CORN
Corn futures were up overnight, eclipsing last week’s high by a mere 1/2 cent in the Dec contract. Dec gained 6-1/2 cents to peak at a 2-1/2 month high of 5.69-1/4 despite a giant spike in the dollar and some bearish news for crude oil. Newswires reported Oil prices dropped on Monday as China’s release of gasoline and diesel reserves eased concerns over tight global supply, while investors cashed in ahead of a Nov. 4 meeting of major crude producers that could increase future production targets. US supplies are currently the lowest priced corn on the world market, but open interest has trended higher. Underlying strength in corn, remains in place as countries like Europe and Brazil join the U.S. in potential plans for fewer corn acres in 2022 due to rising fertilizer costs. Weekly Export Inspections will be out later this morning along with grain crushings followed harvest progress numbers after the close. Corn used in ethanol production is seen up 1.6% year over year to 408.9 mil bu.
SOYBEANS
The soy complex is firm this morning with Nov beans up 2 cents to 12.35-3/4, mid-range of Friday’s 20 cent trading range between 12.49-1/2 and 12.29-1/2. Chinese Ag futures (JAN 22) Soybeans were up 64 yuan ; Soymeal down 56; Soyoil up 10; Palm oil up 114; Corn up 11. Malaysian palm oil prices overnight were down 72 ringgit (-1.43%) at 4954. On tap for today are Weekly Export Inspections, Fats & Oilseeds, Grain Crushings and Crop Progress. Soybean crush is seen at 163.6 ,il bu in Sept., a 4.4% drop from year ago. Crude and once-refined soybean-oil reserves at end of September seen at 2.184 bil lbs, up from 1.853 bil. Meanwhile, high demand boosts soyoil prices in Brazil, setting set new nominal records in the series of Cepea (since July 1998) this month. In real terms (monthly average deflated by the IGP-DI from Sept/21), the current price for soy oil is the highest in 12 months.
WHEAT
Winter wheat futures were mixed overnight. March Chicago wheat is up 6 cents to 7.91. KC contracts fractionally higher this morning. Dec MPLS Spring wheat is up a dime to a new contract high of 10.62-1/2. The overbought condition of the wheat markets, coupled with strength in the dollar create headwinds for the complex to begin the week and new month. However, spot cash prices for truck-delivered millfeed were generally steady around the U.S. on Friday, underpinned by solid demand in eastern markets and rising prices for corn, a rival feed ingredient, dealers said. Weekly Export Inspections will be out later this morning. Pending tenders include an Ethiopian government agency issued a new international tender to buy about 400,000 tons of milling wheat.
CATTLE
Cattle futures are called mixed for today. Futures faced strong selling pressure to end the week, influenced by the expiration of the Oct live contract and long liquidation. The lack of follow-through strength to end the week is concerning, as prices dropped off the previous day’s highs. Cash trade was firmer last week. The range was $125-127, with $126 catching most business, trading higher $1-2 higher than the previous week. Cash markets will still be key in supporting futures prices. The Choice cutout ended $4.23 higher, while Select decreased by $0.08. Buyer interest, especially for higher quality cuts, is increasing with the upcoming winter holidays. This is reflected in the Choice/Select Spread, closing the week at 22.35.
HOGS
Hogs are called steady to higher. Technical buying and short covering supported the market last week. For the week, Dec hogs were 2.750 higher, for the first time in the past three weeks despite weakness in the cash market and a quiet retail trade. Weekly charts posted a hook reversal, and a possible double bottom on the charts. The improved technical picture leaves the door open for follow through buying to start the week. The retail pork carcass were firmer on Friday’s close, gaining 2.52 to 96.52 on movement of 379 loads. On the week, pork carcasses have been relatively stable with daily closing values in the $93.00-$94.00 level. The gains on Friday saw pork carcasses gain $1.94 over the close on Monday. The overall cash market remains soft, and the Cash Hog Index reflects that trading is 0.97 lower to 80.70. On the week, the index traded 4.13 lower. The discount of the index to futures is still supportive, but saw a strong jump today, closing at 4.625 on Friday. The hog market is trying to build a bottom and the strong price action the past two days reflects that idea. The strong close on the week opens the door for additional buying strength, but the fundamentals need to support.
Author
Matthew Strelow