Ahead of the Open | June 29, 2022
GRAIN CALLS
Corn: Steady to 6 cents higher.
Soybeans: 6 to 10 cents higher.
Wheat: 9 to 17 cents higher.
GENERAL COMMENTS: Winter wheat futures rose to highs for the week overnight on signs sharp price declines earlier this month stirred improved demand. Corn and soybeans were also mostly firmer. Malaysian palm oil futures fell 1.7% on expectations for rising production and weaker demand. Front-month crude oil futures rose over $1.60 to the highest levels in over a week. U.S. stock futures signal a firmer open, while the U.S. dollar index is slightly firmer this morning.
No excessive heat is expected in the heart of the Midwest for the next couple of weeks, but many areas will need rain, World Weather Inc. said. Low soil moisture remains in parts of the U.S. Midwest and timely rain “will be extremely important over the next couple of weeks,” the forecaster said today. “Most forecast models are offering some timely rain, but its distribution may not be ideally suited leaving some areas drier biased while others get a little boost in moisture.”
The average cost of a summer cookout for 10 people is now $69.68, up $10 (17%) compared to last year, according to a survey from the American Farm Bureau Federation. Driving up prices: Ongoing supply chain problems tied to the pandemic, the war in Ukraine and the broader jump in inflation. A spike in ground beef prices is the biggest contributor. The survey found that two pounds of ground beef now costs $11.12, a 36% jump from last year. Two-and-a-half pounds of homemade potato salad is up 19%, while hamburger buns are 16% pricier.
USDA’s Hogs & Pigs Report this afternoon is expected to show the U.S. hog herd continued to contract, with the average estimate for the June 1 inventory down 0.7% from year-ago. The breeding herd is expected to be down 1.1% and the market hog inventory down 0.7%. Analysts expect spring farrowings declined 1.4%, with summer and fall farrrowing intentions anticipated to be down fractionally from last year.
Malaysia has allocated 369.5 million ringgit ($84 million) to subsidize chicken and egg prices, the country’s ag ministry announced. New ceiling prices on the goods will come into effect on July 1. The government had earlier said it would lift ceiling prices on chicken and eggs from July after measures to control food inflation created market distortions.
U.S. businesses and households faces risks of price pressures persisting for a long time and central bankers must act resolutely to bring inflation down, Cleveland Federal Reserve President Loretta Mester said. “The fact that the salient prices of gasoline and food remain elevated suggests that there is some risk that longer-term inflation expectations of households and businesses will continue to rise,” Mester told the European Central Bank’s annual forum in Sintra, Portugal. “Central banks will need to be resolute and intentional in taking actions to bring inflation down.”
U.S. exports rose to a record of $176.6 billion in May and imports were little changed at $280.9 billion, leaving the narrowest merchandise trade deficit of the year and adding a tailwind to economic growth in the second quarter. Exports were boosted by gains in industrial supplies such as petroleum products, as well as increases in the value of shipments of consumer goods and motor vehicles. More complete May trade figures that include the balance on services will be released on July 7.
Bids by Sweden and Finland to join the security alliance took a big step forward when Turkey gave them its blessing. By adding the two Nordic countries to its club, NATO would more than double the length of its border with Russia, the global power it was formed to counteract. In response to Russia’s invasion of Ukraine, NATO has launched its biggest mobilization since the end of the Cold War.
Taiwan purchased 40,000 MT of U.S. milling wheat and 55,000 MT of corn (likely to be sourced from South Africa). South Korea tendered to buy up to 140,000 MT of corn from the U.S., Black Sea region/eastern Europe, South America or South Africa. Jordan tendered to buy 120,000 MT of optional origin milling wheat.
CORN: December corn overnight rose as high as $6.62 1/2 after gaining 6 1/4 cents Tuesday following lower-than-expected USDA crop ratings. Traders await USDA’s Acreage and quarterly Grain Stocks reports Thursday. The agency is expected to raise its forecast for U.S. corn plantings by about 370,000 acres, to 89.86 million, based on a Reuters survey of analysts.
SOYBEANS: November soybeans overnight rose as high as $14.72 1/2 after jumping 29 3/4 cents Tuesday. Thursday. USDA is expected lower its estimate for 2022 U.S. soybean plantings to about 90.45 million ac., down 509,000 acres from a March forecast, based on the Reuters survey.
WHEAT: September SRW wheat overnight rose as high as $9.56 cents after rallying 18 1/2 cents Tuesday. Expanding harvest pressure will likely limit price upside in winter wheat, which hit four-month lows Monday. Analysts on average expect USDA to lower its forecast for U.S. all wheat seedings to 47.017 million ac. from 47.351 million ac. in its March projection.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-weaker
CATTLE: Live cattle futures may face pressure as weakness in the wholesale beef market indicates slower demand. Choice beef cutout values fell $1.54 Tuesday to $267.14, though movement was strong at 154 loads. Retailers continue to be selective buyers, showing a willingness to boost purchases when prices are under pressure but slow purchases if prices rise. After July 4, there are no major “beef holidays” until Labor Day, meaning retailers likely will be selective through the rest of summer. August live cattle fell 75 cents Tuesday to $132.725. August feeder futures fell $2.30 to $171.825.
HOGS: Lean hog futures may face followthrough pressure from a weak close Tuesday and concern over pork demand as traders wait for USDA’s Hogs & Pigs numbers. Cash fundamentals remain firm, with the CME lean hog index up 27 cents today after posting a 10-month high at $111.64 yesterday. But summer-month lean hog futures expanded discounts to the cash index, signaling traders anticipate cash will soon start to soften as market-ready supplies build during the second half of the year. Pork cutout values fell $3.56 Tuesday to a three-week low at $105.47, despite a nearly-$20 gain in bellies. Movement was strong at 322 loads. August lean hogs fell $1.05 to $103.825, closing near the session low.
