Ahead of the Open | October 28, 2022

GRAIN CALLS

Corn: 2 to 3 cents lower.

Soybeans: 6 to 7 cents lower.

Wheat: HRW and SRW 8 to 12 cents lower, spring wheat 2 to 4 cents lower.

GENERAL COMMENTS: Corn, soybean and wheat futures fell overnight and are heading for weekly declines amid concerns over global demand and an upturn in the U.S. dollar. Malaysian palm oil futures fell 3.9% and posted a drop of 2.8% for the week. Front-month crude oil was down around $1. U.S. stock index futures signal a lower open, while the U.S. dollar index is up around 175 points this morning.

USDA reported daily soybean sales of 126,000 MT for delivery to China and 198,000 MT to Spain, both during the 2022-23 marketing year. Today’s sale follow four previous USDA-announced soybean purchases this month by China totaling 1.383 MMT.

Western U.S. HRW wheat areas are expected to receive a “restricted amount” of rainfall the next week, with the exception of southern Oklahoma and north-central Texas, World Weather Inc. said. Weather in the central and eastern U.S. “will become more active” Nov. 3-10, with moisture likely in the northern Plains and upper Midwest early in that period, then from the southeastern Plains into the Ohio River Valley in the latter part of that seven-day period, the forecaster said.

Russia said only 3% of food shipped from Ukrainian ports since the grain export deal was signed has gone to the poorest countries, while Western countries account for half of all shipments. “The geography of the recipients of these cargoes has turned out to be completely inconsistent with the initially declared humanitarian objectives,” the country said in a statement. “Needy states such as Somalia, Ethiopia, Yemen, Sudan, (and) Afghanistan have received just 3% of food, mostly from the World Food Program.”

Russia’s wheat export tax for Nov. 2-8 will be 2,923.2 rubles ($47.40) per MT based on an indicative price of $312.70. That’s down from a rate of 3,028.0 rubles per MT the previous week.

Much-needed rain improved conditions for 2022-23 wheat and corn in Argentina, where a prolonged drought has reduced both crops, the Buenos Aires Grain Exchange said in its weekly crop update. “Important rains on sectors of the province of Buenos Aires... improved the scenario for the sown wheat,” it said, adding the wheat area with fair to dry soil moisture conditions fell nine percentage points to 47%. For corn, the exchange said “58% of the lots have a water condition between optimal and adequate.”

Lower natural gas prices are encouraging producers to restart fertilizer production at European plants. About 47% of the region’s ammonia capacity is now offline, down from 70% in September, the International Fertilizer Association said. That should make it a bit easier for farmers to get hold of crucial nutrients. U.S. farmers may pull back on ammonia use this quarter due to the crop nutrient’s premium price tag, dry soil conditions across the Midwest and expectations of lower prices into the second quarter, Bloomberg Intelligence said.

China will sell another 500,000 MT of state-owned soybeans on Nov. 11. Beijing has regularly been auctioning imported soybeans from the 2019, 2020 and 2021 crop years to alleviate tight domestic supplies.

Indonesia plans to set its crude palm oil reference price at $770.88 per metric for Nov. 1-15, the country’s deputy minister for economic affairs said on Friday, up from $713.89 currently. The planned reference price would increase the export tax for the period to $18 per metric ton from the current $3.

South Korea purchased 134,000 MT of corn expected to be sourced from South America or South Africa.

CORN: December corn overnight fell as low as $6.78, just 3/4 cent above this week’s low and slightly above initial support at the 50-day moving average of $6.76 1/2. The lead contract could post its second straight weekly decline after ending last week at $6.81, but is little changed from the end of September.

SOYBEANS: November soybeans fell as low as $13.72 1/2 overnight and are heading for the first weekly decline in the past four after ending last week at $13.95 1/2. Further weakness may have bears targeting this week’s low at $13.66, but declines should be limited by strong demand fundamentals.

WHEAT: December SRW wheat fell as low as $8.27 1/2 overnight and are heading for a second consecutive weekly drop after ending last week at $8.50 3/4. Initial support is seen at a five-week low of $8.24 posted Wednesday.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-weaker

CATTLE: Live cattle futures are poised for a second consecutive weekly gain on continued strength in cash fundamentals. Cash cattle traded around $150 in the Southern Plains on Thursday, about $2 higher than last week’s weighted average in the region, though some feedlots held out for even higher prices. Trade in the northern market was quieter, with asking prices of $155 to $156 in Nebraska. This week’s average cash price will mark a new high for the year and will likely end up at the highest level since May or June 2015. Live steers last week averaged $150.07. Wholesale beef also extended recent strength. Choice beef cutout values rose $1.63 Thursday to $262.49, the highest daily average since Aug. 29.

December live cattle fell 15 cents Thursday to $153.425, up from $152.425 at the end of last week. Further strength today may have market bulls aiming for the contract high of $154.25, posted Tuesday.

HOGS: Lean hog futures may face followthrough pressure from Thursdays sharp, technically-driven losses, though declines may be limited by longer-term bullish fundamentals. Cash fundamentals showed signs of weakening this week, with today’s CME lean hog index down 32 cents to $94.15, the second straight daily decline. December hogs settled $9.025 below today’s cash quote and could decline further, but the benchmark remains near a four-week high. Pork cutout values rose 72 cents to $98.46, up from a four-week low Wednesday. December lean hogs fell $3.375 Thursday to $85.125, the contract’s lowest close since Oct. 17 and down from $89.125 at the end of last week.