Ahead of the Open | October 6, 2022

GRAIN CALLS

Corn: 3 to 5 cents lower.

Soybeans: 11 to 13 cents lower.

Wheat: HRW and SRW wheat 9 to 12 cents lower, spring wheat 2 to 6 cents lower.

GENERAL COMMENTS: Soybean futures fell overnight to a two-month low as the U.S. harvest accelerated and the U.S. dollar strengthened, while winter wheat dropped to a low for the month and corn also faced pressure. Malaysian palm oil futures rose 1.6%, a sixth straight daily gain, on weather concerns. Front-month crude oil mildly faded after earlier rising to a three-week high. U.S. stock index futures signal a mixed open and the U.S. dollar index is up about 550 points.

A large section of the U.S. Central and Southern Plains continues to suffer from varying levels of drought or abnormally dry conditions, World Weather Inc. said today. “Planting is ongoing and will continue for at least the next few weeks,” the forecaster said. “The crops are going into the ground where moisture is lacking. Both short-term crop establishment and long-term development conditions are less than favorable to poor. Abundant precipitation will be needed in the coming months to reverse the dryness and improve production potentials for this season’s crop.”

The arrival of rains in September allowed for a promising start to Brazil’s 2022-23 soybean season, with farmers poised to reap a record of 150.62 MMT despite the drought risks associated with La Niña in southern Brazil. Based on the average of 12 analysts polled by Reuters, expectations of a bumper crop are driven by a record-large planted area of 42.83 million hectares (105.8 million acres). Brazilian crop estimating agency Conab’s initial projection of the 2022-23 Brazilian soybean crop is 152.35 MMT on a 3.4% increase in planted area to 42.89 million hectares.

Ukraine’s winter grain sowing area for the 2023 harvest unlikely will exceed 2 million hectares and the harvest could fall by at least 50%, the head of a large Ukrainian agriculture company said. “The harvest of early grains… will be 50% to 70% less (in 2023 versus 2022). In fact, we will cover our own needs, but not everything will be so rosy with exports,” said Alex Lissitsa, CEO of IMC integrated agricultural business, according to Interfax Ukraine.

Soil moisture reserves are low in Russia’s southern Krasnodar, Rostov and Stavropol regions – the main wheat producing and exporting areas of the country, an ag ministry official said. Low soil moistures pose risks for next year’s harvest if weather conditions don’t improve. The Russian ag ministry has not issued its initial estimate for 2023 production.

Russian President Vladimir Putin ordered his government on Wednesday to take control of Ukraine’s Zaporizhzhia nuclear power plant, Europe’s largest, as the United Nations nuclear watchdog warned that power supply to the site was “extremely fragile.” The plant is located in the southern Ukrainian region also called Zaporizhzhia, one of four regions Putin formally incorporated into Russia on Wednesday in a move condemned by Kyiv as an illegal land grab. The head of the UN nuclear watchdog, Rafael Grossi, will visit Moscow to discuss safety at the plant, Russian state-owned news agency TASS reported.

Japan purchased 97,343 MT of milling wheat from its weekly tender, including 64,523 MT U.S. and 32,820 MT Canadian.

CORN: USDA reported net U.S. corn sales totaling 227,000 MT during the week ended Sept. 29, down from 512,000 MT the previous week and under trade expectations ranging from 350,000 to 800,000 MT. Weekly exports totaled 629,800 MT.

SOYBEANS: Net weekly U.S. soybean sales totaled 777,100 MT, with top buyers including Mexico (233,400 MT) and China (157,100 MT, including decreases of 5,400 MT). Sales were down from 1.003 MMT a week ago but within expectations ranging from 500,000 MT to 1.2 MMT. November soybeans overnight fell as low as $13.56 1/4, the contract’s lowest intraday price since Aug. 3.

WHEAT: USDA reported net weekly wheat sales of 229,400 MT, down from 279,800 MT last week and at the low end of trade expectations ranging from 200,000 to 450,000 MT.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-weaker

CATTLE: Live cattle may face pressure from uncertainty over the cash market. So far, only a limited number of cattle have traded at roughly steady prices compared with last week. And while most feedlots are holding out for firmer prices, packers may resist considering their margins have shrunk to just slightly above breakeven. Tight longer-term supplies of market-ready animals should keep futures underpinned. December live cattle gained 42.5 cents Wednesday to $147.925. November feeders jumped $2.125 to $177.325.

USDA reported net weekly beef sales of 16,400 MT for 2022, with top buyers including South Korea (6,000 MT, including decreases of 700 MT), Japan (2,200 MT) and China (2,100 MT, including decreases of 100 MT).

HOGS: Lean hogs may gain some followthrough from Wednesday’s sharp rebound from the recent sell-off but should remain burdened by slumping cash fundamentals. The CME lean hog index is down 51 cents to $92.93 (as of Oct. 4) and has dropped nearly $30 since the first week of August. October lean hog futures finished Wednesday $2.43 below today’s cash index quote. Pork cutout values rose $1 Wednesday to $99.29 on lighter movement of 282 loads. December lean hogs jumped $2.075 to $76.50.

Net weekly pork export sales totaled 34,300 MT for 2022.