Ahead of the Open | November 28, 2022
GRAIN CALLS
Corn: 4 to 5 cents lower.
Soybeans: 3 to 5 cents lower.
Wheat: HRW and SRW wheat 2 to 10 cents lower, spring wheat 2 to 6 cents higher.
GENERAL COMMENTS: SRW wheat futures extended the past two weeks’ declines, falling to the lowest levels in over three months overnight amid concerns with Covid-related protests in China. Corn and soybean futures also fell as crude oil remained under pressure. Front-month crude oil was down more than $2 after dropping under $74 to an 11-month low. U.S. stock index futures signal a weaker open and the U.S. dollar index is down around 200 points.
USDA reported a daily sale of 110,000 MT of soybeans for delivery to “unknown destinations” for delivery during the 2022-023 marketing year.
Protests against China’s strict Covid lockdowns raged across the country during the weekend, including in Shanghai and Beijing and dozens of university campuses, as protesters made a show of civil disobedience unprecedented since leader Xi Jinping assumed power a decade ago. Some protesters called for Xi to step down. There was no sign of new protests on Monday in Beijing or Shanghai, but dozens of police were in areas where the weekend demonstrations took place. State media did not mention the protests, instead urging citizens in editorials to stick to the strict Covid rules. The global marketplace is uneasy to start the trading week amid the civil unrest in China.
Exports of Ukraine’s grain will not reach 3 MMT in November as Russia tries to limit ship inspections at ports, Ukraine’s Infrastructure Minister Oleksandr Kubrakov said Sunday. The expected exports would be down from 4.2 MMT of grain that left Ukrainian ports in October. Kubrakov said 77 ships were queuing to pass inspection in Turkey while the three Black Sea ports were using only 50% of their capacity. Since July 1, Ukrainian grain exports totaled 17.2 MMT, down 32% from the same period last year, including 9.1 MMT of corn, 6.6 MMT of wheat and 1.4 MMT of barley.
Ukraine President Volodymyr Zelenskyy announced a new effort to move grain to Africa, with the U.S., France, U.K., Sweden, Austria and Canada all committing financial resources to the effort. Ukraine originally proposed the action at the G20 summit and the “Grain from Ukraine” effort was formally unveiled over the weekend. The Guardian reports the effort would aim to send up to 60 ships of grain to poorer countries in Africa.
Black Sea consulting firm SovEcon estimates Russia will export 4.9 MMT of grain in November, up 200,000 MT from October, including 4.4 MMT of wheat. Exports would be up from 3.958 MMT in November 2021. After a slow start to 2022-23, Russian grain exports have gradually built after record production.
Argentina on Friday announced a boost in the exchange rate for U.S. dollars brought in through soy shipments until the end of the year, seeking to rev up exports. The 230 pesos per U.S. dollar exchange rate for soybeans and soy products starts today, Economy Minister Sergio Massa announced. The country’s central bank is looking to bolster its international currency reserves, needed in large part to meet debt payments. The “soy dollar” exchange rate boost to 200 pesos per dollar in September was highly effective in freeing up soy shipments.
Argentina was very warm to hot with limited rainfall during the weekend. World Weather Inc. expects central and southeastern parts of the country to receive some relief rains during the middle of this week, while northern areas will stay dry. Portions of western and southern Brazil will also receive some rains this week into next week, but “there is concern for crops in a part of Mato Grosso and immediate neighboring areas because of dryness,” the forecaster said, while conditions in most areas are favorable.
Soybean planting reached 87% done in Brazil as of last Thursday, according to AgRural, slightly behind the 90% pace last year at this time. AgRural says in only four states – Santa Catarina, Rio Grande do Sul, Piauí and Pará – planting had not yet reached 70%, but this as more due to differences in the growing cycle than to significant delays. AgRural forecasts Brazilian soybean production at 150.5 MMT on planted area of 43.2 million hectares and trendline yields. AgRural said 88% of Brazil’s first corn crop was planted, slightly behind 93% at this time last year.
South Korea purchased 138,000 MT of optional origin corn.
CORN: March corn futures fell under the 10-day moving average at $6.66 overnight and dropped as low as $6.64 but held above 100-day moving average at $6.60.
WHEAT: March SRW wheat overnight fell as low as $7.82, the contract’s lowest intraday price since Aug. 19. USDA will update its weekly crop condition ratings after today’s close. A week ago, USDA reported 32% of the U.S. winter wheat crop in “good” or “excellent” condition as of Nov. 20, up from 30% a week earlier. Wheat rated “poor” to “very poor” totaled 32%, down from 34% a week earlier.
LIVESTOCK CALLS
CATTLE: Steady-firm
HOGS: Steady-weak
February live cattle ended last week at $155.125, down 72.5 cents for the week, after rising near a four-week high of $156.90 on Nov. 23.
HOGS: Lean hog futures may extend last week’s declines on eroding cash fundamentals and weakening technicals. The CME lean hog index is down 61 cents to $85.56 (as of Nov. 23), extending a seasonal drop to the lowest level since early February. December futures settled Friday $1.785 below today’s cash quote, indicating traders expect the index to continue its seasonal decline into the contract’s mid-December expiration. A prolonged slide in wholesale pork is fueling concerns over demand. Pork cutout values ended last week at $87.63, down $5.81 for the week and the lowest daily average since Jan. 18. February lean hogs ended last week at $88.50, down $1.05 for the week and a two-week low
