Ahead of the Open | October 31, 2022
GRAIN CALLS
Corn: 10 to 14 cents higher.
Soybeans: 5 to 8 cents higher.
Wheat: HRW and SRW 35 to 45 cents higher, spring wheat 28 to 35 cents higher.
GENERAL COMMENTS: Corn and wheat futures gapped higher overnight after Russia’s withdrawal from an agreement enabling grain shipments from Ukraine fueled concerns over global supplies. Soybean futures also gained. Front-month crude oil was down over $1.50. U.S. stock index futures signal a lower open, while the U.S. dollar index is more than 650 points higher this morning.
Russia will indefinitely suspend its participation in the United Nations-brokered grain export deal with Ukraine after drone attacks on the Crimean city of Sevastopol, the country’s defense ministry announced Saturday. Russia will sell its own grain to world markets as a replacement for Ukrainian grain. The UN, Ukraine and Turkey pushed forward with grain shipments, despite the Russian withdrawal, according to the Joint Coordination Center in Istanbul. Twelve vessels set off from Ukrainian ports on Monday carrying a record daily volume of 354,500 MT of grain. The UN head of a Black Sea grain-exports deal said on Monday civilian cargo ships can never be military targets or held hostage, and that “the food must flow” under the deal.
Freezing or near-freezing temperatures are expected in parts of Argentina and Brazil today and Tuesday, with temperatures dropping to 27 to 39 degrees Fahrenheit across central and southern Argentina, World Weather Inc. said. The forecaster is not anticipating a large among of permanent damage, “but some cannot be ruled out,” World Weather said. “Some replanting of summer crops will be possible.”
Leftist Luiz Inacio Lula da Silva won Brazil’s runoff election with current incumbent President Jair Bolsonaro. “Brazil is ready to resume its protagonism in the fight against the climate crisis, protecting all our ecosystems, especially the Amazon rainforest,” Lula tweeted Sunday night, vowing to “fight for zero deforestation.” He also will seek fair global trade rather than trade deals that “condemn our country to be an eternal exporter of raw materials.”
Russia’s 2023 wheat production is expected to fall to 87 MMT from this year’s record crop of 101 MMT, ag consultancy IKAR forecasts. IKAR raised its estimate of Russia’s exportable surplus of wheat in 2022-23 by 2 MMT to 50 MMT.
China sold all 40,257 MT of state-owned wheat reserves put up for auction last week. Wheat from the 2014, 2015, 2016 and 2017 crops was sold at an average price of 2,843 yuan ($392.14) per metric ton.
CORN: December corn gapped higher at the start of overnight trading and reached $7.00, the contract’s highest intraday price since Oct. 12. The $7.00 mark continues to pose stiff resistance, though a push above that level could prompt bulls to target the October high at $7.06 1/2.
SOYBEANS: January soybeans overnight reached $14.24, the contract’s highest intraday price since Sept. 30.
WHEAT: December SRW wheat gapped higher at the start of overnight trading and hit $8.93 1/4, the contract’s highest intraday price since Oct. 14.
LIVESTOCK CALLS
CATTLE: Steady-firm
HOGS: Steady-weaker
HOGS: Lean hog futures may extend last week’s declines on pressure from a weakening cash market. The CME lean hog index is down 38 cents to $93.77 (as of Oct. 27), the third straight daily decline. December futures finished Friday $7.67 under the index, which may help limit seller interest. Continued weakness in the index could prompt traders to reconsider earlier ideas the cash market put in an early seasonal low, driving fresh selling in futures. Pork cutout values ended last week at $101.34, up 40 cents for the week. December lean hog futures rose 97.5 cents Friday to $86.10, down $3.025 for the week.
China’s sow herd grew 2% in September versus the prior month to 43.62 million head, according to the country’s ag ministry. The hog herd increased 3.1% from the prior month to 443.94 million head and was up 1.4% from year-ago.
