Ahead of the Open | December 9, 2022

GRAIN CALLS

Corn: 3 to 5 cents higher.

Soybeans: Steady to 2 cents lower.

Wheat: HRW and SRW steady to 2 cents higher, spring wheat steady to 1 cent lower.

GENERAL COMMENTS: Soybean futures rose to fresh 2 1/2-month highs overnight before fading late in the session. Corn and winter wheat futures firmed overnight. Markets were subdued and held to narrow ranges as traders awaited USDA’s monthly Supply & Demand Report at 11 a.m. CT. Malaysian palm oil futures rose 1.2%, capping a modest weekly gain on prospects for biofuels-driven demand from Indonesia. Front-month crude oil firmed slightly but remained near one-year lows. U.S. stock index futures signal a firmer open and the U.S. dollar index is little changed.

USDA’s December Supply & Demand Report is expected to feature modest changes to U.S. and global ending stocks. USDA will update its cotton crop estimate, though traders don’t expect much change to that figure either. USDA will not update its U.S. corn and soybean crop estimates this month. For 2022-23 U.S. ending stocks, traders expect corn to rise 55 million bu. to 1.237 billion bu., soybeans to increase 18 million bu. to 238 million bu. and wheat to decline 2 million bu. to 576 million bushels.

Argentina was hot again in the north and similar conditions will continue in many areas today, but brief cooling is expected during the weekend, World Weather Inc. said. Above normal temperatures will continue next week and into the following weekend, and rainfall will be restricted during the much of the next 10 days. The most organized rainfall is expected in central and northern parts of the nation today through Sunday; after that, net drying is expected once again for at least a full week.

In Brazil, far southern areas are in an accelerated drying trend, which may deplete moisture quickly in Rio Grande do Sul and reduce it other areas nearby over the next 10 days, World Weather said. Heavy rain is expected in some center-west through center-south crop areas during the next 10 days to two weeks

Turkish President Tayyip Erdogan said on Friday he will speak to Russia’s Vladimir Putin on Sunday, and he will also talk to Ukraine’s Volodymyr Zelenskyy in order to strengthen the Black Sea grain deal. “We want to strengthen the grain corridor and transport grain to less developed countries,” Erdogan said.

France’s ag ministry says 97% of the country’s wheat crop is rated good/excellent as of Dec. 5. The winter barley and durum wheat crops are rated 97% and 98% good/excellent, respectively. Regular rainfall and warm temperatures during fall aided sowing and early crop growth in France.

Russia’s wheat export tax for Dec. 14-20 will be 3,143.4 rubles ($50.28) per MT based on an indicative price of $313.40. That’s up from a rate of 2,806.8 rubles per MT the previous week and the highest rate since early September.

International Monetary Fund (IMF) Director Kristalina Georgieva said while China’s reopening from its strict zero-Covid policy will be positive, indicators show more downgrades to world growth are likely. World Bank President David Malpass remains “deeply concerned” about a global recession.

China’s ag ministry lowered its outlook for cotton consumption, as slowing global economic growth continues to hurt demand for textiles. China’s cotton consumption in 2022-23 is forecast at 7.5 MMT, down 200,000 MT from last month, the ministry said in its monthly update. The ministry kept its 2022-23 China cotton import forecast at 1.85 MMT. The ministry also made no changes to its 2022-23 soybean and corn import forecasts, which remained at 95.2 MMT and 18 MMT, respectively.

Egypt purchased 260,000 MT of Russian wheat via private deals.

CORN: March corn overnight reached $6.47, the highest intraday price since Monday but little changed from last week’s close at $6.46 1/4. Sluggish export demand will continue to burden the market. Key downside levels include a 3 1/2-month low of $6.35 posted Wednesday.

SOYBEANS: January soybeans overnight nudged 1/4 cent above Thursday’s high to hit $14.92 3/4, the contract’s highest intraday price $14.93 1/2 on Sept. 21, before retreating. The contract is tracking for a sharp advance from $14.38 1/2 at the end of last week. Followthrough buying could led to an extended rally if buy stops are triggered above $15.00, but that may also be met with a wave of farmer selling.

WHEAT: March SRW wheat traded within the previous session’s range overnight, but the contract is still poised for its fifth straight weekly decline after ending last week at $7.61. Bearish technicals and sluggish export demand continue to burden prices.

LIVESTOCK CALLS

CATTLE: Steady-weak

HOGS: Steady-weaker

CATTLE: Live cattle futures are poised for a weekly decline as a two-month rally in cash prices appears to be leveling off and wholesale beef remains under pressure. After light trade at steady levels earlier in the week, some cattle moved at $2 lower prices in the northern dressed market on Thursday. Most feedlots who held out for higher cash prices earlier this week appear set up for disappointment. With two holiday-shortened slaughter schedules coming at the end of this month, packers may try to fill near-term needs with contracted supplies and cattle previously sold with time. USDA-reported live steers averaged $155.33 this week through Thursday morning, down from last week's $156.42 average. Choice beef cutout values fell $1.68 Thursday to $247.28 as movement remained strong at 146 loads.

February live cattle gained 37.5 cents to $153.925, still down from $155.875 at the end of last week.

HOGS: Lean hog futures may extend Thursday’s drop and are heading for a sharp loss for the week as a hoped-for bottom in the cash market has yet to materialize. CME lean hog index is down 31 cents to $82.47 (as of Dec. 7), the lowest since Jan. 28. December futures finished Thursday 47 cents below today’s cash quote, and after three straight days of sharp losses, February futures finished yesterday just $2.23 above today’s cash quote. The national direct weighted hog average sank $3.57 to $81.11. Wholesale pork bounced modestly from 11-month lows to $84.97.

February lean hog futures fell $1.95 Thursday to $84.70, the contract’s lowest close since Nov. 29 and down from $90.425 at the end of last week.

China’s most active live hog futures ended the week down more than 9%, their largest weekly decline on record. Heavy slaughter and weak demand put further pressure on spot cash prices, which plunged 17%. The cash hog price plunge came after producers stepped up slaughter volumes in expectation of improving demand toward the end of the year, and after Beijing urged them to ensure stable supplies.