Ahead of the Open | October 18, 2022

GRAIN CALLS

Corn: 4 to 6 cents lower.

Soybeans: 1 to 3 cents lower.

Wheat: 2 to 6 cents lower.

GENERAL COMMENTS: SRW wheat futures fell overnight to a four-week low on hopes a deal allowing Ukrainian grain shipments will be extended beyond the November deadline. Corn and soybeans were under mild pressure. Malaysian palm oil futures surged 3% to the highest close in almost seven weeks with support from a weakening ringgit. Front-month crude oil futures are little changed. U.S. stock index futures point to a stronger open, while the U.S. dollar index is down slightly.

Some rain in the U.S. Delta next week may help raise river water levels briefly on the lower Mississippi River, but confidence in the event is low, World Weather Inc said. U.S. HRW wheat areas will continue dry biased over the next 10 days. Canada’s Prairies have potential for rain and snow this weekend and early next week mostly in central and northern areas.

Crop consultant Dr. Michael Cordonnier raised his corn yield by 1 bu. to 170 bu. per acre and matched USDA’s harvested area at 80.84 million acres, which increased his production estimate to 13.74 billion bushels. He trimmed his soybean yield by 0.4 bu. per acre to 49.6 bu. per acre and kept harvested area at 86.63 million acres, which lowered his production estimate to 4.29 billion bushels.

Chinese hog producers are looking at alternatives to soymeal amid shortages and high prices. Shipping delays from the U.S. due to low water levels on the Mississippi River will further tighten Chinese soybean supplies and push soymeal prices higher. As a result, Chinese hog producers are looking for alternative protein sources. China’s soybean imports are likely to fall to their lowest in more than two years this month, having dropped in September and August.

India raised the price at which it will buy 2023-crop wheat from local farmers by 110 rupees to 2,125 rupees ($25.84) per 100 kilograms. It’s hoped the higher purchase price will encourage farmers to boost wheat output.

India is examining whether there is a need to raise palm oil import taxes, government and trade sources said, as part of efforts to help millions of its farmers reeling from lower oilseed prices. Earlier this year, India abolished the basic import tax on crude palm oil (CPO) to keep a lid on prices, though a special 5% duty remains. India also levies a 12.5% import tax on refined, bleached and deodorized (RBD) palm oil.

More than 47 million birds in the U.S. have died due to avian influenza and related cullings, just behind the record 50.5 million that died in 2015, the deadliest U.S. outbreak. The outbreak has infected flocks in 42 states since February, twice as many as in 2015, USDA records show. Nearly 50 million birds also have been culled in Europe, which is suffering from an outbreak of the same subtype of the H5N1 strain.

South Korea purchased 77,000 MT of U.S. milling wheat from two tenders. Japan is seeking 97,482 MT of milling wheat in its weekly tender.

CORN: Late Monday, USDA reported 45% of the U.S. corn crop was harvested as of Sunday, up from 31% a week earlier but one percentage point under trade expectations. Overnight, December corn broke under trendline support around $6.84 and fell as low as $6.77 1/4, the contract’s lowest intraday price since Oct. 7.

SOYBEANS: USDA reported the soybean crop was 63% harvested as of Sunday, up from 44% a week earlier and above analysts' expectations for about 60%. November soybeans traded in a relatively tight range overnight after holding above Monday’s low of $13.76 1/4.

WHEAT: USDA late Monday reported the winter wheat crop was 69% planted as of Sunday, up from 55% a week earlier and slightly ahead of trade expectations for 68%. December SRW wheat overnight fell as low as $8.50 1/2, the contract’s lowest intraday price since Sept. 20, before finding support at the 50-day moving average at $8.49 1/4.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle futures may extend Monday’s climb near four-week highs on bullish technicals and expectations for further cash market strength. The cash market appears headed for further gains this week as packers continue to run heavy slaughters while market-ready supplies are tightening. Not only is the near-term bullish for cattle, but so is the longer-term outlook. The uncertainty is the health of the global economy and what impact that could have on beef demand, which could limit buying in futures. December live cattle rose $1.425 Monday to $149.20, the contract’s highest closing price since Sept. 22.

HOGS: Lean hog futures may extend Monday’s rally on bullish charts and the firming cash market. The CME lean hog index is 26 cents higher to $93.35 (as of Oct. 14), the fourth gain in the past six days. December lean hog futures finished Monday $8.40 below today’s cash index quote, which is virtually in line with the average seasonal decline in prices over the past five years. Strong corrective gains in futures over the past nine trading sessions have erased traders’ pessimistic stance. Pork cutout values extended recent strength and rose $1.64 Monday to $103.50 on movement of 315 loads. December lean hog futures rose $2.70 Monday to $84.95, the contract’s highest close since Sept. 22.