Ahead of the Open | June 3, 2022
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 10 to 14 cents lower.
Wheat: HRW and SRW 10-14 cents lower, spring wheat 2 to 4 cents higher.
GENERAL COMMENTS: Corn, soybean and winter wheat futures were under mild pressure overnight and trading in narrow ranges as traders monitored the Ukraine situation and U.S. weather. Spring wheat firmed. Malaysian palm oil futures ended with a weekly gain of more than 1.5% on expectations for sluggish production and a slow resumption of exports in Indonesia. Front-month U.S. crude oil futures are mildly firmer. U.S. stock index futures signal a weaker open, while the U.S. dollar index is up more than 200 points this morning.
USDA reported a daily sale of 101,600 MT of corn for delivery to “unknown destinations” during the 2021-22 marketing year.
The U.S. economy added a stronger-than-expected 390,000 jobs in May, according to the Labor Department, easing some concerns over potential recession and likely keeping the Federal Reserve on track for further rate increases. The unemployment rate held at 3.6%, just above the lowest level since December 1969. Economists expected non-farm payrolls to increase about 325,000.
Belarus leader Alexander Lukashenko said Minsk was ready to discuss the possible transit of Ukraine’s grain via his country, with some “compromises.” Exports from Ukraine via Belarus have been one of the options in wide discussions led by the United Nations which aim to boost global grain supply. Unblocking of Ukraine’s Black Sea ports is another option. The U.N. Secretary-General cautioned earlier this week that any agreement to unblock shipments of commodities from the region was still a ways off.
Hurdles galore to ship grain out of Ukraine, according to Bloomberg, include: Naval escorts are possible, but there are differences and dangers with this possible option; Possible overland to the Baltic, but that’s complicated by a dearth of truck drivers and the fact that the Soviets used a wider track gauge than the European standard; Ports in Romania and Poland are backed up with traffic or at capacity.
The condition of France’s soft wheat crop declined for a fifth consecutive week amid persistent dryness. France’s ag ministry rates 67% of the crop as good/excellent, down two percentage points from last week. The crop rating plunged 22 points over the past month amid hot, dry conditions.
SovEcon raised its forecast for Russia’s wheat exports in 2022-23 by 1.3 MMT to a record 42.3 MMT. Western sanctions imposed on Moscow have not targeted grain exports but have complicated logistics and payments.
Russia’s wheat export tax for June 8-15 will be $129.20 per metric ton, based on an indicative price of $383.40 per metric ton. The tax is up $8.00 from the previous week and a surge of $18.70 from the end of May.
CORN: USDA’s weekly export sales showed net U.S. corn sales for the week ended May 26 of 185,800 MT for 2021-22, up 23% from the previous week but down 52% from the average for the previous four weeks. Net sales for 2022-23 totaled 48,700 MT. Sales for 2021-22 were expected at 125,000 to 400,000 MT for 2021-22 and from 100,000 to 300,000 MT for 2022-23.
SOYBEANS: Net weekly U.S. soybean sales totaled 111,600 MT for 2021-22, down 60% from the previous week, down 77% from the prior four-week average and a marketing year low. For 2022-23, net sales totaled 284,000 MT, primarily for “unknown destinations,” at 105,000 MT. Sales for 2021-22 were expected to range from 100,000 to 400,000 MT for 2021-22, while sales for 2022-23 were expected from 100,000 to 600,000 MT.
WHEAT: Net weekly U.S. wheat sales totaled 700 MT for 2021-22, while net sales for 2022-23 totaled 363,500 MT, primarily for South Korea, at 108,400 MT. Net sales for 2021-22 were expected to range from minus-50,000 to 100,000 MT, while 2022-23 sales of were expected to range from 200,000 to 350,000 MT.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-firm
CATTLE: Live cattle may see followthrough support from Thursday’s gains and signs of improved beef demand. Packers moved 131 loads of beef on Thursday, the third consecutive day of strong movement this week, and while Choice cutout values fell 77 cents to $266.65, the average remains near a six-week high. Wholesale beef trade this week signals retailers are actively restocking after Memorial Day, suggesting holiday clearance was strong. Further signs of retail demand could embolden futures buyers. August live cattle rose $1.225 Thursday to $134.125, the contract’s highest closing price since May 11. The most-active contract is up from $132.40 at the end of last week.
Net weekly beef sales totaled 17,900 MT for 2022, down 11% from the previous week and down 17% from the prior four-week average. Prominent buyers included Japan (6,000 MT, including decreases of 600 MT), China (4,800 MT, including decreases of 300 MT) and South Korea (2,700 MT, including decreases of 400 MT).
HOGS: Lean hog futures are on track for a weekly gain behind continued strength in cash fundamentals. The CME lean hog index is up 12 cents to $105.03, the benchmark’s 10th gain in 11 days and the highest level since August. Premiums to the cash index limited buyer interest in summer-month hog futures Thursday, but there are no indications the cash market won’t continue to firm seasonally as slaughter numbers tighten into summer. July lean hogs fell 25 cents Thursday to $112.175, up from $111.725 at the end of last week.
Net weekly U.S. pork sales totaled 31,900 MT for 2022, down 13% from the previous week but up 15% from the prior four-week average.
