Ahead of the Open | November 18, 2022

GRAIN CALLS

Corn: 1 to 2 cents higher.

Soybeans: 1 to 3 cents higher.

Wheat: HRW wheat 1 to 3 cents lower, SRW and spring wheat 1 to 3 cents higher.

GENERAL COMMENTS: Corn, soybeans and SRW wheat gained modestly overnight amid corrective buying. Front-month crude oil futures are down around $3, dropping under $80 per barrel for the first time since Sept. 30. U.S. stock index futures signal a firmer open, while the U.S. dollar index is modestly weaker but off its earlier lows.

A senior United Nations official welcomed the 120-day extension of the deal allowing Ukrainian grain exports from Black Sea ports but hopes the next deal will extend beyond that timeframe. Rebeca Grynspan also said there was still work to be done, especially on fertilizer, as there is around 300,000 MT of fertilizer blocked at Russian ports. She said there aren’t problems with U.S. sanctions exemptions on Russian exports, but the situation is more complex with the European Union.

The two largest rail worker unions are expected to conclude voting this weekend on a deal brokered by the White House to stave off a strike. “It must be prevented,” Sen. Roger Wicker (R-Miss.), ranking member of the Senate Commerce, Science and Transportation Committee, said of a potential rail strike in an interview with Bloomberg. “When the moment arrives, and I hope it will not, Congress will step in and impose the Biden administration’s backstop plan.”

The Argentine government slashed its wheat crop estimate to 13.4 MMT from 22.1 MMT previously, citing impact of drought and freezes. The government also raised its 2022-23 soybean planted area forecast by 200,000 hectares to 16.5 million hectares after recent rains and forecasts calling for more rainfall.

Indian farmers have so far planted wheat and rapeseed on nearly 15% more area than a year ago, the latest data from the ag ministry showed. Wheat was planted on 10.1 million hectares as of Nov. 18, up from last year’s 8.8 million hectares. The area planted to rapeseed stood at 6.3 million hectares, up from last year’s 5.5 million hectares.

Russia’s wheat export tax for Nov. 23-23 will be 2,735.2 rubles ($45.31) per metric ton based on an indicative price of $312.50. That’s down from a rate of 2,922.1 rubles per metric ton the previous week.

Farmers in France had almost completed soft wheat and winter barley sowing by Nov. 14, and nearly all emerged crops were in good shape, data from farm office FranceAgriMer showed. An estimated 98% of soft wheat and winter barley crops were in good or excellent condition.

Egypt purchased 60,000 MT of wheat from an unspecified origin via a private deal.

CORN: December corn overnight reached $6.72 3/4, still 2 1/4 cents under the high so far this week but up from $6.58 at the end of last week. A firm close to the week could bolster ideas the market has established a near-term bottom after hitting a 2 1/2-month low at $6.51 1/4 on Tuesday. Initial resistance is seen at the 20-day moving average just under $6.75.

SOYBEANS: January soybeans rose as high as $14.28 overnight but are still down from $14.50 at the end of last week and are heading for the market’s third weekly drop in the past four. Initial support lies just under the overnight lows at the 40- and 100-day moving averages around $14.12. Strong demand fundamentals should limit the downside.

WHEAT: December SRW wheat rose as high as $8.16 1/2 overnight before stalling shy of the 20-day moving average about 1 cent above that level. The contract is down from $8.13 3/4 at the end of last week. While the Ukraine export deal extension is price-negative, weather problems in top producers such as Argentina and a tight global supply outlook may limit further downside.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-weaker

CATTLE: Live cattle are poised for a modest weekly gain behind a firm tone in the cash market, which continues to trade around the highest levels in 7 1/2 years. Cash cattle traded in the $151 to $152 area in the Southern Plains on Thursday, up around $1 to $2 from last week, while trade in the northern market turned active in the $154 to $155 range, also around $1 to $2 higher than last week. Wholesale beef prices appear to be stabilizing following a recent downturn as demand remains solid. Choice beef cutout values rose 1 cent Thursday to $257.10 on strong movement of 165 loads. December live cattle rose 95 cents Thursday to $152.75, the highest close in a week and up from $151.525 at the end of last week.

USDA’s Cattle on Feed Report this afternoon is expected to show the Nov. 1 feedlot inventory down 1.7% from last year. That would mark the second month in a row with a year-over-year decline in inventories after last month’s report showed the first such instance since December 2021. Analysts on average expect a 3.5% drop in October placements versus the same month in 2021, while marketings are expected to have increased 0.8%.

HOGS: Lean hog futures may face pressure from eroding cash fundamentals and weaker pork demand. Pork cutout values fell $1 Thursday to $92.63, as a drop of more than $6 in bellies helped send the average near a 10-month low. Movement slowed to just 252 loads on the day, about 19% below the average for the past 30 days and a sign packers may need to cut prices further to encourage retailer demand amid seasonally strong slaughter. CME lean hog index is down 8 cents to $88.14, a nine-month low. December lean hogs fell 60 cents Thursday to $84.975, up from $84.35 at the end of last week, while February gained 45 cents to $90.80, a three-week high.

China imported 160,000 MT of pork in October, which was up 6.7% from September but down 20.6% from last year. Through the first 10 months of this year, China imported 1.38 MMT of pork, down 58.8% from the same period last year.