Ahead of the Open | September 14, 2022

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GRAIN CALLS

Corn: 5 to 7 cents lower.

Soybeans: Steady to 1 cent lower.

Wheat: 1 to 7 cents lower.

 

GENERAL COMMENTS: Grain and soybean futures eased toward the end of the overnight session as traders watched outside markets after Tuesday’s selloff in U.S. equities. Malaysian palm oil futures fell 1% amid profit-taking following three days of gains. Front-month crude oil futures are slightly higher. U.S. stock index futures signal a slightly firmer open and the U.S. dollar index is down more than 300 points.

U.S. railroads are poised to stop shipments of farm product and other key goods starting Thursday. Norfolk Southern Corp. said it plans to halt unit train shipments of bulk commodities Thursday ahead of a potential U.S. rail worker strike the following day. The railroad also said it would stop accepting autos for transit at its facilities starting this afternoon. Other railways are likely to follow suit, according to one agriculture group. Railroads have until a minute after midnight on Friday to reach tentative deals with holdout unions representing about 60,000 workers.

All wheat production in Canada surged 56% from year-ago to 34.7 MMT, while canola production was up 39% to 19.5 MMT, according to Statistics Canada. Estimated wheat production slightly topped expectations of 34.5 MMT, based on a Reuters poll. Stats Canada said consistent precipitation and warm temperatures resulted in better crop conditions on the Prairies, though dry conditions continue to be a concern for the southwestern and central parts of Saskatchewan.

Ukraine exported 1.5 MMT of grain in the first 13 days of this month, according to the country’s ag ministry, as shipments continue to build following the deal to restart exports on Aug. 1. But the pace was still 34% less than the same period last year. Since July 1, Ukraine has exported 5.8 MMT of grain, including 3.4 MMT of corn, 1.83 MMT of wheat and 525,000 MT of barley. The 2022-23 year-to-date export pace was 46.8% behind the same period last year.

France’s ag ministry lowered its forecast for 2022-23 French wheat exports outside the EU by 300,000 MT to 10.0 MMT, though that would still be up 13.8% from 2021-22. The export forecast within the 27-member bloc was increased by 110,000 MT to 7.13 MMT.

The Organization of the Petroleum Exporting Countries (OPEC) said Tuesday the supply of oil has become disconnected from demand, a possible sign it is planning to cut output to prop up prices. The group last week cut its oil production levels by 100,000 barrels a day, but prices have continued to fall. Meanwhile, the International Energy Agency (IEA) lowered global crude oil demand by 100,000 barrels per day (bpd) in 2022 to 2 million bpd. IEA cut its forecast for Chinese oil demand by 400,000 bpd this year.

Taiwan purchased 65,000 MT of Brazilian corn.

 

CORN: December corn overnight fell as low as $6.82 3/4 after dropping 3 1/4 cents Tuesday to $6.92 3/4, down from Monday’s 2 1/2-month closing high. Initial support comes in at the 10-day moving average around $6.76 3/4.

SOYBEANS: November soybeans overnight fell as low as $14.72 1/4 after declining 9 1/2 cents Tuesday. The contract posted a 2 1/2-month intraday high at $15.08 3/4 earlier in the session.

WHEAT: December SRW wheat traded within Tuesday’s range overnight. The contract rose 1 3/4 cents Tuesday and faces initial resistance at the two-month high of $8.78 posted Monday.

 

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-firmer

 

CATTLE: Live cattle futures may face pressure from slumping wholesale beef prices and further potential weakness in the cash market. Choice boxed beef prices fell $2.28 Tuesday to $256.66, the lowest level since May 11, while Select was $2.18 lower. Wholesale beef’s sharp drop has generated strong retailer buying, as packers moved 172 loads of product Tuesday. While there’s plenty of retailer demand under the market, packers likely will attempt to lower cash prices again this week, especially if live cattle futures face followthrough selling from Tuesday’s losses. October live cattle fell 95 cents Tuesday to $144.80. October feeder cattle fell $2.60 to $180.525, a two-month low.

HOGS: Lean hog futures may gain support on followthrough technical strength from Tuesday’s rally to four-week highs. October lean hogs surged $3.875 to $95.75, the highest closing price since Aug. 17. The CME lean hog index is down 62 cents to $97.67 (as of Sept. 12), narrowing the gap with front-month futures to $2.54, the smallest since April 19. October futures’ strength indicates traders expect the cash market to post a short-term bottom soon, but it’s unlikely the lead contract would move to a premium unless the cash index starts to firm. Pork cutout values fell $1.01 Tuesday to $104.70 but movement was strong at 357 loads.

China will sell 15,000 MT of frozen pork stocks from state reserves on Sept. 17. We reported the second batch of pork sales yesterday, though no date or tonnage were provided at that time. Last week China sold 37,000 MT of state-owned pork stocks.

 

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