Market Snapshot | September 14, 2022

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Soybean hedgers: Exit 2022-crop hedge… USDA now projects 2022-23 carryover will tighten to 200 million bu., which would be the lowest level since 2015-16. Given this morning’s price weakness, we have the opportunity to get out the 10% hedge held in November soybean futures near breakeven. We advise soybean hedgers to exit this coverage.

 

Corn futures are 7 to 8 cents lower at midsession.

  • Corn futures are under continued corrective pressure following Monday’s rally to 2 1/2-month highs. Accelerating harvest and concerns over rail shipping delays contributed to price weakness.
  • Some U.S. railroads will start halting grain shipments Thursday, a day ahead of a potential work stoppage, Reuters reported, citing an agricultural association and grain cooperatives. Railroads have until a minute after midnight Friday to reach tentative deals with holdout unions representing about 60,000 workers.
  • Ukraine exported 1.5 MMT of grain in the first 13 days of this month, according to the country’s ag ministry, as shipments continue to build following the deal to restart exports on Aug. 1. But the pace was still 34% less than the same period last year.
  • U.S. ethanol production averaged 963,000 barrels per day (bpd) during the week ended Sept. 9, down 26,000 bpd from the previous week but up 2.8% from the corresponding week last year.  Ethanol stocks dropped 295,000 barrels to 22.843 million barrels.
  • Taiwan purchased 65,000 MT of Brazilian corn.
  • December corn is trading slightly above the overnight low of $6.82 3/4. Initial support comes in at the 10-day moving average around $6.76 3/4, with resistance at Monday’s high at $6.99 1/2.

Soy complex futures are mixed, with soybeans down 10 to 11 cents and soyoil down more than 100 points, while soymeal is up $3 to $5.

  • Soybean futures fell a second day as the market extended a corrective pullback from Tuesday’s climb to 2 1/2-month highs. Soymeal rose amid spreading against soyoil.
  • Canola production in Canada rose 39% in 2022 to 19.1 MMT, according to Statistics Canada.
  • The Organization of the Petroleum Exporting Countries (OPEC) said Tuesday the supply of oil has become disconnected from demand, a possible sign it is planning to cut output to prop up prices. The group last week cut its oil production levels by 100,000 barrels a day, but prices have continued to fall.
  • Malaysian palm oil futures fell 1% amid profit-taking following three days of gains.
  • November soybeans extended overnight declines and fell as low as $14.66, still above support levels including the 100-day moving average at $14.50 3/4. The contract posted a 2 1/2-month intraday high at $15.08 3/4 Tuesday.

Wheat futures are mostly firmer, with HRW and spring wheat contracts up 4 to 9 cents and SRW mixed.

  • HRW futures extended the past week’s rally to post two-month highs amid weakness in the dollar and concerns over dryness in the U.S. Plains with planting underway.
  • Rain was removed from the near-term outlook for the U.S. HRW belt overnight, World Weather Inc. said. Both the GFS and ECMWF models “are reducing rainfall advertised for next week,” the forecaster said.
  • Estimated all wheat production in Canada surged 56% from year-ago to 34.7 MMT, according to Statistics Canada, slightly topping expectations of 34.5 MMT, based on a Reuters poll. Stats Canada said consistent precipitation and warm temperatures resulted in better crop conditions on the Prairies.
  • France’s ag ministry lowered its forecast for 2022-23 French wheat exports outside the EU by 300,000 MT to 10.0 MMT, though that would still be up 13.8% from 2021-22. The export forecast within the 27-member bloc was increased by 110,000 MT to 7.13 MMT.
  • December HRW futures reached $9.51 3/4, the contract’s highest intraday price since July 11. SRW wheat is continuing this week’s sideways trade, with initial resistance at the two-month high of $8.78 posted Monday.

Live cattle futures are mixed at midmorning while feeder cattle are firmer.

Hog futures are mostly firmer.

  • October lean hogs generated little followthrough buying interest from Monday’s jump to four-week highs and are down slightly, while deferred contracts are up slightly.
  • The CME lean hog index is down 62 cents to $97.67 (as of Sept. 12), narrowing the gap with front-month futures to $2.54, the smallest since April 19. October futures’ strength indicates traders expect the cash market to post a short-term bottom soon.
  • Pork cutout values fell $1.01 Tuesday to $104.70 but movement was strong at 357 loads.
  • China will sell 15,000 MT of frozen pork stocks from state reserves on Sept. 17. We reported the second batch of pork sales yesterday, though no date or tonnage were provided at that time. Last week China sold 37,000 MT of state-owned pork stocks.
  • October lean hogs face resistance at Tuesday’s high of $96.075, the contract’s highest intraday price since Aug. 23.

 

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