phase 1 trade agreement requires China to fulfill its TRQ obligations, something that had not occurred previously.
CORN: Futures held a slightly firmer tone even after weekly export sales fell short of expectations. USDA reported net U.S. corn sales for the week ended Sept. 23 totaling 370,400 MT for 2021-22, down from 373,000 MT the previous week and below trade expectations for sales of 400,000 to 900,000 MT. USDA’s quarterly Grain Stocks Report is expected to show Sept. 1 U.S. corn stocks at 1.155 billion bu., which would be down 40% from a year ago and the smallest Sept. 1 stocks since 2013. December corn futures overnight rose within 1/2 cent of this week’s high at $5.41 3/4. Other chart levels to watch include the 40-day moving average around $5.38 3/4 and the 100-day moving average around $5.50.
SOYBEANS: Net weekly soybeans sales totaled 1.094 MMT for 2021-22, primarily for China (776,500 MT, including 204,000 MT switched from unknown destinations). Expectations ranged from 700,000 MT to 1.2 MMT. USDA’s quarterly Grain Stocks Report is expected to show U.S. soybean stocks as of Sept. 1 at about 174 million bu., a 67% drop from the year-earlier date and the smallest figure for that date since 2014. November soybeans rose as high as $12.86 1/4 overnight. Chart levels to watch include the 40- and 200-day moving averages around $13.05 and $12.78, respectively, as well as this week’s high at $12.97.
WHEAT: Net weekly wheat sales of 290,100 MT for 2021-22 were down 19% from the previous week and down 30% from the prior four-week average. Expectations ranged from 250,000 to 550,000 MT. 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 wheat stocks number for that date since 2007. December SRW wheat rose as high as $7.16 1/2 overnight, within this week’s range.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-firm
CATTLE: Futures may face continued pressure from weaker boxed beef prices, which suggest high retail beef prices may be pushing some consumers toward cheaper chicken or pork. Choice cutout values fell $2.97 yesterday to an average of $297.33, the lowest since $296.26 on Aug. 6, USDA data showed. Movement totaled about 158 loads. Cash cattle trade picked up mostly around $122 in the Iowa market yesterday, with trade also underway in Kansas and Nebraska from $122 to $124 and Texas seeing cash action mostly around the $124 mark. Meatpackers slaughtered an estimated 352,000 head of cattle the first three days this week, down 3.0% from the same period last week and down 1.1% from the same period in 2020, a USDA report showed. December live cattle yesterday fell 45 cents to $127.05 on Wednesday, the contract’s lowest closing price since $125.575 on May 4.
