Ahead of the Open | June 7, 2022

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GRAIN CALLS

Corn: 4 to 6 cents higher.

Soybeans: 2 to 6 cents higher.

Wheat: 2 to 8 cents lower.

GENERAL COMMENTS: Corn futures firmed near the close of overnight trading after initially dropping in the wake of better-than-expected USDA crop ratings. Soybeans also firmed overnight. Wheat futures overnight gave back a small portion of Monday’s steep gains. Malaysian palm oil futures rose 1.0%, the fourth gain in five sessions, on supply concern. Front-month U.S. crude oil futures are near unchanged. U.S. stock index futures signal a weaker open, while the U.S. dollar index is nearly 400 points higher this morning.

Russia’s defense minister said the Ukrainian ports of Berdyansk and Mariupol have been de-mined and are ready to resume grain shipments. President Vladimir Putin, according to a Kremlin spokesman said “Ukraine must demine the approaches to its ports. This will allow ships, once checked by our military, to enter the ports, load grain and with our help, proceed to international waters.” The minister also said Russian armed forces had created the “necessary preconditions for the full resumption of railway traffic between Russia, the Donbas, Ukraine and Crimea” and had started delivery of cargo to the Ukrainian cities of Mariupol, Berdyansk and Kherson on 1,200 km (750 miles) of reopened railway tracks.

Ukraine will only be able to export a maximum 2 MMT of grains a month if Russia refuses to lift its blockade of the country’s Black Sea ports, according Taras Vysotskyi, the country’s first deputy minister of ag. “I think we reached the limit. The biggest amount we can export is about 2 MMT a month,” Vysotskyi told participants at an International Grains Council (IGC) conference in London.

Kazakhstan plans to extend export restrictions of 1 MMT of wheat and 300,000 MT of wheat flour until September, according to the country’s ag ministry. The restriction was originally set to expire on June 15. Exporters have used 40% of the wheat quota and 70% of the flour quota. The ministry expects the country to produce between 13 MMT and 13.5 MMT of wheat this year, with total grain production likely to be between 18 MMT and 19 MMT.

The European Commission raised its EU wheat production forecast by 300,000 MT to 130.4 MMT. Last week, the commission cut its 2022-23 wheat export forecast by 2 MMT to 38 MMT. The commission cut its production forecasts for barley by 1.2 MMT to 52.3 MMT and for corn by 900,000 MT to 72.5 MMT.

 

CORN: USDA late yesterday reported the U.S. corn crop 94% planted as of Sunday, up from 86% a week earlier and 1 percentage point above expectations. In its first condition ratings for 2022, USDA rated the crop 73% “good” or “excellent,” up from 72% in those categories a year ago. Ratings topped analysts’ expectations for a “good” to “excellent” rating around 68%.

When USDA’s initial weekly condition ratings of the spring are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop starts the growing season 0.8 point above last year at this time, though 5.4 points below the initial 2021 rating that came a week earlier. The initial corn CCI rating is 6.5 points above the five-year average for the first week of June.

SOYBEANS: USDA said 78% of the U.S. soybean crop was planted as of Sunday, up from 66% a week earlier and just behind the 79% five-year average for that date. The crop was 56% emerged, not far behind the 59% average for that date. But Minnesota and North Dakota remain well-behind schedule, with their soybean crops 72% and 41% planted, respectively.

WHEAT: Farmers in the Northern Plains managed a decent jump in spring wheat plantings last week but the pace remains behind average. The U.S. spring wheat crop was 82% planted as of Sunday, USDA said, up from 73% a week earlier and behind the five-year average of 97%. The winter wheat crop was 79% headed, compared to the 84% five-year average, and was 5% harvested, just behind the 6% average.

 

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-firm

CATTLE: Live cattle futures may face followthrough pressure from a soft performance to start the week, with prospects for further cash weakness and demand concerns hanging over the market. Choice cutout values rose $2.32 Monday to $269.58, near a seven-week high, but movement was a light 70 loads. Wholesale trade the past two days suggests retailers restocked following Memorial Day and aren’t inclined to buy actively for Father’s Day features, especially at higher prices. Live steers last week averaged $138.07, down $1.00 from the previous week and the fourth straight weekly decline.

August live cattle fell 95 cents Monday to $132.90, while August feeder cattle sank $1.90 to $171.975.

HOGS: Followthrough from a weak technical performance the previous two sessions may be mitigated by continued strength in cash fundamentals. The CME lean hog index is up $1.29 today to $107.34 (as of June 3), the second straight day of $1-plus gains and the highest quote since August. After sharp losses on Monday, June and July hogs finished less than $2 above the cash index, while the August contract ended at a mild discount. Pork cutout values erased a sharp morning jump Monday and ended down 59 cents at $108.79. July lean hogs fell $1.775 Monday to $108.975, the lowest closing price since May 31.

 

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