Ahead of the Open | July 8, 2022

GRAIN CALLS

Corn: 7 to 9 cents higher.

Soybeans: 1 cent lower to 6 cents higher.

Wheat: 15 to 28 cents to higher.

GENERAL COMMENTS: Wheat futures climbed to highs for the week overnight. Corn and soybeans firmed on forecasts for dry Midwest conditions later this month. Malaysian palm oil futures ended the week with a drop of nearly 12% on expectations for rising supplies. Front-month crude oil is up slightly more than $1. U.S. stock index futures signal a weaker open and the U.S. dollar index is more than 100 points higher after posting a fresh 20-year high.

U.S. jobs growth expanded at a faster pace than expected in June, indicating hiring remains strong even amid elevated concerns over recession. The Labor Department reported non-farm payrolls rose 372,000 during June, higher than economists’ expectations for a gain closer to 250,000 and continuing a strong year for job growth. The unemployment rate was 3.6%, unchanged from May and in line with estimates.

There was little change in the near-term Midwest weather outlook overnight, World Weather Inc. said. There was “a little more rain” suggested in the second of the next two weeks relative to Thursday, “but it will still be questionable as to how much rain will fall after Saturday,” the forecaster said. Temperatures “will be milder than usual which should conserve soil moisture in those areas that got rain and were eased from dryness this week, but there will still be some areas in the southwestern Corn Belt and Delta that will be too dry.”

Argentina's wheat-planting area for the 2022-23 harvest season is estimated at 6.2 million hectares (15.3 million acres), down from the 6.3 million hectares previously estimated, the Buenos Aires Grain Exchange said. The cut is the fourth made by the exchange since the season began in May, mainly due to unfavorable weather that has prevented many farmers from meeting their original planting targets.

The UN Food and Agriculture Organization (FAO) global food price index dropped 2.3% in June – the third straight monthly decline after hitting a record high in March but was still 23.1% above year-ago. Declines in the price of cereal grains, vegoils and sugar more than offset increases in meat and dairy. Compared to year-ago, prices surged 12.6% for meat, 24.9% for dairy, 27.6% for cereal grains, 34.3% for vegoils and 8.9% for sugar.

Russia is ready to negotiate with Ukraine and Turkey about grain exports, but it is unclear when such talks might take place, Foreign Minister Sergei Lavrov said on Friday. U.S. Secretary of State Antony Blinken addressed Russia directly at a G20 foreign ministers meeting in Bali, Indonesia, on Friday and called on Moscow to let Ukrainian grain be exported. A Western official said Blinken’s message directly to Russia was, “Ukraine is not your country. Its grain is not your grain. Why are you blocking the ports? You should let the grain out.” However, Russian President Vladimir Putin continued to blame the West.

President Joe Biden will discuss possible reductions in U.S. tariffs on Chinese goods in a meeting with his advisers set for today, Bloomberg reports, citing people familiar with the matter, as his administration nears a closely watched decision on trade with China.

The U.S. exported $17.1 billion of ag goods against imports of $17.8 billion for a deficit of $656 million in May. The deficit increased from $19 million in April. Through the first eight months of fiscal 2022, ag exports totaled 136.5 billion against imports of $128.2 billion for a surplus of $8.3 billion. USDA forecasts fiscal 2022 ag exports at $191 billion and imports at $180.5 billion, leaving a surplus of $10.5 billion.

Russia’s wheat export tax for July 13-19 will be 5,558.9 rubles ($90.94) per metric ton based on an indicative price of $401.60, up from 4,635 rubles ($85.80) the previous week. The tax, however, is well below levels when it was pegged to the U.S. dollar.

France’s ag ministry rates 63% of the country’s wheat crop as being in good or excellent condition, down one percentage point from the previous week. Crop ratings have plunged 26 percentage points since the beginning of May. The ag ministry says 14% of this year’s crop has been harvested.

Indonesia will implement 35% palm oil mix in biodiesel, known as B35, by the end of the month to help absorb excess palm oil supply, CNBC Indonesia reported, citing senior energy ministry official Dadan Kusdiana. Indonesia currently has a mandatory 30% blend of palm oil-based fuel in its biodiesel.

China will sell 500,000 MT of imported soybeans from its state reserves on July 15. Beijing has been holding weekly auctions of soybean stockpiles to boost domestic supplies.

South Korea purchased 65,000 MT of corn expected to be sourced from South America.

CORN: USDA reported net weekly corn sales reductions of 66,600 MT for 2021-22, a marketing-year low and well under trade expectations for sales of 200,000 to 500,000 MT. Net sales for 2022-23 totaled 111,200 MT, within expectations. December corn overnight rose to $6.07, just under last week’s close at $6.07 1/2.

SOYBEANS: USDA reported net weekly soybean sales reductions of 160,000 MT for 2021-22, a marketing-year low but within trade expectations. Net sales for 2022-23 totaled 240,100 MT, primarily for “unknown destinations” and within expectations ranging from 100,000 to 300,000 MT. November soybeans overnight rose to $13.86 but still down from $13.95 1/4 at the end of last week.

WHEAT: USDA reported net weekly wheat sales at 286,400 MT for 2022-23, down from 496,700 MT and 477,800 MT the previous two weeks. Sales were at the low end of expectations ranging from 250,000 to 600,000 MT. September SRW wheat overnight reached a high for the week at $8.61 3/4 and is up from $8.46 at the end of last week.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle futures may continue to be support by firmness in the cash market. Light cash cattle trade was reported through Thursday, with prices steady/weaker in the Southern Plains and steady/firmer in the northern market. The price spread between the two markets was about $11, favoring northern locations where supplies are tighter. Unless there’s a dramatic shift in the cash tone, it appears the northern market will continue to support the overall market and lead to a firmer average cash price. USDA-reported live steers averaged $149.87 this week through Thursday morning, up sharply from last week's $146.15 average. Choice beef cutout values rose 2 cents Thursday to $268.07, up $4.25 since the end of last week, while movement was strong at 125 loads. Weekly beef export sales of 11,000 MT were down 35% from the previous week and 30% from the four-week average.

HOGS: Lean hog futures may continue to gain support as strength in the wholesale pork market conveys firm retail demand. Pork cutout values rose 69 cents Thursday to $112.19, though movement, at 287 loads, continued to slow slightly. Wholesale trade this week suggests demand is solid as retailers stock up for mid-summer features. The CME lean hog index firmed 23 cents today (as of July 6), though followthrough buying in summer-month hog futures may be limited by their relationship with cash (July at a $3.09 premium and August at a 66-cent discount). August lean hogs rose 30 cents Thursday to $109.50, the highest close since June 21. Weekly pork export sales of 31,200 MT were down 3% from the previous week but up 23% from the four-week average.