GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 1 to 3 cents higher.
Wheat: 1 to 6 cents lower.
GENERAL COMMENTS: Corn and wheat futures were lower overnight, while soybeans traded mildly higher ahead of USDA’s Crop Production and Supply and Demand reports at 11 a.m. CT today. Malaysian palm oil futures rose 2.5% behind strength in crude oil expectations for stronger exports. Front-month crude oil futures are up about 65 cents, U.S. stock index futures signal a strong open and the U.S. dollar index is down more than 800 points.
USDA is expected to lower its estimate for the U.S. corn crop to 14.088 billion bu., down 271 million bu. from its August forecast, based on a Reuters survey of analysts. The average estimated U.S. yield is expected to be cut to 172.5 bu. per acre from 175.4 bu. per acre. Analysts are split on soybeans, though the average estimate is down 35 million bu. to 4.496 billion bu. which would still be up from last year’s record 4.435 billion bu. crop. The average U.S. soybean yield is expected to be reduced to an estimated 51.5 bu. per acre from 51.9 bu. last month. USDA is expected to slightly increase old-crop ending stocks for corn and soybeans. For 2022-23 U.S. ending stocks, the average trade estimate is down 171 million bu. for corn, up 2 million bu. for soybeans and up 8 million bu. for wheat from last month’s projections.
As soon as Friday, up to 115,000 freight rail workers could walk out if they cannot reach a new contract with railroads, potentially shutting down the national rail network that transports 20% of all grain shipments. If a strike would occur, ag sector officials concur it would be catastrophic for U.S. food and agriculture, as the system will not regroup to full capacity overnight, even if any strike is short. Things were not moving in the right direction for a compromise as discord surfaced between the railroads and the two biggest unions, sources reported over the weekend. Railroads have filed notices they are going to begin limiting shipments of many chemicals effective today in anticipation of a possible strike.
Rains fell across areas of the Midwest over the weekend, bringing beneficial precip to late-filling soybeans. Rains this week will favor northern areas of the Midwest, while central and southern locations will trend drier. General dryness is also expected across the Southern Plains, Delta and Southeast. The drier conditions will be welcome in the Delta and Southeast after recent, heavy rains.
France’s transport minister said Sunday he would sign an agreement with Romania to help increase Ukrainian grain exports to developing countries including to the Mediterranean. “Tomorrow (Monday), I will sign an accord with Romania that will allow Ukraine to get even more grains out... towards Europe and developing countries, notably in the Mediterranean (countries) which need it for food,” Clement Beaune told France Inter radio, adding the deal covered exports by land, sea and river. According to a draft agreement of the French-Romanian deal, seen by Reuters, Paris would cooperate in developing a project aimed at increasing efficiency at the port of Galati, equipping border points in northern Romania, maximizing the use of grain containers stationed in the port of Constanța as well as increasing the capacity there and in the Sulina canal. It would also help to build a medium-term strategy on the axes of the corridor between Romania and Ukraine and provide pilings to optimize ship traffic. France will also provide funding for the initial technical expertise and work with Bucharest to identify financing.
Ukrainian farmers are likely to cut the winter grain planted area by at least 30% because of a jump in prices for seeds and fuel combined with a low selling prices of their grain, the Ukrainian Agrarian Council (UAC) said on Monday. “The main reasons that encourage agricultural producers to reduce sown areas are the high cost of fertilizers, problems with the sale of grain, as well as too low purchase prices for agricultural products,” UAC said.
Large speculators in early September increased their bullish bets in the corn market for the sixth consecutive week, data from the Commodity Futures Trading Commission showed. The managed money net long in corn futures and options rose 5,012 contracts during the week ended Sept. 6 to 226,479 contracts, the highest since the end of June. In soybeans, the managed money net long fell a second straight week, dropping 2,172 futures and options contracts to 99,629 contracts.
CORN: December corn overnight fell as low as $6.78 1/2 after ending Friday at $6.85, up 19 1/4 cents for the week and the contract’s highest closing price since June 22. In addition to the Crop Production and Supply and Demand reports, traders also await USDA’s weekly crop condition update after the close today. A week ago, USDA reported the U.S. corn crop condition at 54% “good” or “excellent” as of Sept. 4, unchanged from a week earlier.
SOYBEANS: November soybeans overnight rose as high as $14.19 3/4 after declining 8 1/4 cents last week, the second straight weekly drop. A week ago, USDA said 57% of the U.S. soybean crop was in “good” or “excellent” condition as of Sept. 4, unchanged from a week earlier.
WHEAT: December SRW wheat overnight touched $8.78, the contract’s highest intraday price since $8.85 1/2 on July 12, before fading. The most-active contract gained rose 40 1/2 cents last week and may further support from weakness in the U.S. dollar, which fell sharply for the second day in a row.
USDA’s Supply and Demand Report is expected to show a slight increase in the global supply outlook for 2022-23. Global wheat ending stocks for 2022-23 are expected to increase to 268.10 MMT from 267.34 MMT last month.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
CATTLE: Live cattle futures may extend last week’s gains amid ideas the cash market is near a short-term low and may climb as supplies of market-ready animals tighten this fall. The December live cattle contract’s $5-plus premium over nearby October conveys trader expectations for tighter supplies. USDA-reported live steers averaged $142.17 through Friday morning, down $2.62 from the previous week’s average. Choice beef cutout values ended Friday at $257.26, down $2.16 for the week and the third straight weekly decline.
October live cattle rose $1.30 Friday to $145.675, up $1.125 for the week and the contract’s highest close since Aug. 17. A push above the mid-August high at $146.25 in October live cattle could trigger a challenge of the contract high.
HOGS: Lean hog futures may face pressure from a protracted slide in cash fundamentals. The CME lean hog index is down 69 cents to $99.57, a four-month low. October lean hog futures ended Friday $6.395 below today’s cash index quote (as of Sept. 8), the lowest since late April. While the spread between the index and front-month futures has sharply narrowed, traders still sense the cash market will continue to weaken over the next month. While cash hog prices extended a late-summer slide, wholesale pork values firmed last week. Pork cutout values ended Friday at $102.87, up 62 cents for the week. October lean hogs rose $1.05 to $93.175, up $3.15 for the week and the highest closing price since Aug. 30.