Ahead of the Open | November 8, 2022

GRAIN CALLS

Corn: 2 to 3 cents lower.

Soybeans: 5 to 6 cents lower.

Wheat: 1 to 6 cents lower.

GENERAL COMMENTS: Corn futures fell to the lowest levels in over five weeks overnight as U.S. dollar strength exacerbated concerns over demand. Soybeans and wheat also eased as traders looked ahead to USDA’s Crop Production and Supply & Demand Reports Wednesday. Malaysian palm oil futures fell more than 1% on concerns China’s Covid restrictions may harm demand. U.S. stock index futures signal a firmer open, while the U.S. dollar index is up more than 250 points.

USDA reported daily soybean sales totaling 144,000 MT for delivery to Mexico, 138,700 MT to China and 132,000 MT to “unknown destinations,” all for the 2022-23 marketing year. Today’s announcement was the first daily soybean purchase by China since Oct. 28. USDA also reported a daily corn sale of 338,600 MT to Mexico for delivery in 2022-23.

Crop consultant Dr. Michael Cordonnier lowered his Argentine corn crop estimate by 1 MMT to 50 MMT, citing “continued adverse weather and potentially lower acreage.” Last week was “not a good week in Argentina” amid frosts in many areas on top of continued dry conditions. He expects only around 30% of the country’s corn crop will be planted by the end of this month. “Generally, late-planted corn yields 10% to 15% less than early corn, depending on weather.” Cordonnier kept his Argentine soybean crop estimate at 50 MMT and also made no changes to his Brazilian crop forecasts of 151 MMT for soybeans and 125.5 MMT for corn.  

Overall soybean planting is over halfway complete in Brazil as many producers took advantage of drier weather in recent days, World Weather Inc. said. Rainfall will gradually return to center-west Brazil later this week that will help improve the moisture profile. “Soybean and first-season corn prospects are generally favorable,” the forecaster said. “Other production areas will see several waves of rain this week that will help improve the moisture profile as well.”

A deepening low-pressure system is expected to produce the season’s first major winter storm, including blizzard conditions, in the Northern Plains and northern Midwest starting around mid-week, World Weather said. The storm will shut travel across parts of the Dakotas and northern Minnesota Wednesday night and Thursday while stressing livestock. Bitter cold will induce strong demand for heating fuel and additional stress to animals with near- and subzero degree temperatures expected from Nebraska to Montana, North Dakota and possibly northwestern Minnesota this weekend.

Russia has not seen much progress on advancing its exports of grains and fertilizers as part of the Black Sea export initiative, Deputy Foreign Minister Andrey Rudenko told state-run ITAR-TASS news agency. “So far, we do not see much progress on the Russian part [of the grain deal], so all factors will be taken into account when the final decision on the extension will be made,” he said.

Ukrainian farmers have planted 4.3 million hectares to winter grains, including 3.6 million hectares of winter wheat, according to the country’s ag ministry. That was 90% of the area expected to be sown to winter grains for 2023 harvest. Winter wheat plantings are expected to fall sharply from 6.1 million hectares for the 2022 harvest due to Russia’s invasion.

The Australian Bureau of Meteorology (ABM) says oceanic and atmospheric indicators reflect mature La Niña conditions persist. Models suggest the weather phenomenon that typically increases the chance of above-average rainfall for northern and eastern Australia during its spring and summer will continue near-term, though the majority of them predict a return to ENSO-neutral conditions by early 2023.

Chinese leaders are considering steps toward reopening after nearly three years of tough pandemic restrictions. Chinese officials have grown concerned about the costs of their zero-tolerance approach to smothering Covid-19 outbreaks, which has resulted in lockdowns of cities and whole provinces, crushing business activity and confining hundreds of millions of people at home. But they are proceeding slowly, weighing potential costs of reopening for public health and support for the Communist Party.

Japan is seeking 94,603 MT of milling wheat in its weekly tender. Egypt canceled its tender to buy an unspecified amount of wheat due to high prices.

CORN: USDA late Monday reported 87% of the U.S. corn harvest was complete as of Sunday, up from the previous week and the average for the previous five years for that date, both 76%. Progress was slightly ahead of trade expectations at 86%. December corn overnight fell as low as $6.72 1/2, the contract’s lowest intraday price since $6.71 1/2 on Oct. 7, the low for last month. Further weakness may have bears targeting a late-September low at $6.61 1/2.

SOYBEANS: USDA on Monday said the U.S. soybean crop was 94% harvested as of Sunday, up from 88% the previous week and ahead of the 86% average for that date the previous five years. Progress matched trade expectations. January soybeans overnight fell under the 200-day moving average at $14.45 before rebounding. The contract posted a six-week high at $14.69 Monday before fading.

WHEAT: USDA rated 30% of the U.S. winter wheat crop in “good” or “excellent” condition as of Sunday, a two-point improvement from a week earlier. The crop was 92% seeded as of Sunday, up from 87% a week earlier and slightly ahead of the five-year average of 90%.

When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop inched up 0.2 point to 265.9 but remained 77.2 points (22.5%) below the five-year average for early November. The SRW crop improved 2.6 points to 350.5, though that was 12.5 points (3.4%) below average for the date. Click here for more details.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-mixed

CATTLE: Live cattle may gain followthrough technical support from Monday’s strong close and from expectations for further cash strength. Live steers averaged $151.98 last week, up 3 cents from the previous week’s average and the fifth consecutive weekly increase. December live cattle rallied $1.40 on Monday to $153.05, $1.07 above last week’s average cash cattle price. With a winter storm on its way to the Central and Northern Plains later this week, traders may build in more premium in futures, especially with the cash market expected to continue its upward trajectory. Choice beef cutout values rose 80 cents Monday to $264.55, near an 11-week high posted late last week. Movement was slower at 97 loads.

HOGS: Lean hog futures face mixed signals, as Monday’s sharp rally could lead to followthrough buying interest but upside may be limited because cash values continued to slump. The CME lean hog index is down 57 cents to $90.88 (as of Nov. 4), the lowest price since Feb. 11, though it is more than $12.00 above last year at this time. Monday’s futures rally narrowed the December contract’s discount to the index to $4.40. Pork cutout values rose 23 cents Monday to $96.95. December lean hogs rose $4.075 Monday to $87.05, the contract’s highest close since Oct. 26.