Ahead of the Open | November 16, 2022
GRAIN CALLS
Corn: 6 to 8 cents lower.
Soybeans: 14 to 16 cents lower.
Wheat: 16 to 22 cents lower.
GENERAL COMMENTS: SRW wheat futures fell for the first time in four sessions and corn and soybeans also dropped overnight on growing confidence a deal allowing Ukrainian grain exports will be extended. The war escalation concerns that fueled late buying in grain and soy markets on Tuesday also eased. Malaysian palm oil futures fell a third consecutive session on demand concerns, while front-month crude oil was down more than $1. U.S. stock index futures signal a mixed open, while the U.S. dollar index is down around 100 points this morning.
USDA reported a daily sale of 1.867 MMT of corn for delivery to Mexico, with 1.242 MMT for delivery in 2022-23 and the remainder for 2023-23. That was the fifth largest daily corn sale on record. USDA also reported a daily sale of 150,000 MT of hard red spring wheat for delivery to Iraq in 2022-23.
Russia spoke in favor of extending the Black Sea grain deal at this week’s G20 summit in Bali, as long as more grain was sent to countries in the greatest need, Finance Minister Anton Siluanov told Russian state-run RT news channel. Russia is also seeking to free up its exports of grains and fertilizers. The Kremlin said today Russia had seen “certain progress” toward addressing its concerns over the Black Sea grain deal. Meanwhile, Turkish President Tayyip Erdogan said he believed the grain export deal will be extended beyond its Nov. 19 deadline, adding that his country is making efforts to extend it by a year.
Poland and NATO are investigating Tuesday’s explosion in eastern Poland near the Ukrainian border, but Polish President Andrzej Duda said there appeared to be no signs of an intentional attack on his country and the rocket was probably used by Ukrainian air defense. President Joe Biden also told allies the missile that killed two people in Poland was a Ukrainian air defense missile, a NATO source said.
Argentina’s weather outlook this week holds greater rainfall prospects, based on an updated model, which would lead to “a little better environment for planting emergence and establishment,” World Weather Inc. said. “Some delays to fieldwork may occur, but the moisture is needed to ensure favorable planting conditions next week.” In Brazil, the rest of the week is expected to be dry or mostly dry in the center-west and far southern parts of the country, while rain falls abundantly in northeastern portions of crop country.
U.S. hard red winter wheat production areas are expected to be drier biased during much of the coming two weeks especially where drought is most significant, World Weather said.
Birds weighing in at a hefty 18 to 20 lbs. are in short supply this year as a U.S. outbreak of avian flu wiped out flocks nationwide, Reuters reported. With more people looking to celebrate Thanksgiving together following the Covid-19 pandemic, there is increased demand for oversized drumsticks and meaty breasts, according to U.S. poultry and food suppliers. Avian flu has eliminated about 8 million turkeys through fatal infections and cullings to control outbreaks, representing almost 4% of the nation’s flock, according to U.S. government data. Production of turkey meat this year is forecast to fall 7% from 2021, the government said.
Mexico will start vaccinating birds in high-risk areas this week to prevent the spread of the highly contagious H5N1 strain of bird flu in the country, authorities said. Last month, Mexican authorities detected a severe H5N1 strain of avian influenza at a commercial farm in Nuevo Leon state on the border with the United States.
China will auction another 40,000 MT of state-owned wheat reserves on Nov. 23. The full allotment of wheat supplies has been purchased in the weekly auctions that started in mid-October.
CORN: December corn traded within Tuesday’s broad range overnight after rebounding from a 2 1/2-month low early in Tuesday’s session and ending firmer. Key support remains around the 100-day moving average of $6.50 1/2. A drop under that level could spur fund liquidation and a test of further support at $6.46 1/2 and $6.25.
WHEAT: December SRW wheat traded within the previous session’s wide range overnight after rising 9 3/4 cents Tuesday to $8.28 1/4, the contract’s highest close since Nov. 7. Key support is seen at the 10-week low Nov. 10 at $7.95 1/2.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-mixed
HOGS: Lean hog futures may extend the past week’s sideways pattern as eroding cash fundamentals continue to weigh on the market. The CME lean hog index is down 16 cents to a nine-month low of $88.49 (as of Nov. 14). December lean hog futures finished Tuesday $3.165 below the cash index, which is about a normal seasonal decline over the next month. That suggests traders have a neutral bias toward cash expectations ahead of the contract’s settlement in mid-December. Pork cutout values fell 86 cents Tuesday to $95.70, led by declines in loins. Movement was stronger at 353.6 loads. December lean hogs rose 45 cents Tuesday to $85.3250, the contract’s highest close since Nov. 8.
