Ahead of the Open | November 17, 2022

GRAIN CALLS

Corn: 7 to 8 cents lower.

Soybeans: 10 to 12 cents lower.

Wheat: SRW wheat 15 to 16 cents lower, HRW and spring wheat 4 to 9 cents lower.

GENERAL COMMENTS: SRW wheat futures fell to a 2 1/2-month low overnight and corn and soybeans also dropped as supply concerns eased following an extension of the Black Sea grain export deal. Malaysian palm oil futures fell 4.4% on a stronger ringgit and concerns over demand, while front-month crude oil fell to near a three-week low. U.S. stock index futures signal a weaker open, while the U.S. dollar index is up nearly 900 points this morning.

The deal allowing Ukrainian exports of grain from Black Sea ports was extended for 120 days from Nov. 18 without any changes. “I welcome the agreement by all parties to continue the Black Sea grain initiative to facilitate the safe navigation of export of grain, foodstuffs and fertilizers from Ukraine,” United Nations Secretary General Antonio Guterres said. He said the UN was also “fully committed to removing the remaining obstacles to exporting food and fertilizers from the Russian Federation.” The export of Russian ammonia via a pipeline to the Black Sea has not yet been agreed as part of the renewal, a source familiar with discussions told Reuters.

Turkish President Tayyip Erdogan said Russian grain exports could be processed into flour in Turkey and then shipped to Africa to help relieve food shortages there, reiterating a previous pledge. Erdogan said Russian grain was meant to be delivered to countries such as Mali, Djibouti, Sudan and Somalia free of charge.

South America’s near-term weather outlook has changed little, with slightly less rain expected in central Argentina the next 10 days, World Weather Inc. said. Brazil’s outlook is similar. with net drying through the weekend in the center-west through far southern Brazil, then scattered showers and thunderstorms in most areas during the next week, before another round of drying occurs in the following weekend. Rain is expected to return in the early days of December.

In the U.S., the HRW belt and West Texas are expected to receive limited precipitation the next 10 days, World Weather said.

Strategie Grains raised its 2022-23 European Union wheat production forecast by 100,000 MT to 125.6 MMT, though that would still be down 4.2 MMT (3.2%) from last year. The EU corn crop estimate was raised 400,000 MT to 50.8 MMT, which would be down 19.4 MMT (27.6%) from last year. In its first forecasts for 2023-24, Strategie Grains forecasts the area sown with soft wheat in the EU at 21.67 million hectares, down from 21.78 million hectares in 2022-23 but slightly above the five-year average.

China sold all 39,843 MT of state-owned wheat reserves put up for auction. The average sales price was 2,965 yuan ($414.57) per metric ton, which was up from 2,865 yuan per metric ton the previous week.

Pakistan tendered to buy 500,000 MT of optional origin milling wheat. 

CORN: USDA reported net U.S. corn sales during the week ended Nov. 10 at 1.17 MMT, more than quadruple the 265,300 MT from the previous week and in the upper end of trade expectations ranging from 700,000 MT to 1.4 MMT. Mexico led buyers at 919,800 MT, including decreases of 30,800 MT.

SOYBEANS: USDA reported net weekly U.S. soybean sales at 3.03 MMT, nearly quadruple the 794,800 MT reported the previous week and well above expectations for 900,000 MT to 1.7 MMT. China led buyers at 1.542 MT, including 395,100 MT switched from “unknown destinations” and decreases of 15,900 MT. January soybeans overnight fell to $14.12, the contract’s lowest intraday price since $13.97 3/4 on Oct. 31.

WHEAT: USDA reported net weekly U.S. wheat sales of 290,300 MT, down from 322,500 MT the previous week and at the low end of expectations ranging from 250,000 to 500,000 MT. December SRW wheat overnight fell as low as $7.93 3/4, the contract’s lowest intraday price since Sept. 1.

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-mixed

CATTLE: Live cattle futures may extend Wednesday’s gains behind expectations for cash market strength, while weakness in corn prices should support feeder cattle. Some light cash cattle trade surfaced around $150 in the Southern Plains on Wednesday, about steady with initial trade in the state last week, though most feedlots held out for higher prices. Cash sources signaled packer interest was picking up, suggesting it’s likely a matter of time before firmer prices surface. The northern market remained relatively quiet, though firmer prices are expected to develop there, as well. Choice beef cutout values fell $1.27 to $257.09, the lowest since Oct. 21, but movement was strong at 170 loads. December live cattle rose 52.5 cents Wednesday to $151.80.

USDA reported net weekly U.S. beef sales of 13,400 MT for 2022, down slightly from 13,700 MT the previous week. Top buyers included Mexico (5,200 MT, including decreases of 100 MT) and Japan (2,500 MT, including decreases of 400 MT).

HOGS: Lean hog futures may extend sideways trade but the upside is limited amid a continued soft tone in the cash market. The CME lean hog index is down 22 cents to $88.22 (as of Nov. 15), the lowest level since Feb. 9. Pork cutout values fell $2.07 Wednesday to $93.63 as a drop of more than $7 in bellies helped send the average to the lowest level since Feb. 2. Seasonal pressure this time of year is normal as supplies build seasonally, but we expect seasonal lows relatively soon as slaughter numbers and pork production are expected to peak earlier than normal. December lean hogs rose 25 cents Wednesday to $85.575.

USDA reported net weekly U.S. pork sales of 25,200 MT for 2022, up from 10,800 MT the previous week and led by Mexico at 15,300 MT, including decreases of 500 MT.