Ahead of the Open | December 14, 2022

GRAIN CALLS

Corn: 3 to 5 cents lower.

Soybeans: 7 to 8 cents lower.

Wheat: 5 to 12 cents lower.

GENERAL COMMENTS: Corn, soybean and wheat futures fell overnight as traders monitored South American weather and waited for another Federal Reserve interest rate increase expected later today. Malaysian palm oil futures rose 1.6%, while front-month crude oil futures rose more than $1. U.S. stock index futures signal a lower open and the U.S. dollar index is down slightly.

The Fed is expected to raise interest rates 50 basis points at the conclusion of its two-day monetary policy meeting this afternoon, which would end the four-meeting string of 75-basis-point increases. Markets will pay particular attention to Chair Jerome Powell’s post-meeting press conference and the updated economic forecasts from Fed officials for clues as to how long the monetary tightening cycle will persist.

Argentina’s rainfall the rest of this week will be “restricted,” along with that in southern Brazil, Uruguay and parts of Paraguay, World Weather Inc. said. There is some potential for scattered showers and thunderstorms after Dec. 24 in Argentina, but early indications suggest mostly light rainfall with greater coverage than that which precedes that time period. Much of northern Brazil, “will be plenty wet” over the next 10 days to two weeks

China is facing a “very tough” time as it dismantles its rigid “zero-Covid” policy and allows people to live with the virus, posing challenges preparing hospitals and ensuring people are sufficiently protected, the World Health Organization (WHO) said.

Moscow could increase its grain export quota for 2022-23 from its current level of 25.5 MMT, Interfax news agency quoted Russian Agriculture Minister Dmitry Patrushev as saying, without providing further details. Russia produced a record grain crop this year, including around 100 MMT of wheat.

Ukraine has exported almost 19.7 MMT of grain so far in 2022-23, down 31.5% from the same period last year, according to ag ministry data. The volume included 10.8 MMT of corn, 7.3 MMT of wheat and 1.5 MMT of barley. Ukraine expects to export around 51 MMT of grain this marketing year, down sharply from a record 86 MMT in 2021-22.

France expects to export 10.3 MMT of wheat outside of the EU trade bloc in 2022-23, up 300,000 MT from the ag ministry’s previous forecast. That would be a 17% increase from 2021-22 exports. The ag ministry cut its 2022-23 wheat export forecast within the bloc by 210,000 MT to 6.73 MMT.

The International Energy Agency (IEA) warned today it can’t rule out an increase in the price of crude oil in 2023 due to the tightness of the global market, despite the decline in demand caused by the weakening of the world economy.

Palm oil imports to India, the world’s largest buyer, rose 29% in November from the previous month as steep discounts to rivals soyoil and sunflower oil made purchases lucrative for local refiners, a trade body said. Imports last month were 1.14 MMT, more than double from a year earlier, the Mumbai-based Solvent Extractors’ Association of India (SEA) said. Higher Indian imports would help top producer Indonesia cut its inventories and support benchmark Malaysian palm oil prices.

Tunisia tendered to buy 100,000 MT of optional origin durum wheat. Japan received no offers in its tender to buy 70,000 MT of feed wheat and 40,000 MT of feed barley.

CORN: March corn overnight held support at the 10-day moving average of $6.46 3/4. The most-active contract fell 1/2 cent to $6.53 1/2 Tuesday, ending a string of four straight higher closes.

SOYBEANS: January soybeans traded within the previous session’s range overnight after gaining 19 1/4 cents Tuesday to $14.79 3/4. Initial support is seen at the 10-day moving average of $14.61 1/2 and Tuesday’s low of $14.60 3/4.

WHEAT: March SRW wheat overnight dropped under the 20-day moving average at $7.49 and fell to $7.37 3/4. The contract on Tuesday hit its highest level in over a week.

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-firmer

CATTLE: Live cattle should remain supported by tight supplies and an outlook for continued cash firmness, but price gains may be limited by trader caution driven by expectations packers will try to limit cash market strength through the end of the year. December live cattle finished Tuesday 89 cents below last week’s average cash cattle price, though February futures jumped to a three-week high. Choice beef cutout values fell $2.07 Tuesday to $254.95 after soaring $8.09 Monday. February live cattle rose 25 cents to $156.35, the contract’s highest close since Nov. 22.

HOGS: Lean hog futures may extend Tuesday’s gains on ideas the cash market is near a seasonal bottom. December futures gained 45 cents on Tuesday, extending the lead contract’s premium to the cash index, which is up 15 cents to $81.62 (as of Dec. 12) but still near an 11-month low. While December hog’s 78-cent premium to the cash index is modest, it signals traders sense the cash market is in the process of posting a seasonal bottom. Wholesale pork extended a recent upturn, with pork cutout values jumping $4.20 Tuesday to a three-week high at $91.14, driven by a gain of more than $36 in bellies. Movement was strong at 343 loads. February lean hogs rose 87.5 cents to $84.575.