Ahead of the Open | December 6, 2022
GRAIN CALLS
Corn: 1 to 5 cents higher.
Soybeans: 11 to 14 cents higher.
Wheat: SRW wheat 1 to 2 cents higher, HRW wheat 2 to 4 cents lower, spring wheat mixed.
GENERAL COMMENTS: Corn futures climbed overnight on corrective buying following Monday’s drop to 2 1/2-month lows, while soybean also gained and wheat was mixed. Malaysian palm oil futures rose 3% following reports of India's higher palm oil imports and Indonesia’s preparation for implementing a higher blend of biodiesel, which contains palm oil-based fuel. Front-month crude oil fell around $1. U.S. stock index futures signal a mixed open and the U.S. dollar index is down slightly.
USDA reported daily soybean sales of 264,000 MT for delivery to China and 240,000 MT for delivery to “unknown destinations,” both for the 2022-23 marketing year. Today’s announcement follows three separate daily purchases by China since Nov. 23 totaling 376,000 MT.
Crop Consultant Michael Cordonnier lowered his estimate for Argentina’s soybean crop for the second week in a row, citing a lack of rain and high temperatures increasing crop stress. Cordonnier now estimates the Argentine soybean crop at 48 MMT, down 1 MMT from his previous forecast and the second consecutive week he trimmed his outlook by that amount. Cordonnier also reduced his Argentina corn crop estimate 1 MMT to 48.0 million. “Near-term temperatures are forecast to be much above normal which will increase moisture stress on the crop that has already planted and it could result in poor germination and emergence for the crop yet to be planted,” Cordonnier said.
Cordonnier kept his Brazilian crop estimates at 151 MMT for soybeans and 125.5 MMT for corn. “Widespread rain is expected in the 6-10 day period” for Brazil, he said. “If this forecast verifies, it will lead to improved soil moisture across much of Brazil at a critical time when the soybean yield is being determined.”
Argentina is expecting some showers and thunderstorms Friday and Saturday in central through northern parts of the nation, with some follow up moisture Sunday and Monday in eastern and northern most parts of the nation, World Weather Inc. said. “Temporary relief from dryness is expected, but much more rain will be needed to induce a serious change in crop and field conditions. The following week will be dry or mostly dry.”
Atmospheric and oceanic indicators reflect a mature La Niña, according to the Australian Bureau of Meteorology and models suggest a return to ENSO-neutral conditions in January or February 2023. For Australia, La Niña typically increases the chance of above-average rainfall in northern and eastern areas of the country.
Epitome Energy plans to build a $400 million soybean crushing plant in Grand Forks, North Dakota, the company announced Monday. The plant will process up to 42 million bu. of soybeans per year into crude degummed soybean oil, meal and hulls. Soybean oil will likely go into the renewable diesel industry, while the meal will go into the livestock industry.
India’s palm oil imports jumped 29% in November from a month ago, as a steep discount to rival soyoil and sunoil made buying of the tropical oil lucrative for local refiners, Reuters reported, citing dealer sources. Higher imports by India, the world’s biggest palm oil buyer, would help top producer Indonesia cut its inventories and support benchmark Malaysian palm oil prices, which have nearly halved from this year’s record highs. India’s palm oil imports reached 1.14 MMT last month, the average estimate from five dealers with trading firms showed.
Seeking to reduce dependence on oil imports, Indonesia’s president asked the government to create a mechanism next year to ensure the rollout of B35 biodiesel, a senior minister said today. B35 is a fuel containing a 35% mix of palm oil-based fuel. Indonesia currently has a mandatory 30% mix of palm oil fuel in biodiesel, known as B30.
South Korea purchased 50,000 MT of U.S. milling wheat, 65,000 MT of Australian feed wheat and 65,000 MT of corn expected to be sourced from South America. Taiwan tendered to buy up to 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South Africa. Japan is seeking 154,957 MT of wheat in its weekly tender.
CORN: March corn traded within the previous session’s range overnight after dropping Monday as low as $6.37 3/4, the contract’s lowest intraday price since Aug. 22. Unless bargain buying emerges, prices may remain under pressure from bearish technicals and soft exports.
WHEAT: March SRW wheat traded within the previous session’s range overnight after falling Monday as low as $7.34, the contract’s lowest intraday price since October 2021.
LIVESTOCK CALLS
CATTLE: Steady-firm
HOGS: Steady-firmer
HOGS: Lean hog futures should gain support from beliefs the cash market is near a bottom. The CME lean hog index is down 8 cents to $82.79 (as of Dec. 2), the lowest since January. December futures are trading 71.5 cents below today’s cash index quote and February futures are $7.735 above the cash index, signaling traders anticipate the cash index will soon bottom and then start to strengthen seasonally. Pork cutout values fell $2.48 Monday to $86.46, led by declines of over $9 in bellies. Movement was strong at 321 loads. February lean hogs rose 10 cents Monday to $90.525, the contract’s highest close since Nov. 17.
