Ahead of the Open | September 27, 2022

GRAIN CALLS

Corn: 6 to 8 cents higher.

Soybeans: 12 to 16 cents higher.

Wheat: 15 to 20 cents higher.

GENERAL COMMENTS Wheat futures rose sharply overnight in a corrective rebound from Monday’s losses as outside market pressures eased. Corn and soybeans also gained in corrective trade after USDA reported slower-than-expected harvest progress. Malaysian palm oil futures fell 0.3% amid concerns over weaker demand. Front-month crude oil futures are more than $1 higher. U.S. stock index futures signal a firmer open and the U.S. dollar index is down more than 200 points after earlier rising to the highest level since May 2002.

Farmers are among the Russians being drafted into the military, President Vladimir Putin told a meeting with officials today, signaling potential risks for the 2023 crop, Reuters reported. Autumn is a busy season for farmers in Russia, the world’s top wheat exporter, as they sow winter wheat for the next year’s crop and harvest soybeans and sunflower seeds.  

Hurricane Ian, currently a Category Three storm, was over western Cuba this morning and is expected to intensify to a Category Four storm today over the southeastern Gulf of Mexico. Some weakening is expected prior to Ian hitting the Tampa Bay area of Florida Wednesday night into Thursday morning. The storm’s latest track and intensity will reduce the impact on the interior southeastern U.S., but central and northern Florida will take the brunt of the storm. This new storm path will further spare Georgia’s most important cotton production areas from the hurricane’s wrath.

A total of 231 ships carrying 5.3 MMT of agricultural products, including nine vessels with 345,3000 MT that departed today, have left three Ukrainian Black Sea ports since Aug. 1 when the grain export deal started. Prior to the war, Ukraine exported up to 6 MMT of grain per month and the three ports included in the export deal could load 100 to 150 ships per month.

China will auction 40,000 MT of wheat from state-owned reserves on Oct. 12. The sale will include wheat from the 2014 crop offered at 2,410 yuan (around $336) per MT and wheat from the 2015, 2016 and 2017 crops at 2,500 yuan (around $348.50) per MT. Spot prices for wheat in China are currently above 3,000 yuan per MT.

South Korea purchased 137,000 MT of corn expected to be sourced from South America or South African and 68,000 MT of South American corn. Japan is seeking 61,800 MT of milling wheat in its weekly tender. Jordan made no purchases in a tender that closed today to buy 120,000 MT of milling wheat but issued a similar tender with an Oct. 4 deadline.

CORN: USDA late Monday reported the U.S. corn harvest at 12% complete as of Sunday, up from 5% from a week earlier but slightly under trade expectations for 13%. The crop was rated 52% “good” to “excellent,” unchanged from the previous week. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 1.8 points to 335.2, the 11th straight weekly decline and 25.7 points under the five-year average.

SOYBEANS: USDA reported the U.S. soybean harvest at 8% complete as of Sunday, up from 3% a week earlier but behind the 13% average for the past five years. Analysts expected harvest to be 11% complete. USDA rated 55% of the crop in “good” to “excellent,” unchanged from last week. Based on the Pro Farmer CCI, the soybean crop slipped 0.7 point to 338.2, the eighth straight weekly decline and 15.0 points under the five-year average.

WHEAT: USDA said the U.S. winter wheat crop was 31% planted at the start of the week, up from 21% a week earlier and slightly ahead of the 30% five-year average, USDA reported. Analysts expected planting to be about 33% complete. December SRW wheat rose above the 10-day moving average of $8.73 overnight and reached $8.78 1/2 but held within Monday’s range.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-weaker

CATTLE: Live cattle futures may face followthrough technical pressure from Monday’s drop to two-month lows. Traders began the week expecting firmer cash trade again after last week’s average price firmed $1.75 to $144.94, but futures’ poor technical performance could weigh on this week’s cash trade. At minimum, packers will likely delay initial bids, especially after buying large numbers of cattle last week. Feedlot operators, who are current, won’t likely be willing sellers at lower prices, meaning there’s potential for an extended cash standoff this week. Weakness in wholesale prices may also pressure futures. Choice beef cutout values fell 79 cents Monday to $247.84, an 18-month low. Movement was strong at 110 loads.

December live cattle fell $1.20 Monday to $147.35, the contract’s lowest closing price since July 21. November feeder cattle fell $1.20 to $177.05, the lowest close since June 14.

HOGS: Lean hog futures may experience carryover pressure from a chart breakdown Monday that sent the market to an eight-month low. Futures dropped below a broad sideways trading range that’s been in place since February. While traders are likely overly bearish, it’s going to be difficult for bulls to regain their footing with technicals slumping and recession concerns accelerating. Cash fundamentals are also eroding, with today’s CME lean hog index is down 60 cents to $96.99. Pork cutout values rose 53 cents Monday to $101.46 on strong movement of 348 loads. December lean hogs fell $3.40 Monday to $79.40, the contract’s lowest close since late January.

China will sell an unspecified amount of pork from state reserves as it tries to increase supplies ahead of the week-long National Day holiday that begins Oct. 1. In total, Beijing plans to sell 200,000 MT of pork from state-reserves to ease prices, which were 30% higher than year-ago last week.