Ahead of the Open | June 22, 2022

GRAIN CALLS

Corn: 1 cent higher to 5 cents lower.

Soybeans: 13 to 21 cents lower.

Wheat: HRW and SRW 12 to 16 cents higher, spring wheat 1 to 5 cents higher.

GENERAL COMMENTS: New-crop soybean futures fell to the lowest level in over five weeks overnight and corn also slipped on hopes for improving weather in the Midwest. Wheat futures rose after a Russian strike on the Ukrainian port city of Mykolaiv stoked supply fears. Malaysian palm oil futures plunged nearly 10% to a six-month low as crude oil tumbled nearly $7. U.S. stock futures signal a weaker open, while the U.S. dollar index is modestly weaker this morning.

There’s little change in the near-term weather outlook for the Midwest. Limited rainfall is expected over the next week to 10 days in the eastern Midwest, Delta and Southern Plains, leading to additional drying, World Weather Inc. said. “Topsoil moisture has become very short in many of these areas already, but subsoil moisture is favorable,” the forecaster said. “Timely rain will become increasingly more important especially after another week of 90- and lower 100-degree Fahrenheit heat with limited rainfall.” Rain is expected later this week in parts of Nebraska, Iowa, northern Kansas and northern Missouri.

Russian and Turkish delegations have agreed to continue consultations on the safe exit of Turkish merchant vessels and grain exports from Ukrainian ports,” Russia’s defense ministry said. Turkey’s TRT Haber broadcaster said talks between the Turkish and Russian military officials were “positive and constructive.” A Turkish dry cargo ship stuck at the Ukrainian port of Mariupol safely departed from the port hours after the meeting, it said.

Brazilian farmers are expected to harvest a bigger second corn crop this season than previously forecast, based on a recent crop tour conducted by Agroconsult. Brazilian farmers are now expected to reap 89.3 MMT of second corn, more than the 87.6 MMT forecast in May. Thanks to an abundant second corn crop, Brazil may supply corn to some countries that would otherwise rely on Ukraine. Second corn this season will represent about 77% of national production, which is pegged at 114.8 MMT.

President Joe Biden will call on Congress to suspend the federal gas and diesel taxes for the next three months, the latest effort by the White House to provide relief to Americans struggling with record fuel prices. The move is contingent on legislative action, which would temporarily lift the tax of 18.3 cents per gallon on gasoline and 24 cents on diesel during the summer months.

CORN: Despite recent heat, U.S. crops remain in generally strong condition. USDA late Tuesday reported 70% of the U.S. crop in “good” or “excellent” condition as of Sunday, down from 72% from a week earlier and meeting expectations. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop fell 3.5 points to 376.2, though that was still 4.4 points above the five-year average.

December corn overnight fell as low as $6.90, the contract’s lowest intraday price since $6.88 1/2 on June 3. The new-crop contract plunged 27 1/4 cents to start the week.

SOYBEANS: USDA’s “good” to “excellent” rating for soybeans fell to 68% as of Sunday from 70% a week earlier and about 1 percentage point lower than expected. Based on the weighted Pro Farmer CCI, the soybean crop dropped 4.9 points to 366.0, though that was still 5.5 points above average for the date.

November soybeans overnight fell as low as $14.83, the contract’s lowest intraday price since $14.78 1/4 on May 13.

WHEAT: Strength in wheat overnight partly reflected corrective buying from sharp declines Tuesday, but followthrough gains may be limited by increasing harvest pressure. USDA said the winter wheat harvest was 25% complete as of Sunday, up from 10% a week earlier and about two percentage points higher than expected. USDA reported the spring wheat crop in 59% “good” or “excellent” condition, up from 54% the previous week. The Pro Farmer CCI for the spring wheat crop improved 10.8 points to 364.21, which was 17.3 points above the five-year average.

July SRW wheat overnight fell as low as $9.60, the contract’s lowest price since March 2, before rebounding amid corrective buying.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firmer

CATTLE: Live cattle may gain support from expectations a firm cash market tone will continue this week, though buying interest may be muted by futures’ soft performance Tuesday. Feeder cattle may gain support from weakness in corn. Cash cattle traded rather actively around $138 in the Southern Plains on Tuesday, about steady with last week’s weighted average in the region. The northern market, where market-ready supplies are tighter and prices have been sharply higher, remained quiet. Based on the initial activity, prices are likely to be steady to firmer compared with last week’s average of $143.67. Choice beef cutout values rose $1.06 Tuesday to $267.56 on strong movement of 143 loads. August live cattle fell 32.5 cents Tuesday to $136.25. August feeder futures surged $2.35 to $175.30.

HOGS: Lean hog futures may see followthrough buying from Tuesday’s jump to two-month highs as cash fundamentals continue to strengthen. The CME lean hog index is up $1.29 today (as of June 20) to $110.45, the highest level since August. July futures finished Tuesday more than $2 above today’s cash quote, while the August contract narrowed to a modest discount. Pork cutout values fell $1.01 to $110.86, though movement was relatively strong at 335 loads. July lean hogs rose $1.725 Tuesday to $112.725, the contract’s highest close since April 28.

China will buy another 40,000 MT of frozen pork for state reserves on June 24. Beijing continues to stockpile pork via weekly purchases to boost hog margins.