Market Snapshot | November 4, 2022

Corn futures are up slightly in two-sided action as traders look ahead to USDA’s Nov. 9 Crop Production and Supply and Demand Reports.
Long corn/short soybean spread unwinding is limiting buyer interest. Strength in crude oil and weakness in the U.S. dollar is limiting seller interest.
USDA’s reports next week are expected to show only minor changes. The agency’s estimate for U.S. corn production may drop to 13.887 billion bu. from 13.895 billion bu., based on a Reuters survey of analysts, while U.S. 2022-23 ending stocks may rise slightly, to 1.207 billion bu.
Two unions have rejected a proposed deal with U.S. railroads, while six have approved it. Others are still deciding, with votes of the two largest rail workers’ unions coming mid-November.
December corn fell under the 50-day moving average around $6.81 and dropped to $6.78 1/2, matching this week’s low. The contract ended last week at $6.80 3/4. Initial resistance lies just above today’s high at the 20-day moving average of $6.86 1/2.

Soybeans extended this week’s rally to six-week highs behind strength in crude and global vegoil markets. Nearby soyoil reached the highest level in nearly five months.
Dryness in Argentina is also a supportive background factor. A La Nina pattern will keep eastern Argentina, Uruguay and Brazil’s Rio Grande do Sul state in a below-normal precipitation pattern for a few more weeks, World Weather Inc. said. “Soil moisture is not rated as poorly as one might imagine after two months of below normal rainfall, but a boost in rainfall will be needed soon.”
In Brazil, net drying is expected for much of the coming week the next week except in the northeast where showers and thunderstorms will be possible, World Weather said.
In its Nov. 9 reports, USDA is expected modestly increase its estimate for U.S. soybean production to 4.315 billion bu. from 4.313 billion bu., based on the Reuters survey. U.S. 2022-23 ending stocks are seen rising to 212 million bu. from 200 million bu.
January soybeans hit $14.65 1/2, the contract’s highest intraday price since Sept. 22 and up from $14.00 1/4 at the end of last week. December soyoil rose to 77.18 cents, the highest since June 10.

Wheat futures rose as dollar weakness and crude oil strength encouraged corrective buying and short-covering following sharp declines earlier this week.
Status of a deal allowing Ukraine grain exports continues to be a market concern. Russia this week said it would resume its participation in the deal allowing Ukrainian grain exports but has not committed to participating beyond the current agreement’s Nov. 19 deadline.
Flooding and excessive rains across key parts of Australia’s wheat growing areas have damaged what was expected to be a record high quality crop just a few weeks ago.
The UN Food and Agriculture Organization (FAO) lowered its 2022-23 global cereal grain production forecast by 4.9 MMT from last month to 2.764 billion MT. Most of the reduction was to wheat production.
Iraq purchased 150,000 MT of hard milling wheat expected to be sourced from Canada, Lithuania and Australia.
December SRW wheat climbed to $8.55 1/2 and is poised for strong weekly gains after ending last week at $8.29 1/4.

Live cattle futures climbed a second straight session as strength in wholesale beef indicated firm demand despite signs of slippage in the cash market.
Live steers averaged $151.79 through Thursday morning, down 16 cents from last week's average. Market-ready supplies are expected to tighten, but futures traders have been reluctant to build in premium.
Choice beef cutout values rose $1.71 Thursday to $265.18, the highest daily average since Aug. 8, on movement of 129 loads.
December live cattle reached $152.50, slightly under this week’s high of $152.775 but still down from $153.00 at the end of last week.

Hog futures are choppy at midmorning.

Lean hog futures climbed after an early drop to near three-week lows was followed by corrective buying. Softening cash fundamentals are limiting buyer interest.
The CME lean hog index is down 95 cents (as of Nov. 2) to $92.34, a new low for the fall and the lowest level since Feb. 14. Based on the wider-than-normal discount December hogs hold to the cash index, traders anticipate more near-term seasonal pressure over the next six weeks.
Pork cutout values rose 13 cents Thursday to $96.36, near a nine-month low reached the day before. Movement was strong at 337 loads.
December lean hogs dropped under 40- and 50-day moving averages and fell as low as $82.825, the contract’s lowest intraday price since $81.40 on Oct. 17, before bouncing back.

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