Big Balance Sheet Adjustments Possible | FTT Audio Oct. 12, 2021

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Corn futures are a penny or two lower leading up to USDA’s potentially big production and balance sheet adjustments at 11:00 a.m. CT. Soybean futures are 3 to 4 cents lower, with the November contract hitting its lowest level since March 31 overnight. Winter wheat futures are fractionally to 2 cents higher, while spring wheat futures are up 1 to 5 cents. Crude oil futures are firmer and the greenback is near unchanged. The troubled Chinese property Giant, Evergrande, reportedly missed another big debt payment and traders are increasingly worried about a contagion effect. Rising inflation, driven in part by surging energy prices, adds to marketplace unease.

In today’s reports, USDA’s 2021-22 domestic balance sheets will reflect the Sept. 1 stocks data and the final 2021 wheat crop estimate, along with any changes to corn and soybean production. That could produce some major adjustments, especially for soybeans.

Brazil’s 2021-22 soybean crop will likely climb 5.1% from last year’s big crop to a record 144 MMT, forecasts South American Crop Consultant Dr. Michael Cordonnier, who expects an increase in acreage. Cordonnier estimates Brazil’s 2021-22 corn crop at 118 MMT, up 37% from last season.

Reuters is reporting that Argentina will prioritize international sales of corn to ensure crops already harvested are exported before sales can be registered for next season’s crop that’s currently being planted, according to an ag ministry source.

Later this morning, the International Monetary Fund is expected to estimate slightly lower economic growth in 2021 than the 6% it forecast in June. The expected reduction is based in part on the uneven growth trajectories of wealthy countries and their poorer counterparts.

The World Health Organization (WHO) is calling on China to increase surveillance of a deadly H5N6 variant of bird flu after a recent spike in human infections. The overall number of cases is low and there’s no evidence of human-to-human transmission, but the virus has a fatality rate of 50%.

Cash cattle traded at an average price of $122.96 last week, up 40 cents from the week prior and the first uptick in weeks. But support from the cash market gains could be limited given that nearby contracts are already trading above the index and ongoing weakness in the product market.

December Lean hog futures have moved into the wide gap area left by the post-Hogs & Pigs Report price action. While the gap is wide, bulls likely need to step up in next two or three days to prevent the gap from being filled, which would be a negative technical signal. The pork cutout value ended yesterday with gains of $1.02, well off its morning high but a gain, nonetheless. Cash hog bids fell an average of 92 cents yesterday.


 

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