Ahead of the Open | October 24, 2022

GRAIN CALLS

Corn: 4 to 5 cents lower.

Soybeans: 12 to 13 cents lower.

Wheat: 6 to 9 cents lower.

GENERAL COMMENTS: Corn, soybean and wheat futures fell overnight on pressure from outside markets. Front-month crude oil futures are down nearly $2. U.S. stock index futures signal a firmer open, while the U.S. dollar index is up more than 250 points.

Ukraine accused Russia of blocking the full implementation of the Black Sea grain deal. “Russia is deliberately blocking the full realization of the Grain Initiative,” Ukraine’s infrastructure ministry said in a statement via the Telegram messaging app. As a result, Ukrainian ports the last few days “are working only at 25% to 30% of their capacity.” The United Nations is calling for “urgent measures to be taken” to prevent shipping delays. Since July 1, Ukraine has exported nearly 12 MMT of grain, according to the country’s ag ministry, down 33.4% from the same period last year. The exports included 6.29 MMT of corn, 4.49 MMT of wheat and 1 MMT of barley.

China’s economy grew 3.9% from a year earlier in the third quarter, quickening from the 0.4% growth recorded in the second quarter. That topped the 3.5% economic growth expected by economists. For the first nine months of the year, China’s GDP expanded 3.0% from a year earlier, well below the 5.5% annual growth target set earlier by the government.

China imported 7.72 MMT of soybeans in September, up 840,000 MT (12.2%) from August and 550,000 MT (7.7%) more than last year. Imports were slightly higher than expected amid increasing urgency to rebuild stockpiles. Through the first nine months of the year, China imported 69.04 MMT of soybeans, down 6.6% from the same period last year.

China’s third-quarter pork output totaled 12.11 MMT, up by less than 1% from the same period last year. China’s pork output totaled 41.5 MMT in the first nine months of the year, up 5.9% from last year. But the growth rate of China’s pork production has slowed recently since increasing every quarter year-on-year for the last two years, as some farmers reduced their breeding herds after months of low hog prices and high feed costs eroded profits.

Global grain merchants Archer-Daniels-Midland and Bunge likely continued their recent string of solid quarterly profits, bolstered by tight global grain supplies and strong demand for food and fuel, Reuters reported ahead of both companies' quarterly earnings releases this week. Healthy soybean crush margins in the United States were also expected to underpin results, they said.

Large speculators in mid-October increased bullish bets in the soybean market for the first time in five weeks. The managed money net long in soybean futures and options rose 1,124 contracts during the week ended Oct. 18 to 66,862 contracts, according to Commodity Futures Trading Commission data. In soyoil, the managed money net long surged to the highest level since mid-May. In SRW wheat, large speculators increased their net short for the second consecutive week.

Saudi Arabia purchased 566,000 MT of optional origin milling wheat. Iraq pushed back the closing date on it tender to buy a nominal 50,000 MT of optional origin wheat to Oct. 30. Algeria tendered to buy a nominal 50,000 MT of soft milling wheat.

CORN: December corn futures traded within last Friday’s range overnight after ending last week at $6.84 1/4, down 13 1/2 cents for the week. USDA will update weekly harvest progress after today’s close. A week ago, USDA reported 45% of the U.S. corn crop was harvested as of Oct. 16, up from 31% a week earlier and ahead of the 40% average for the previous five years.

SOYBEANS: November soybeans traded within Friday’s range overnight after ending last week at $13.95 1/2, the highest close since Oct. 13 and up 11 3/4 cents for the week. Traders will watch for any additional export business from China after USDA reported a combined 1.955 MMT in daily soybean sales the previous two weeks.

WHEAT: December SRW wheat traded within Friday’s range overnight after ending last week at $8.50 3/4, down 9 cents for the week. USDA will update winter seeding progress after today’s close. A week ago, USDA reported the winter wheat crop was 69% planted as of Oct. 16, up from 55% a week earlier and slightly ahead of the 68% five-year average.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle futures may extend last week’s rally on cash strength and bullish technicals, though the market is nearing overbought levels and could experience some corrective selling. USDA-reported live steers averaged $150.06 through Friday morning, up from the previous week’s average of $146.99 and the third consecutive weekly increase. Despite recent strong gains, December live cattle futures hold just a small premium to the cash market, which could lead to further near-term buying interest. December live cattle rose 75 cents Friday to $152.425, a lifetime-high close for the contract.

USDA’s Cattle on Feed Report released after Friday’s close was largely price-neutral, though continued declines in feedlot inventories is a long-term bullish factor. The Oct. 1 feedlot inventory was down 0.9% from year-ago, with September placements down 3.8% and marketings up 4.0%.

HOGS: Lean hog futures may extend last week’s rally on firm cash and bullish technicals, though the market is overbought and could be susceptible to short-term corrective selling. The CME lean hog index is 29 cents higher to $94.05 (as of Oct. 20) and has risen six of the past seven days. December lean hog futures have been rising with the cash index and finished Friday $4.965 below today’s index quote. Pork cutout values fell $2.93 Friday to $100.94, though movement was strong at 334 loads. December lean hogs rose $2.10 Friday to $89.125, the highest close since Aug. 15 and a weekly gain of $6.875.

China imported 150,000 MT of pork in September, up 10,000 MT (7.1%) from August but down 54,000 MT (26.5%) from last year. Through the first nine months of this year, China imported 1.22 MMT of pork, down 61.2% from the same period last year.