Ahead of the Open | December 19, 2022

GRAIN CALLS

Corn: 2 to 3 cents lower.

Soybeans: 6 to 8 cents lower.

Wheat: 1 to 4 cents lower.

GENERAL COMMENTS: Soybean futures fell overnight to the lowest levels in a week after weekend rains reached some dry areas of South America. Corn and wheat futures were also under pressure. Malaysian palm oil futures rose 0.4% following reports of flooding in Malaysia, while front-month crude oil rose more than $1. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down slightly.

USDA reported daily sales of 132,000 MT of soybeans for delivery to “unknown destinations” and 141,000 MT of corn for delivery to Mexico, both during the 2022-23 marketing year.

Needed rains fell on areas of southern Brazil over the weekend, but more will be needed to reverse the dry pattern. Northwestern areas of Argentina also received weekend rainfall, while other parts of the country were dry. Rains are expected across Argentina Thursday night through the coming weekend, while some areas of southern Brazil may also get needed precip. Northern Brazil is expected to be excessively wet in some areas.

China today reported its first Covid-related deaths in weeks. There are rising doubts over whether the official count captured the full toll of Covid that is ripping through cities after the government relaxed strict anti-virus controls. According to reports, hospitals in Beijing are overwhelmed, and funeral homes are busier than usual.

Using a low-profile fleet of ships under U.S. sanctions, Syria has this year sharply increased wheat imports from the Black Sea peninsula of Crimea that Russia annexed from Ukraine, Reuters reported. With sanctions making it more complicated for Syria and Russia to trade using mainstream sea transport and marine insurance, the two countries are increasingly relying on their own ships to move the grain, including three Syrian vessels that are subject to sanctions imposed by Washington. Wheat sent to Syria from the Black Sea port of Sevastopol in Crimea increased 17-fold this year to just over 500,000 MT.

Soft wheat production in the European Union and the United Kingdom is expected to rise to 143.2 MMT in 2023, up from 140.7 MMT in 2022, European grain trade association Coceral said. France, the EU’s biggest wheat producer, was projected to harvest 34.1 MMT in 2023, up from 33.6 MMT, while No. 2 grower Germany’s soft wheat production was forecast to rise to 22.9 MMT from 22.5 MMT this year.

Malaysian palm oil is expected to trade at between 3,500 and 5,000 ringgit per MT from now until the end of May as stocks in the commodity’s top two producer countries deplete, Reuters reported, citing leading industry analyst Dorab Mistry said. March palm oil futures on the Bursa Malaysia Derivatives Exchange closed at 3,917 ringgit ($885.80) per MT on Friday. Indonesia, the world’s biggest producer of palm oil, will raise mandatory biodiesel blending to 35% starting Jan. 1.

CORN: March corn futures overnight fell as low as $6.46, the contract’s lowest price since Dec. 12, after ending last week at $6.53, up 9 cents for the week.

SOYBEANS: March soybeans fell as low as $14.64, the contract’s lowest intraday price since $14.62 1/2 on Dec. 12.

WHEAT: March SRW wheat overnight fell as low as $7.48 1/2 but held at 10-day moving average support about 1 cent below that level. The contract ended last week at $7.53 1/2, up 19 1/4 cents for the week.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-weaker

CATTLE: Live cattle may gain support from expectations cash prices will remain supported by tight supplies even as the holidays limit packer buying the rest of the year. Packers have restricted cash cattle purchases the past two weeks and will be buying for holiday-shortened kills the remainder of the year. That’s likely to limit their willingness to aggressively chase after animals. With Christmas and New Year’s Day falling on Sundays, some plants are planning to take extended weekends the next two weeks. Live steers averaged $155.56 last week through Thursday morning, down just 23 cents from last week’s average and near the 7 1/2-year high posted earlier this month. February live cattle rose 92.5 cents Friday to $155.775, up 22.5 cents for the week.

HOGS: Lean hog futures may face corrective selling following Friday’s rally and continued sluggishness in the cash market. After three days of modest price gains, the CME lean hog index is down 33 cents to $81.55 (as of Dec. 15), though that’s slightly above the 11-month low of $81.47 posted Dec. 9. February lean hogs finished last week at a $4.225 premium to the cash index after strong corrective gains Friday. Pork cutout values rose $1.95 Friday to $87.44, down $1.12 from a week ago. Movement slowed sharply to 212 loads. February lean hogs rallied $4.125 Friday to $85.775, the contract’s highest close since Dec. 7 and a $1.775 weekly advance.

China imported 180,000 MT of pork in November, up 20,000 MT (12.5%) from October but 11.1% below year-ago. For the first 11 months of this year China imported 1.56 MMT of pork, down 56% from the same period last year.