Ahead of the Open | June 2, 2022
GRAIN CALLS
Corn: 5 to 7 cents higher.
Soybeans: 8 to 12 cents higher.
Wheat: 15 to 23 cents higher.
GENERAL COMMENTS: Wheat futures rebounded firmly overnight following sharp declines the previous two sessions, while corn and soybeans also gained. Malaysian palm oil futures rose 1.7%, the third straight daily gain. Front-month U.S. crude oil futures are around $1 lower after dropping over $4 earlier overnight. U.S. stock index futures signal a stronger open, while the U.S. dollar index is down more than 300 points this morning.
USDA reported a daily soybean sale totaling 352,000 MT for delivery to Pakistan, with 55,000 MT for delivery during the 2021-22 marketing year and 297,000 MT for 2022-23.
Ukraine is working with international partners to create a United Nations-backed mission to restore Black Sea shipping routes and export Ukrainian ag products, foreign ministry spokesman Oleg Nikolenko said. “We call on countries whose food security may suffer more from Russian aggression against Ukraine to use their contacts with Moscow to force it to lift the blockade of Ukrainian seaports and end the war,” Nikolenko wrote on Facebook.
India has allowed wheat shipments of 469,202 MT since banning most exports last month, but at least 1.7 MMT is lying at ports and could be damaged by looming monsoon rains, government and industry officials told Reuters. Shipments have been allowed to mainly Bangladesh, the Philippines, Tanzania and Malaysia, said a senior government official. Indian wheat exports fell to 1.13 MMT in May from a record 1.46 MMT in April, the official said.
Australia is poised for a third year of near-record wheat production in 2022 as high international prices and good weather boost plantings. Australian farmers are wrapping up planting efforts on a record 14.45 million hectares (35.7 million acres), according to IKON Commodities. Analysts and traders expect the country’s wheat production to range from 30 MMT to 35 MMT, well above the 10-year average of 24.8 MMT.
State agency the Malaysian Palm Oil Council (MPOC) lowered its production outlook for the world’s second largest producer and pegged prices to remain above 6,000 ringgit ($1,367.37) per MT this year. MPOC forecast Malaysia's 2022 production at 18.6 MMT, up from 18.1 MMT in 2021 as migrant workers are expected to enter and help ease a labor shortage at plantations. The world will see higher demand for oils and fats in 2022, and global palm oil dependency will continue to rise, said Mohd Izham Hassan, MPOC deputy director.
China will auction another 500,000 MT of imported soybeans from state-owned reserves on June 10. Beijing continues to hold the weekly auctions to help boost supplies for domestic users.
The Russian government has removed export quotas on some fertilizers, the Interfax news agency said. Extension of the non-tariff quota for di-ammonium phosphate (DAP), sodium nitrate and mixtures of calcium nitrate and ammonium nitrate has been deemed unworkable due to low demand from domestic farmers, the agency said.
CORN: July corn futures traded inside Wednesday’s range overnight after dropping 22 1/4 cents to $7.31 1/4, the contract’s lowest close since April 1. Wednesday’s low at $7.20 1/2 marks initial support. Corn futures may continue to draw direction from wheat, with the near-term Midwest weather outlook mostly favorable for early crop development.
SOYBEANS: July soybeans rose as high as $17.04 1/2 overnight but held within Wednesday’s range. Export optimism and concerns over delayed U.S. plantings, particularly in the northern Midwest, may continue supporting futures. Initial support comes in around this week’s low at $16.73 3/4 in July futures.
WHEAT: July SRW wheat rose to $10.58 1/4 overnight but held within a narrow range after tumbling 46 1/4 cents Wednesday to $10.41 1/4, the contract’s lowest closing price since April 7. Traders will continue to closely monitor recent talks that may lead to the resumption of grain shipments out of Ukraine.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-firm
CATTLE: Live cattle may face weakness as expectations for further slippage in cash prices mutes followthrough technical momentum from Wednesday’s sharp gains. Strength in corn prices may burden feeder futures. More cattle traded at $135 in the Southern Plains on Wednesday, steady with prices the prior day, but futures’ strength prompted packers to boost bids in the northern market from earlier in the week. Ultimately, this week’s cash average is likely to drop from last week’s average of $139.07. Wholesale beef market strength could underpin futures with retailers actively buying after the Memorial Day holiday. Choice cutout values slipped 12 cents Wednesday to $267.42, still near a five-week high. Movement was again strong at 146 loads.
August live cattle rose $2.525 Tuesday to $132.90. August feeder futures soared $4.60 to $169.725.
HOGS: Lean hog futures should remain supported by firm cash fundamentals, but the market’s sizable premium to the CME lean hog index could limit buying after the July contract ended at a five-week high Wednesday. The CME lean hog index is down 24 cents today to $104.91 (as of May 31), its first decline in 10 days. July futures hold a roughly $7.50 premium to the index, with August at about $4 over, and futures traders may seek further cash index firmness before extending those premiums. Pork cutout values rose $2.31 to $110.02, near a six-week high and led by a gain of nearly $14 in bellies. Movement totaled 293 loads.
July lean hogs rallied $4.425 Wednesday to $112.425, the contract’s highest settlement since April 28.
