Ahead of the Open | May 3, 2022
GRAIN CALLS
Corn: 3 to 5 cents higher.
Soybeans: 6 to 7 cents higher.
Wheat: 5 to 14 cents higher.
GENERAL COMMENTS: Corn futures rose overnight after USDA reported slower-than-expected planting progress, while soybeans and wheat also climbed. Nearby U.S. crude oil fell slightly. U.S. stock index futures indicate a slightly lower open, while the U.S. dollar index is down more than 600 points.
Central Brazil’s safrina corn crop continues to be hampered by the early onset of the annual dry season, with some areas having not received a significant rain for 30 to 50 days. Crop Consultant Dr. Michael Cordonnier estimated 35% to 50% of Brazil’s safrinha corn crop is facing some level of moisture stress, prompting him to cut his Brazilian corn crop forecast by 5 MMT to 107 MMT. The cut assumes a 10% loss of production in Mato Grosso, Goias, Minas Gerais and the Federal District, which combined are projected to produce approximately 56.5 MMT of safrinha corn.
Ukraine is forecast to have a significant shortage of grain storage facilities for this year’s crops due to a sharp decline in exports resulting from Russia’s invasion, analyst APK-Inform said. The firm said Ukraine’s exports could total only 45.5 MMT in 2021-22 after last year’s record harvest of 86 MMT and grain and oilseeds stocks might reach an all-time of 21.3 MMT.
Ukraine’s farmers have sown around 31% of the area expected for the 2022 spring crops, or 4.7 million hectares, Ukrainian grain traders union UGA said. The union said farmers planned to sow 11.45 million hectares of spring grains this year, 3.5 million to 4 million hectares less than in 2021 due to the Russian invasion.
South Korea tendered to buy 50,000 MT of U.S. milling wheat.
CORN: USDA late Monday reported 14% of the U.S. corn crop was planted as of Sunday, up from 7% a week earlier but well below the 33% average for the previous five years. Progress fell short of expectations for 16% planted, based on a Reuters survey. July corn overnight reached $8.09 1/2, filling a small gap on the daily chart created at the opening of overnight trading Sunday. Further strength will have bulls targeting the contract high of $8.24 1/2 posted last Friday.
SOYBEANS: USDA reported the U.S. soybean crop at 8% planted as of Sunday, meeting analysts’ expectations but below the five-year average of 13%. Further delays in corn planting may prompt some farmers to switch acres to soybeans, which could weigh on new-crop November futures.
July soybeans traded in a narrow range overnight and may see corrective buying today after tumbling 39 1/2 cents Monday to $16.45 1/4, the lowest closing price since April 11.
WHEAT: Winter wheat futures fell to three-week intraday lows Monday on prospects for moisture relief in top HRW areas of the U.S. Plains, but the crop remains stressed by drought and weekly USDA crop ratings fell short of expectations. USDA reported 27% of the winter wheat crop in “good” or “excellent” condition through Sunday, unchanged from the previous week's 34-year low.
When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped another 6.9 points to 253.9, which is 73.6 points below the five-year average for the beginning of May. The SRW crop inched 0.4 point higher to 351.0, thought’s still 8.8 points below the five-year average for the date.
LIVESTOCK CALLS
CATTLE: Steady-firm
HOGS: Steady-weaker
CATTLE: Live cattle futures may gain on followthrough buying from Monday’s strong close and signs a recent wholesale beef slump may be ending. Choice cutout values rose $1.77 Monday to $262.55, while Select gained 26 cents, though movement was slow at 79 loads. The downtick in movement indicates retailers are becoming more selective after actively buying recently ahead of the spring and summer grilling season. Traders are waiting to see whether last week’s unexpected cash market strength continues. Cash cattle averaged $143.34 last week, up 32 cents from the previous week.
Monday’s feeder cattle rally suggests the market may be putting in a bottom, but continued strength in corn may temper upside. June live cattle rose $2.55 Monday to $135.20. August feeder cattle surged $5.80 to $174.075.
HOGS: Lean hog futures may see carryover technical pressure from Monday’s tumble to 3 1/2-month lows. May hogs ended Monday at $99.875, the first close below $100.00 since Jan. 31 and putting the front-month contract $1.715 below today’s CME lean hog index quote (as of April 29), which is down 18 cents. The expanding discount suggests traders sense the four-day slide in the cash index will continue. June lean hog futures finished Monday just $3.385 above the cash index. Over the past five years, the cash index has firmed $8.77 from the beginning of May to mid-June.
Wholesale pork jumped sharply to start the week, with cutout values up $2 to $106.58 on strength in most cuts. Movement totaled 290.52 loads. June lean hogs fell $1.40 Monday to $104.975, the lowest settlement since Jan. 21.
