Ahead of the Open | September 6, 2022
GRAIN CALLS
Corn: 6 to 8 cents higher.
Soybeans: 17 to 19 cents higher.
Wheat: 8 to 12 cents higher.
GENERAL COMMENTS: Corn and wheat futures were firmer overnight as traders returned from the three-day holiday weekend, while soybeans fell amid prospects for greater supplies from Argentina. Malaysian palm oil futures fell 3% to a six-week closing low on expectations for higher inventories. Front-month crude oil futures are down slightly. U.S. stock index futures signal a stronger open, while the U.S. dollar index is up more than 300 points.
Rainfall reached much of the eastern Midwest over the weekend, with greatest totals in the Ohio River Basin. Southern Illinois, southern Indiana, western, central and southwestern Ohio and portions of Kentucky received 1 to 3 inches, with local totals of over 5 inches, World Weather Inc. said. Soybean pod-filling conditions should improve in southeastern Iowa and northwestern Illinois. Much of the western Corn Belt was dry.
Argentina boosted the exchange rate for its soybean exports. For September, the exchange rate for Argentine soybean farmers will be 200 pesos per U.S. dollar, up from the previous rate of 139 per dollar, the official exchange rate. The move is an attempt by the Argentine government to increase exports and hard currency reserves. Through the end of August, Argentina's farmers sold nearly 52% of the 44-MMT of the 2021-2022 harvest, significantly below sales notched during the same period in the previous season.
Australia’s wheat production is forecast to be the second highest ever at 32.2 MMT, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), though that would be down 11% from last year’s record. “Timely and sufficient rainfall in late winter greatly benefitted crop development in many regions and lifted average yield potentials across all states. Cropping regions in Western Australia, South Australia and Victoria have benefitted more consistently from these winter developments than those in New South Wales and Queensland,” ABARES said.
Strategie Grains cut its forecast for this year’s European Union sunflower seed, citing damage from recent dry and hot weather. The firm now estimates EU sunflower seed production at 9.17 MMT, down nearly 1.2 MMT from its previous forecast. That would be down 11.3% from last year, despite a sharp increase in planted acreage.
Russia will not restart the flow of gas to Germany as planned. Gazprom, the Russian-owned energy giant, said it would postpone restarting the pumping of natural gas through the Nord Stream 1 pipeline until the “collective west” lifts sanctions against Moscow over its invasion of Ukraine, the Kremlin said. The announcement, which raises fears of an extended energy shortage in Europe, followed an agreement by the G7 finance ministers to cap the price of Russian oil.
OPEC+ agreed Monday to cut oil production for the first time in over a year, delegates said, saying it should pull back about 100,000 barrels a day from October amid fears of a global recession and more Iranian oil coming to the market in the event of a revived nuclear deal.
Malaysia's palm oil inventories at the end of August likely rose above 2 MMT for the first time in more than two years, lifted by a jump in production, a Reuters survey showed. Stockpiles jumped 15% from the month before to 2.03 MMT, the highest since April 2020. Output in the world's second largest producer climbed 8% to 1.7 MMT, hitting a 10-month peak.
South Korea purchased 65,000 MT of Australian feed wheat and tendered to buy up to 140,000 MT of optional origin corn. Taiwan tendered to buy 55,375 MT of U.S. milling wheat. Jordan purchased 60,000 MT of wheat and tendered to buy another 120,000 MT.
CORN: December corn futures overnight reached $6.73 1/4 before hitting resistance at the 100-day moving average at $6.73 3/4. The contract ended last week at $6.65 3/4, up 1 1/2 cents for the week. Traders will watch for early harvest reports and await USDA’s weekly crop condition updates after today’s close. A week ago, USDA reported 54% of the U.S. corn crop in “good” or “excellent” condition as of Aug. 28, down from 55% the previous week
WHEAT: December SRW wheat overnight pushed slightly above the 50-day moving average to reach $8.25 before pulling back. The contract ended last week at $8.11, up 53/4 cents for the week.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
HOGS: Lean hogs may face followthrough pressure from a soft close Friday and continuing weakness in cash fundamentals. The CME lean hog index is down another $1.52 today (as of Sept. 1) to $104.74, near a three-month low. National direct cash hog prices continue to fall seasonally, with the bulk of the pressure noted in the Iowa/southern Minnesota market. While fall- and winter-month hog futures hold wider-than-normal seasonal discounts to the cash market, additional chart-based selling can’t be ruled out. Pork cutout values ended last week at $102.25, up 2 cents from a week earlier. Movement Friday was strong at 302.6 loads. October lean hogs fell $1.925 Friday to $90.075, down 57.5 cents for the week.
China will sell 37,000 MT of pork from state-owned reserves on Sept. 8. The sales are meant to boost domestic supplies and ease prices, which have recently spiked.
