Ahead of the Open | September 30, 2022
GRAIN CALLS
Corn: 3 to 5 cents higher.
Soybeans: 3 to 7 cents higher.
Wheat: 6 to 11 cents higher.
GENERAL COMMENTS: Wheat futures rose overnight and are heading for a second straight weekly gain as Russia’s plans to annex four regions of Ukraine stoked concerns over supply disruptions. Corn and soybean futures also gained. Malaysian palm oil futures rose 2.3% but still dropped 8.5% for the week on concerns over weaker demand. Front-month crude oil have turned mildly weaker after earlier showing slight strength. U.S. stock index futures signal a firmer open and the U.S. dollar index is up more than 200 points.
Ian, now a hurricane again, is expected to make landfall again near Charleston, South Carolina around 1 p.m. CT. Ian is expected to weaken quickly once over land, but it will not completely dissipate until Saturday afternoon. Some crop damage is possible. The hurricane swept through about 40% of Florida’s beef cattle country, leaving ranches “kind of wrecked,” Jim Handley, executive vice president of the Florida Cattlemen’s Association told Bloomberg. The heaviest agricultural damage was to Florida’s orange crop.
USDA’s Grain Stocks Report and Small Grains Summary will be released later this morning. The Sept. 1 stocks in the Grain Stocks Report will set final 2021-22 carryover for corn and soybeans and signal implied first quarter 2022-23 wheat use. Traders expect Sept. 1 stock of 1.512 billion bu. for corn, 242 million bu. for soybeans and 1.776 billion bu. for wheat. USDA will also issue its final production estimates for this year’s U.S. wheat crop. All wheat production is expected to come in at 1.778 billion bu., up 5 million bu. from August, with just minor adjustments to the wheat classes.
Low river levels and soaring barge freight rates are curbing U.S. grain exports. Numerous barges have run aground on the lower Mississippi River and grain barge shipping rates are soaring to historic highs this week, Reuters reports, hampering already sluggish grain exports from the Gulf. Tow boats on the lower Mississippi have been forced to reduce the number of barges per tow by nearly 40% to squeeze through the reduced shipping lanes. Barge freight at the Port of St. Louis hit a record-high $49.88 per ton this week, up 58% from a year ago, according to USDA data, while grain barge unloads at Louisiana Gulf Coast export terminals were 39% below the five-year average since Sept. 1. “The projections for the water levels are going down, which means this situation is going to get worse,” Mike Steenhoek, executive director for the Soy Transportation Coalition, told Reuters. “Unless we get a significant amount of rainfall soon, this season is going to be a challenge.”
The U.S. average price of diesel fell 7.5 cents during the week ended Sept. 26 to $4.889 per gallon, up from $3.406 from the same week a year earlier but under $4.90 for the first time since March, according to the U.S. Energy Information Administration. Among 10 U.S. regions, Midwest diesel fell the most, down 1.14 cents to $4.881 per gallon.
Russia’s wheat export tax for Oct. 5-11 will be 2,119.0 rubles ($37.16) per MT based on an indicative price of $308.10. That’s down from a rate of 2,476.6 rubles per MT the previous week and the eighth straight weekly decline. After a slow start to 2022-23 wheat exports despite a record crop this year, Russia has been actively lowering the export tax in an effort to encourage more sales.
China set the 2023 minimum purchase price for wheat at 2,340 yuan ($329.69) per MT, an increase of 40 yuan (1.7%) compared with this year. China buys wheat from farmers at the minimum price when the market price drops below that level in order to support stable grain production. Cash wheat prices in the major growing province Shandong currently stand at 3,100 yuan a MT.
South Korea purchased 60,000 MT of corn likely to be sourced from South America or South Africa. The Philippines purchased 50,000 MT of Australian feed barley but passed on a tender to purchase up to 60,000 MT of feed wheat. Mauritius tendered to buy 25,800 MT of optional origin wheat flour. Algeria purchased between 150,000 and 200,000 MT of milling wheat that’s likely to be sourced from Russia and is continuing negotiations on more purchases, believed to be more focused on EU origin.
CORN: December corn futures rose to $6.75 1/2 overnight but stopped short of Thursday’s high at $6.76 3/4 and the 20-day moving average at $6.78. The contract is down slightly from $6.76 3/4 at the end of last week.
WHEAT: December SRW wheat reached $9.12 overnight, short of Thursday’s high at $9.14 1/2 and the 200-day moving average at $9.17 3/4. The contract is poised for a strong gain for the week after ending last week at $8.80 1/2.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-weaker
HOGS: Lean hog futures likely will be supported by USDA data that indicated U.S. producers contracted herds more than expected. Every category in USDA’s Hogs & Pigs Report Thursday was lower than the average pre-report trade estimates, which should trigger corrective buying in hog futures. USDA estimated the U.S. hog herd at 73.8 million head as of Sept. 1, down 1.1 million head (1.4%) from year-ago. The breeding herd at 6.152 million head declined 38,000 head (0.6%) from year-ago, while the marketing herd at 67.648 million head fell 1.029 million head (1.5%). All three categories were the smallest inventories since 2017.
