Ahead of the Open | July 7, 2022

GRAIN CALLS

Corn: 10 to 15 cents higher.

Soybeans: 30-plus cents higher.

Wheat: 25 to 35 cents to higher.

GENERAL COMMENTS: Grain and soybean futures are expected to open higher after surging overnight on corrective buying following steep losses earlier this week. Malaysian palm oil futures rose 2% after reversing early losses, while front-month crude oil is up more than $2. U.S. stock index futures signal a stronger open and the U.S. dollar index is near unchanged but still near a 20-year high.

Due to Monday’s holiday, export sales data for the week ended June 30 will be released Friday morning.

The near-term Midwest weather outlook remains mostly favorable for crop development as corn nears pollination. U.S. weather today is a little drier than forecast Wednesday, “but another round or two of rain is still expected in the lower Midwest through Saturday that will help to fill in the hole of dryness that remains from northern Missouri and southern Iowa through parts of central and southern Illinois to Indiana and southern Ohio,” World Weather Inc. said. “The lower Midwest rainfall will be welcome and extremely well timed for corn pollination and early soybean blooming.”

China expects June trade growth to remain relatively high, but said the second half year brings rising uncertainties, the commerce ministry said. According to a survey, China’s foreign trade growth faces instabilities in the second half of this year and the trade situation remains complex, a commerce ministry spokesperson said, without providing specifics. The ministry said Beijing and the U.S., who agreed to maintain close communications, will strengthen the exchange of macroeconomic policies and promote pragmatic cooperation on the economy and trade.

Copper, used in everything from construction to electronics, has fallen to its lowest level since late 2020. The market has been given the moniker “Dr. Copper” because it is reputed to have a “Ph.D. in economics” with an ability to predict turning points in the global economy. The most actively traded copper futures contract finished Wednesday at $3.408 a pound, its lowest settlement since November 2020 and on pace for a fifth consecutive weekly decline. Copper hit record highs earlier this year partly because of supply concerns related to the war in Ukraine and sanctions on Russia, a metals producer. Copper has since retreated by about 30%.

Ukraine will summon Turkey’s ambassador to seek clarification after a Russian-flagged cargo ship suspected of carrying stolen Ukrainian grain left a Turkish port, Ukraine’s foreign ministry said. It was “unacceptable” for the ship to have been allowed to leave, the ministry said. “We regret that Russia’s ship Zhibek Zholy, which was full of stolen Ukrainian grain, was allowed to leave Karasu port, despite criminal evidence presented to the Turkish authorities,” foreign ministry spokesperson Oleg Nikolenko wrote on Twitter.

Effective July 12, India will require firms to secure permission before exporting wheat flour. After India banned wheat exports in mid-May, demand for wheat flour jumped. By requiring permission to export wheat flour, New Delhi seeks to better control domestic supplies before exports are allowed. 

Indonesia is considering cutting its palm oil export levy to encourage more shipments, a cabinet minister said on Thursday. To jumpstart exports, the government needs to make extra effort to quickly cut domestic stocks and prop up palm fruit prices for farmers that have slumped since a three-week ban on exports in May, Senior Minister Luhut Pandjaitan said at an industry event. “For shipments to flow we may have to lower the export levy to provide incentives for businesses to export,” Luhut said, without providing further details.

Japan purchased 122,420 MT of wheat from its weekly tender, including 66,370 MT U.S. and 56,050 MT Canadian. Egypt purchased 63,000 MT of German wheat. The Philippines tendered to buy at least 50,000 MT of optional origin feed wheat.

CORN: December corn rose as high as $5.99 1/4 after leaving a 1/4-cent gap in the daily bar chart at the open of overnight trade. The most-active contract rose 6 1/2 cents Wednesday to $5.85, after earlier dropping to a five-month low of $5.66 1/2. The market is near oversold levels and followthrough buying plus a higher close today could foster ideas the market has established a near-term bottom.

SOYBEANS: November soybeans overnight reached $13.64 1/2 after gaining 6 3/4 cents Wednesday. Initial support is seen at the 5 1/2-month low of $13.02 1/2 hit earlier in Wednesday’s session. Further buying could have market bulls aiming to fill a 16 3/4-cent gap created on the daily chart Tuesday.

WHEAT: Winter wheat may be poised for the markets’ first gains in six days if overnight strength can be sustained. September SRW wheat overnight rose as high as $8.45 1/2 after the contract fell 2 1/2 cents Wednesday to $8.04 1/2, the contract’s lowest closing price since Feb. 18.

LIVESTOCK CALLS

CATTLE: Steady/firmer

HOGS: Steady/firmer

CATTLE: Live cattle futures are expected to open with a firmer tone on followthrough buying after a strong finish on Wednesday. Traders are expecting steady to firmer cash cattle prices to develop this week, though negotiations have been slow thus far. Strong gains in wholesale beef prices should also provide support. Choice beef surged $3.39 with Select up $3.06 yesterday and packers moved a solid 121 loads on the day.

HOGS: Lean hog futures may see followthrough buying from Wednesday’s strong close, though the premium July hogs now hold to the cash index may limit buying in the front-month contract. August hogs have also erased most of their discount to the cash index, which is down 65 cents to $109.93 today (as of July 5), the fifth straight daily decline. The pork cutout value dropped $2.98 on Wednesday, due mostly to a $22.46 plunge in belly prices. All other cuts aside from hams traded higher.

For the week ended July 1, the pork price in China was 26.25 yuan ($3.91) per kilogram, up 14.9% from the previous week, according to the ag ministry. The ministry attributed the jump in price to declining hog supplies in the northern part of the country and “reluctance to sell” by producers. The National Development and Reform Commission said earlier this week it will take timely measures and tighten market oversight to prevent sharp increases in pork prices.