Ahead of the Open | June 23, 2022

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GRAIN CALLS

Corn: 11 to 20 cents lower.

Soybeans: 32 to 37 cents lower.

Wheat: 14 to 22 cents lower.

GENERAL COMMENTS: New-crop corn futures overnight fell to the lowest level in nearly three months and soybeans also dropped on escalating concerns over recession and an improving weather outlook. Nearby SRW wheat sank near a four-month low. Malaysian palm oil futures surged more than 5%, while front-month crude oil futures are near unchanged this morning after a drop to six-week lows Wednesday. U.S. stock futures signal a firmer open, while the U.S. dollar index is up nearly 300 points this morning.

Midwest weather is expected to remain “drier biased” in eastern and central parts over the next week before rain chances improve in early July, World Weather Inc. said. The outlook for the next week “is still worrisome” with the central and eastern Midwest drying down, “but the second week of the outlook brings at least one and possibly two opportunities for rain that would be supportive of pollination even though the amounts may be light in some areas,” the forecaster said. “The best crop weather still looks to be in parts of Iowa, southeastern Nebraska and from the eastern Dakotas to western Wisconsin.

Countries should ask for help if they have any problems importing Russian food and fertilizer, a senior U.S. official said Wednesday, stressing that such goods were not subject to U.S. sanctions over Moscow’s war in Ukraine. “Nothing is stopping Russia from exporting its grain or fertilizer except to own policies and actions,” an official with the U.S. State Department Bureau of Economic and Business Affairs said. Facilitating Russian grain and fertilizer exports is a key part of attempts by United Nations and Turkish officials to broker a package deal with Moscow that would also allow for shipments of Ukrainian grain from the Black Sea port of Odesa.

Turkey is investigating claims that Ukrainian grain has been stolen by Russia and says it would not allow any such grain to be brought into the country. Kyiv’s ambassador to Ankara said in early June Turkish buyers were among those receiving grain that Russia had stolen from Ukraine. The Kremlin reiterated its assertion that Russia has not stolen any grain from Ukraine.

Japan purchased 168,330 MT of wheat in its weekly tender, including 59,080 MT U.S., 63,820 MT Canadian and 45,430 MT Australiana. Saudi Arabia tendered to buy 480,000 MT of wheat.

The Energy Information Administration (EIA) said Wednesday that product releases scheduled for the week of June 20 will be delayed due to “systems issues.” That includes weekly ethanol production data.

 

CORN: December corn overnight fell as low as $6.70, the new-crop contract’s lowest intraday price since $6.53 1/4 on March 31. July corn fell to $7.52 1/2, just a tick above this week’s low. Strong crop ratings and an outlook for less-threatening Midwest weather will continue to weigh on prices.

SOYBEANS: November soybeans overnight fell as low as $14.31 3/4, the new-crop contract’s lowest intraday price since $14.37 on April 6.

WHEAT: July SRW wheat overnight fell as low as $9.47, the contract’s lowest intraday price since $9.15 on March 1. July HRW wheat fell as low as $10.07 3/4, the lowest since March 29. Wheat futures will remain under pressure from technical weakness and accelerating harvest pressure.

 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firmer

CATTLE: Live cattle futures may face followthrough pressure from a weak close Wednesday and a soft tone in the cash market. Feeder futures may gain support from slumping corn prices. Initial cash trade in the Southern Plains this week was reported around $138.00, indicating that the overall market this week will be well under last week’s average of $143.67. Wholesale beef movement has been strong this week, reflecting what’s likely the last push of retailer demand for July 4 features. Barring an unexpected surge in demand through the heart of summer, beef purchases are likely to slow. Choice beef cutout values fell 99 cents Wednesday to $266.57, though movement was strong at 157 loads.

August live cattle dropped $1.325 Wednesday to $134.925, the lowest close since June 14. August feeder futures fell $2.15 to $173.15.

HOGS: Lean hog futures may gain support from continued strength in cash fundamentals. The CME lean hog index reached a 10-month high at $110.45 Wednesday and is up another 29 cents today. Pork cutout values rose 29 cents Wednesday to $111.15, though movement was slower at about 259 loads. Negative packer margins could limit cash market upside as slaughter supplies build during the second half of the year. Packer margins were nearly $30 per head in the red as of Wednesday. July lean hogs fell 87.5 cents Wednesday to $111.85, while August hogs fell $1.475 to $108.325.

USDA’s Cold Storage Report is out at 2 p.m. CT today. The data will detail frozen meat stocks at the end of May. The five-year average is a 34.5-million-lb. decline in beef stocks and a 28.7-million-lb. drop in pork stocks during the month.

 

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