Ahead of the Open | October 17, 2022

Wheat futures higher as escalating fighting stirs concern over Ukraine supplies; soybeans firmer, corn slightly lower.

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Pro Farmer’s Ahead of the Open
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GRAIN CALLS

Corn: Steady to 1 cent lower.

Soybeans: 1 to 4 cents higher.

Wheat: 6 to 10 cents higher.

GENERAL COMMENTS: Wheat futures rose overnight amid concern escalating fighting between Russia and Ukraine may jeopardize the extension of a deal to allow grain shipments from Ukrainian Black Sea ports. Soybeans also firmed by corn fell slightly. Malaysian palm oil futures rose 0.3% with support from soyoil strength, which front-month crude oil futures were up about 50 cents. U.S. stock index futures point to a firmer open, while the U.S. dollar index is down about 800 points.

Southern Oklahoma received some welcome rain during the weekend while other areas in U.S. hard red winter wheat country were dry, and U.S. HRW areas “will continue dry biased for the next 10 days,” World Weather Inc. said. In the Midwest, Delta and Mid-South regions, frost and freezing temperatures this week “will induce some soybean and late corn quality declines, but very little production change is expected. Some bean shattering may occur in the more immature fields, but that should be rare.”

Russian kamikaze drones hit tanks with sunflower oil at one of the terminals in the Ukrainian port city of Mykolaiv late on Sunday, the city mayor said today. One of Ukraine’s largest ports, Mykolaiv halted shipments at the start of the Russian invasion, but Ukraine is pushing to open the port to expand shipments of food under a deal brokered by the United Nations and Turkey.

The U.S. economy will enter a recession within the next year as the Federal Reserve battles to bring down persistently high inflation, the economy contracts and employers cut jobs in response, according to the Wall Street Journal’s latest survey of economists. On average, economists put the probability of a recession in the next 12 months at 63%, up from 49% in July’s survey.

Traders expect members of the National Oilseed Processors Association (NOPA) to report soybean crush totaled 161.6 million bu. during September, which would be down 2.4% from August but up 5.1% from year-ago and a record for the month. Soyoil stocks are expected to decline to 1.522 billion bu., which would be a 23-month low.

Less than 30% of the Ukrainian winter grain crop area for the 2023 harvest was sown at optimal times because of poor weather, the state weather forecaster said, adding that this was “significantly less” than in previous years. “For crops that will be sown in October, there is a high probability that the plants... will enter the winter in the initial stages of development, will be weakened and vulnerable to adverse winter conditions if they occur,” forecaster said.

Ukraine exported 2.12 MMT of grain, mostly corn and wheat, during the first 17 days of this month, according to ag ministry data. That was down 50,000 MT (2.3%) from the same period last year. Since July 1, Ukraine has exported 10.8 MMT of grain, including 5.88 MMT of corn, 3.99 MMT of wheat and 896,000 MT of barley – down 5.7 MMT (34.5%) from the same period last year.

Large speculators in early October increased bullish bets in the corn market to the highest level since mid-June, while bullish positions in soybeans dropped to the lowest level since December, data from the Commodity Futures Trading Commission showed. The managed money net long in corn futures and options rose 23,649 contracts during the week ended Oct. 11 to 267,377 contracts, the biggest net long since the week ended June 14.

China sold all 41,359 MT of state-owned wheat reserves put up for auction last week. China will hold another wheat auction on Oct. 19, with plans to sell around 50,000 MT of state-owned reserves.

CORN: December corn traded in a narrow range overnight and dropped as low as $6.85 1/4, just above the 20-day moving average and trendline support, both around $6.83. USDA will update weekly harvest progress after today’s close. Last week, USDA said 31% of the U.S. corn harvest was complete as of Oct. 9, up from 20% the previous week and ahead of the 30% average for that date the previous five years.

SOYBEANS: November soybeans traded in a narrow range overnight, briefly dipping under the 10-day moving average at $13.79 before rebounding. USDA as week ago said the U.S. soybean crop was 44% harvested as of Oct. 9, up from 22% a year earlier and ahead of the 38% five-year average.

WHEAT: December SRW wheat rose as high as $8.76 overnight after earlier dropping to $8.60, slightly under the 40-day moving average. USDA a week ago said 55% of the winter wheat crop was planted as of Oct. 9, up from 40% a week earlier but behind the 58% average for the past five years.

LIVESTOCK CALLS

CATTLE: Steady/firmer

HOGS: Steady/firmer

CATTLE: Live cattle may gain support from expectations cash prices will extend the past two weeks’ strength. However, nearby live cattle futures are trading just slightly above the cash market. Macroeconomic concerns continue to keep traders cautious toward the long side of the market despite firming cash prices and a bullish longer-term outlook as supplies tighten through 2023. Last week, the five-area average for Monday-Thursday reached $146.77, up 80 cents from last week.

HOGS: Lean hog futures may extend last week’s gains behind chart strength and a firming cash market but could also be susceptible to profit-taking. The CME lean hog index is up 42 cents to $93.09 (as of Oct. 13), the third gain in the past five days. December hogs, which is the new lead-month contract, finished $10.84 below the cash index, suggesting traders expect the strengthening of the index to be short-lived. Friday’s futures gains included a technically bullish weekly high close in the December contract, which may encourage followthrough buying today.