Ahead of the Open | December 2, 2022

GRAIN CALLS

Corn: 3 to 5 cents lower.

Soybeans: 1 to 2 cents lower.

Wheat: SRW and spring wheat 8 to 14 cents lower, HRW 18 to 21 cents lower.

GENERAL COMMENTS: SRW wheat futures extended declines overnight and dropped to three-month lows as weak export demand continued to burden prices. Corn and soybeans also weakened. Malaysian palm oil futures fell 2.9% and posted a 4.4% decline for the week on strength in the ringgit and sharp weakness in soyoil. U.S. stock index futures signal a lower open and the U.S. dollar index is more than 600 points higher.

U.S. employers hired more workers than expected and raised wages in November. The Labor Department reported non-farm payrolls increased by 263,000, about 63,000 more than economists forecast. The report sent U.S. stock index futures tumbling and the dollar surging amid expectations the Federal Reserve may have to maintain aggressive policy tightening to rein in inflation. The Labor Department also revised October payrolls higher to 284,000, up from 261,000 previously.

China signaled it may adjust its strict zero-Covid policy. The top official in charge of China’s Covid response told health officials the country faced a “new stage and mission” in pandemic controls. “With the decreasing toxicity of the Omicron variant, the increasing vaccination rate and the accumulating experience of outbreak control and prevention, China’s pandemic containment faces a new stage and mission,” Vice Premier Sun Chunlan said Wednesday, according to state news agency Xinhua.

Argentina’s weather outlook remains dry biased through the first half of next week with a strong warming trend that will bring back 90- and 100-degree Fahrenheit highs later this weekend and into next week, World Weather Inc. said. “Weak” weather systems are expected to expand the following week across the country, increasing rain frequency, although initial amounts will be light.

In Brazil, routinely occurring rainfall “will support normal crop development in much of the nation during the next two weeks,” World Weather said. A boost in rainfall is still needed in portions of Mato Grosso and neighboring areas where soil moisture is low in pockets and there has not been much rain recently.

The UN Food and Agriculture Organization (FAO) global food price index ticked down 0.2 point in November – the eighth straight monthly decline – though it was 0.4 point (0.3%) above year-ago. Declines in cereal grains, dairy and meat slightly more than offset increases in vegetable oils and sugar. Compared to year-ago, prices were up 4.1% for meat, 9.1% for dairy and 6.4% for cereal grains, while vegoils dropped 16.2% and sugar declined 4.9%.

FAO’s world cereal grain production forecast for 2022-23 was cut 7.2 MMT from last month to 2.756 billion metric tons, due mainly to smaller corn production. Cereal grin production is now expected to fall 57 MMT (2.0%) from 2021-22.

The Senate on Thursday passed legislation to avert a rail strike and the measure is headed to President Joe Biden’s desk to be signed into law. The bill adopts a tentative agreement reached in September between union leaders and freight operators.

Russia’s wheat export tax for Dec. 7-13 will be 2,806.8 rubles ($45.41) per MT based on an indicative price of $313.10. That’s up from a rate of 2,788.0 rubles per MT the previous week.

China will auction another 500,000 MT of soybeans from state-owned reserves on Dec. 9.

CORN: March corn overnight fell as low as $6.54 3/4, the contract’s lowest intraday price since $6.53 1/2 on Nov. 15 and down from $6.71 1/4 at the end of last week.

SOYBEANS: January soybeans overnight fell to $14.25 1/2, down from $14.36 1/4 at the end of last week. January soyoil fell more than 200 points overnight to a low of 64.50 cents, the lowest since Oct. 17.

WHEAT: March SRW wheat overnight fell as low as $7.65, the contract’s lowest intraday price since Aug. 19 and down from $7.97 at the end of last week.

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-firmer

CATTLE: Live cattle futures should remain supported by expectations the cash market will sustain a strong trend. Cash cattle prices firmed in the northern market on Thursday, though some feedlots continued to hold out for even higher prices. Trade in the Southern Plains has been at mostly steady prices this week. Despite having fresh contract supplies available, cash sources signal packers still have some near-term slaughter needs to fill, which could increase cash prices from levels traded so far this week. USDA-reported live steers averaged $155.23 through Thursday morning, down from last week's $156.07 average, but northern market activity may still boost prices.

February live cattle fell 25 cents Thursday to $155.425, up from $155.25 at the end of last week.

HOGS: Lean hog futures may extend sharp gains earlier this week behind strengthening technicals. The CME lean hog index is down another 65 cents to $83.24 (as of Nov. 30). December futures finished Thursday just 11 1/2 cents below today’s cash quote, suggesting traders sense a seasonal low is close. Pork cutout values fell 81 cents Thursday to $86.52 as movement slowed to about 277 loads. February lean hogs surged $3.825 cents Thursday to $89.175, the contract’s highest close since Nov. 22 and up from $88.50 at the end of last week.