Ahead of the Open | October 20, 2022

Grain, soybean futures firmer as traders watch for updates on Ukraine export deal.

Pro Farmer's Ahead of the Open
Pro Farmer’s Ahead of the Open
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GRAIN CALLS

Corn: 2 to 3 cents higher.

Soybeans: 8 to 9 cents higher.

Wheat: 6 to 10 cents higher.

GENERAL COMMENTS: Corn and soybean futures firmed overnight as traders watched for developments on any extension of a Ukraine export deal. Wheat futures also firmed. Malaysian palm oil futures fell 0.4% after earlier hitting a seven-week high, while front-month crude oil futures are up more than $1. U.S. stock index futures signal a weaker open, while the U.S. dollar index is down nearly 400 points.

USDA reported daily soybean sales of 201,000 MT of soybeans for delivery to China and 132,000 MT to “unknown destinations,” both during the 2022-23 marketing year. Today’s announcement follows USDA-reported daily soybean sales Oct. 12-14 totaling 1.622 MMT to China or unknown destinations.

Russian officials continue to send less-than-positive signals on the prospects for continuing the grain deal that facilitated exports of Ukrainian grain and agricultural products via the Black Sea. Russian Foreign Ministry spokeswoman Maria Zakharova said the country was ready to boost food and fertilizer exports, but said the U.S. is still preventing such an action as they are “blackmailing” and “persecuting” those trying to trade with Russia.

Archer-Daniels-Midland Co. said it expects to boost its soybean exports from Brazil’s 2022-23 crop-year by 11%, reflecting an outlook for a record crop, the company’s sourcing director for Latin America said Wednesday. Brazil’s soybean output is estimated at a record 152.4 MMT, up 21% from last year.

Argentina is expected to produce 15 MMT of wheat this year, according to the latest forecast from the Rosario Grain Exchange, down 1 MMT from its prior outlook, as late frost hit a crop already hurt by drought. This year’s production would be the lowest in seven years.

Consultancy Strategie Grains raised its 2022-23 European Union wheat crop forecast by 1.4 MMT to 125.5 MMT, though that would still be down 4.3 MMT (3.3%) from last year. The firm cut its EU corn production figure to 50.4 MMT, down 2.5 MMT from its prior outlook and 19.9 MMT (28.3%) lower than last year due to this year’s drought.

China kept its benchmark lending rates unchanged for a second straight month on Thursday, in line with expectations, as authorities held off unleashing more monetary stimulus to avoid stark policy divergence with other major central banks.

The Japanese yen slid to 150 to the dollar on Thursday, its lowest value since 1990 and a psychological milestone. The Bank of Japan (BOJ) recommitted to its policy of bond-buying but refuses to raise interest rates, even as other major central banks are tightening monetary policy.

China’s state planner has increased its coordination with large-scale hog farms to ensure stable supplies, as it tries to cool soaring prices in the world’s largest pork market. China’s largest hog producers have agreed to “undertake social responsibilities,” said the National Development and Reform Commission (NDRC) said.

Japan purchased 97,482 MT of wheat in its weekly tender, including 34,912 MT U.S., 34,090 MT Canadian and 28480 MT Australian. Saudi Arabia tendered to buy 535,000 MT of hard milling wheat.

CORN: USDA reported net U.S. corn sales of 408,300 MT for the week ended Oct. 13, within trade expectations for 250,000 to 700,000 MT. December corn traded inside the previous session’s range after falling 2 3/4 cents Wednesday to $6.78 1/4, the contract’s lowest settlement since Oct. 6.

SOYBEANS: Net weekly U.S. soybean sales totaled 2.336 MMT, primarily for China (1.976 MMT, including 436,000 MT switched from unknown destinations and decreases of 213,700 MT). Sales were at the high end of expectations ranging from 1.7 MMT to 2.5 MMT. Soyoil futures extended this week’s rally, with the December contract posting a fresh four-month high at 71.73 cents overnight.

WHEAT: Net weekly U.S. wheat sales totaled 163,100 MT, below trade expectations ranging from 200,000 to 500,000 MT. December SRW wheat held within the previous session’s range overnight after falling 8 1/4 cents Wednesday to $8.41 1/4, a four-week low.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-mixed

CATTLE: Live cattle futures may extend this week’s rally as cash prices continue to strengthen. Light cash trade was reported at $147 in the Southern Plains and $150-plus in the northern market Wednesday, roughly $2 higher than last week’s prices in these areas. But most feedlots continue to hold out for even higher prices since they are current on marketings and packers are showing a need for supplies. October live cattle futures finished yesterday $2.36 above last week’s average cash price of $146.99. Net weekly U.S. beef sales totaled 16,600 MT for 2022, primarily for South Korea (7,100 MT, including decreases of 600 MT) and Japan (3,600 MT, including decreases of 300 MT).

October live cattle rose 87.5 cents Wednesday to $149.35, the highest close for a nearby contract since August 2015. December live cattle jumped $1.575 to $151.35, a two-month high.

HOGS: Lean hog futures may extend sharp gains behind strengthening cash but could also be susceptible to corrective selling or profit-taking. December lean hog futures finished Wednesday $5.825 below today’s cash index quote of $93.20 (as of Oct. 18), below the seasonal average decline into mid-December. Front-month December hogs are due for a pause or short-term pullback, but there’s growing optimism an early seasonal low may have already been posted in the cash index and there are hopes for stronger Chinese demand in the year ahead. Net U.S. pork sales totaled 40,800 MT for 2022. China was a buyer of 3,000 MT of U.S. pork for the week and took shipment of 4,100 MT. Pork cutout values fell $1.37 to $101.30 on movement of 305 loads.

December lean hogs rose 90 cents Wednesday to $87.375, the contract’s highest close since Sept. 20.