Ahead of the Open | November 11, 2022

GRAIN CALLS

Corn: 4 to 5 cents higher.

Soybeans: 22 to 25 cents higher.

Wheat: 3 to 8 cents higher.

GENERAL COMMENTS: Corn, soybean and wheat futures climbed overnight on a continued sharp pullback in the U.S. dollar and prospects an easing of China’s Covid restrictions could improve demand. Malaysian palm oil futures rose 2.7% on Indonesia’s plan to raise its export tax reference price, but still fell 1.7% for the week. Front-month crude oil rallied nearly $3. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down around 1,400 points and near a three-month low.

China on Friday eased some of its strict Covid rules even as case numbers surged to their highest since April. Under the new rules, centralized quarantine times for close contacts and travelers from abroad were shortened by two days. China will also stop trying to identify “secondary” contacts while still identifying close contacts. The loosening of regulations came a day after Chinese President Xi Jinping led his new Politburo Standing Committee in a meeting on Covid. While the regulations were eased, some cities stepped up their Covid lockdowns as case numbers surged.

Negotiations continue to address Russia’s concerns on the Ukraine grain export deal. Officials from Russia and the United Nations met in Geneva to discuss a possible extension of the deal. “It is necessary to resolve a number of issues related to a well-known part of the so-called grain deal that concern us,” a Kremlin official said. “Here there is mutual understanding on the part of our counterparts in the United Nations, so work is underway.” Russia’s agricultural exports have not been directly targeted by Western sanctions, but Moscow says blocks on Russia’s payments, logistics and insurance industries were a “barrier” to Russia being able to export its grain and fertilizer.

Russia’s wheat export tax for Nov. 16-22 will be 2,922.1 rubles ($48.60) per metric ton based on an indicative price of $312.30. That’s down from a rate of 3,012.0 rubles per metric ton the previous week.

Indonesia plans to set reference price of its crude palm oil at $826.58 pr MT for Nov. 16-30 shipments, Trade Ministry official Farid Amir said Friday. The planned reference price would put the export tax for the period at $33 per MT, up from $18 for Nov. 1-15 period, and would trigger a $85 per MT levy.

China will auction another 500,000 MT of imported soybeans from state-owned reserves on Nov. 25.

South Korea purchased 69,000 MT of optional origin corn and passed on another tender to buy up to 68,000 MT of optional origin corn. Japan purchased 94,603 MT of wheat in its weekly tender, including 62,423 MT of U.S. and 32,180 MT Canadian. Indonesia purchased 60,000 MT of U.S. milling wheat and 60,000 MT of Canadian milling wheat. The Philippines passed on a tender to buy 60,000 MT of feed wheat.

CORN: December corn overnight rose as high as $6.61, but the contract is on track for its third weekly decline in the past four after ending last week at $6.81.

SOYBEANS: January soybeans overnight traded within the previous day’s range after tumbling 29 cents Thursday to $14.23. The contract is poised for a weekly loss after ending last week at $14.62 1/4.

WHEAT: December SRW wheat traded within the previous day’s range overnight after dropping Thursday to $8.03 1/2, the contract’s lowest close since Sept. 1. The contract is on track for a sharp weekly decline after ending last week at $8.47 3/4.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-weaker

CATTLE: Live cattle futures face mixed signals as this week’s cash trade didn’t live up to expectations for continued strength, but tight supplies and recent strength in wholesale beef could limit selling interest. Live steers averaged $151.86 this week through this morning, down 12 cents from last week's average. Packers have been reluctant to offer even steady prices for cash cattle this week and most feedlots have shown no willingness to move animals at lower prices. Choice beef cutouts fell $1.40 Thursday to $263.27, still near an 11-week high reached last week. December live cattle rose $1.50 Thursday to $153.075, after reaching a two-week high at $153.55.

HOGS: Lean hog futures may face pressure from continued weakness in cash fundamentals but are still on track for a weekly gain. The CME lean hog index is down 50 cents to $88.96 (as of Nov. 9), extending its seasonal price decline. After two straight days of gains, the national direct cash hog price dropped $2.47 on Thursday. Eroding cash fundamentals likely mean buyer interest in futures will be limited, even with December lean hogs more than $4 below the cash index. Pork cutout values rebounded from a nine-month low, rising $2.42 Thursday to $96.54 behind a gain of over $8 in hams. Movement was slower at 298 loads.

December lean hogs fell 40 cents Thursday to $84.875 but are up from $82.975 at the end of last week.