Ahead of the Open | October 5, 2022
GRAIN CALLS
Corn: 3 to 4 cents lower.
Soybeans: 9 to 12 cents lower.
Wheat: 6 to 9 cents lower.
GENERAL COMMENTS: Grain and soybean futures fell overnight amid growing recession concerns and strength in the U.S. dollar. Malaysian palm oil futures rose 0.7%, while front-month crude oil firmed slightly. U.S. stock index futures signal a weaker open and the U.S. dollar index is up around 1,000 points.
StoneX raised its corn yield estimate by 0.7 bu. from last month to 173.9 bu. per acre, but cut its production forecast 112 million bu. to 14.056 billion bushels. The brokerage firm cut its soybean yield estimate by 0.5 bu. to 51.3 bu. per acre and lowered its production forecast 73 million bu. from last month to 4.442 billion bushels.
Ukraine is holding tough talks to ensure grain continues flowing from its Black Sea ports even after a deal on such exports expires next month, an adviser to the Ukrainian government said. “We hope for a prolongation of the mandate to bring grain out of Ukraine’s ports,” Mykhailo Podolyak, an adviser to the Ukrainian president’s chief of staff said, said in a Bloomberg TV interview on Tuesday. He declined to elaborate on when any results can be expected, describing the talks as “complicated.” Ukraine doesn’t negotiate with Russia directly, according to Podolyak. Instead, there are sub-negotiating groups that also include Turkey and the United Nations.
USDA’s ag attaché in Beijing estimates China’s corn crop at 270 MMT, 4 MMT lower than USDA’s official forecast and 2.5 MMT lower than last year’s crop. The attaché cited reduced planted area and yield losses caused by excessive rains in the major production area of northeast China.
The Joint Ministerial Monitoring Committee recommended OPEC+ cuts oil production by 2 million barrels per day. A final decision is expected later today.
The European Union agreed to a price cap on Russian oil as part of a new sanctions package to punish Russian President Vladimir Putin for his nuclear threats and illegal land grab in Ukraine. The bloc has tried to reduce its reliance on Russian energy since the invasion began, but member states with large shipping industries had been anxious about the costs of an oil price cap to their economies. Meanwhile, the Group-of-Seven industrialized economies are within weeks of announcing a formal cap on the price of Russian oil, according to Ben Harris, the U.S. Treasury’s assistant secretary for economic policy. The step will be announced “substantially before Dec. 5,” Harris said. That’s the date when aggressive European Union sanctions on Russian oil exports are due to enter into force.
The White House is warning the oil industry that it could take “extraordinary” measures to rein in gas prices, the Washington Post reports. Democrats also want to blame big corporations politically for high prices, which have now hit $6.38 per gallon in California and are particularly acute in the West. “The most potent policy option the White House has is emergency authority to limit exports to other nations, a strategy that would be targeted at boosting inventories at home but which could destabilize global markets and exacerbate the energy crunch.”
Russian President Vladimir Putin signed laws annexing four Ukrainian regions. Earlier this week, both houses of the Russian parliament ratified treaties making the Donetsk, Luhansk, Kherson and Zaporizhzhia regions part of Russia. Ukrainian forces have driven back Russian troops in three partially occupied Ukrainian territories. In recent weeks, Kyiv has recaptured large swaths of territory while nearly 200,000 Russians have fled to bordering nations to escape Putin’s conscription order. “Russia isn’t winning. Putin’s great nationalist celebration of conquests is turning out to be a debacle,” said Daniel Fried, a fellow at the Atlantic Council and a former U.S. ambassador to Poland.
CORN: December corn rose 2 1/4 cents Tuesday to $6.83, the highest close since Sept. 22. The contract dropped to $6.78 1/2 overnight.
WHEAT: December SRW wheat fell as low as $8.95 overnight after dropping 9 cents Tuesday to $9.03.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-weaker
HOGS: Lean hog futures posted a downside breakout from the bear flag formation on the daily charts Tuesday, which projects contracts to around their lows. While we feel traders are overly pessimistic, that won’t likely stop additional near-term selling given the technical breakdown.
