Ahead of the Open | June 8, 2022
GRAIN CALLS
Corn: 6 to 11 cents higher.
Soybeans: 15 to 19 cents higher.
Wheat: 6 to 9 cents higher.
GENERAL COMMENTS: July soybean futures rose to a contract high overnight and corn and wheat also firmer amid uncertainty over Ukraine supplies. Malaysian palm oil futures fell 0.6% as the market assessed export uncertainty. Front-month U.S. crude oil futures rose over $1 to a three-month high above $121 a barrel. U.S. stock index futures signal a lower open, while the U.S. dollar index is aboutu 160 points higher this morning.
The Kremlin said Western sanctions against Moscow must be lifted before Russian grain could be delivered to international markets. “President (Vladimir) Putin said that in order for Russian grain volumes to be delivered to international markets, direct and indirect sanctions against Russia must be lifted,” Kremlin spokesman Dmitry Peskov told reporters. He said the sanctions were affecting shipping insurance, payments, and access to European ports.” He added that "no substantive discussions" about lifting them were taking place. Earlier, Russia’s TASS news agency reported grain shipments will resume from Ukraine’s Russian-occupied Black Sea port of Berdyansk this week after work was completed to de-mine it, cited local authorities as saying.
Conab raised its official Brazilian corn crop estimate by 600,000 MT to 115.2 MMT, while keeping its 2021-22 export forecast unchanged at 37 MMT. The firm raised its Brazilian soybean crop by 500,000 MT to 124.3 MMT but lowered its 2021-22 export forecast by 1.8 MMT from last month to 75.2 MMT.
India could soon allow traders to ship out around 1.2 MMT of wheat as it seeks to clear cargoes stuck at ports since last month’s sudden ban of exports. But even if those exports are allowed, it would still leave around 500,000 MT of wheat sitting at ports, as some exporters have failed to secure required permits.
Malaysian palm oil futures reversed early losses today due to continued uncertainty around Indonesia's export policy, with expectations of lower stockpiles underpinning prices. Indonesia said Tuesday the government would bring down its combined maximum crude palm oil export and levy rate to $488 per MT from $575 per MT to encourage shipments. Flip-flopping of top producer Indonesia's export policy has resulted in supply uncertainties, leading to high volatility in the palm oil market. The country's palm oil association GAPKI expects this year's exports of palm oil to be lower than 2021’s 34 MMT.
Jordan tendered to buy 120,000 MT of optional origin milling wheat.
CORN: July corn overnight reached $7.70, the contract’s highest intraday price since $7.77 1/4 on May 31. Initial resistance lies just above today’s high at the 50- and 40-day moving averages at $7.73 1/2 and 7.82 1/4, respectively. December corn also posted the highest price in over a week.
SOYBEANS: July soybeans overnight touched a contract high at $17.54, surpassing the previous high of $17.49 1/4 posted May 31. Based on the continuation chart, upside targets include the April high at $17.57 1/2 and the February high at $17.65.
WHEAT: July SRW and HRW wheat contracts traded within Tuesday’s ranges overnight. Initial resistance in July SRW is seen at the 20-day moving average around $10.92 and this week’s high at $11.08 3/4.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-mixed
CATTLE: Live cattle futures may extend Tuesday’s late upswing amid signs the cash market may reverse or at least stabilize a four-week slide. While many traders started the week expecting further cash weakness, strength in wholesale beef and currentness of feedlot supplies has fostered ideas that cash price could be steady-at-worst. With packers offering lower bids and feedlots seeking higher prices, this week’s cash negotiations are likely to run deeper into the week than recent weeks. Choice beef cutout values rose $1.84 Tuesday to $271.42, the highest daily average since April 15. Movement was strong at 137 loads.
August live cattle rose $1.225 Tuesday to $134.125 and August feeders rose 47.5 cents to $172.45.
HOGS: Lean hog futures face a mixed picture with the market’s technicals slipping in recent sessions, but cash fundamentals likely limited much more downside. The CME lean hog index is up another 46 cents today (as of June 6) to $107.80, the highest since August. June hogs finished Tuesday just 62.5 cents above the index and the July ended at only a $1.475 premium, while August futures finished at a 70-cent discount to the cash index. The price relationship between summer-month contracts and the cash index signals traders are taking a cautious approach after the cash market underperformed through spring. Pork cutout values fell 96 cents Tuesday to $107.83, but movement was strong at over 346 loads. July lean hogs rose 30 cents Tuesday to $109.275.
China will buy another 40,000 MT of frozen pork for state reserves on June 10. China has bought more than 200,000 MT of pork for its reserves so far this year in an effort to support hog farmers facing weak prices and soaring costs.
