Ahead of the Open | May 10, 2022

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GRAIN CALLS

Corn: Steady to 1 cent higher.

Soybeans: 5 to 12 cents higher.

Wheat: 3 to 9 cents higher.

GENERAL COMMENTS: Corn and soybean futures rose overnight after USDA’s weekly planting progress numbers fell short of expectations. Wheat futures also firmed on a corrective rebound. Malaysian palm oil futures fell to a two-week low on higher inventories. Front-month U.S. crude oil futures are little changed this morning. U.S. stock index futures indicate a firmer open, while the U.S. dollar index is modestly firmer.

Crop Consultant Dr. Michael Cordonnier cut his U.S. corn yield projection by 1.5 bu. to 177 bu. per acre given slow planting. He notes corn yield potential declines about 0.3% for each day planting is delayed in early May and that increases to about 1% per day at the end of the month. For Iowa and Illinois, yield potential for corn planted on May 15 is generally about 95%; around 92% of normal on May 20. He also cut his planted acreage estimate by 500,000 acres to 90.0 million acres. He maintained his soybean acreage and yield projections at 91.0 million acres and 51.5 bu. per acre, respectively.

USDA Secretary Tom Vilsack is working with lawmakers to include funding in a coming bill that would offset the penalty for planting a crop after a prevent-plant claim. USDA also could extend final planting dates to let farmers into fields without crop insurance penalty for each late day. Farmers normally receive only 35% of their prevent-plant indemnity if they plant a crop on the same land that year.

China’s provincial authorities have been asked by the ag ministry to investigate suspected illegal destruction of wheat fields for construction projects, and cases of the crop being cut prematurely for feed. Beijing has made food security a top priority and spent 5 billion yuan ($744 million) to stabilize the crop after a poor start last fall.

Malaysia’s ag ministry proposed cutting the export tax on palm oil by as much as half to help fill a global edible oil shortage and grow market share of the world’s second-largest palm oil producer. Malaysia could temporarily cut the tax to 4% to 6% from the current 8%, with a decision possible as early as June.

French farmers are expected to cut back on corn planting and devote more area to sunflower seeds in response to rising fertilizer costs, the country’s farm ministry said. The ministry forecasts farmers will plant 1.37 million hectares of corn for grain in 2022, down 6.1% from last year. In contrast, the ministry forecasts sunflower seed area at 758,000 hectares, up 8.5% from 2021.

South Korea purchased 65,000 MT of corn – likely to be sourced from South America. Japan is seeking 196,560 MT of wheat from the U.S., Canada and Australia in its weekly tender. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat.

 

CORN: USDA late Monday reported 22% of the U.S. corn crop was planted as of Sunday, up from 14% the previous week but under the 50% average for that date the previous five years. Progress fell short of analysts’ expectations for plantings at about 25%. The lower-than-expected planting figure may limit declines in new-crop futures.

Nearby corn futures’ technicals weakened Monday as funds sold an estimated 14,000 contracts, sending the July contract down 12 3/4 cents to $7.72, the lowest closing price since April 11. December corn fell 10 cents to $7.10 3/4, a four-week low. Further downside below key July support levels, such as the 20- and 50-day moving averages at $7.62 3/4 and $7.53 1/2, respectively, could accelerate fund sales.

SOYBEANS: USDA reported 12% of the U.S. crop was planted as of Sunday, up from 8% the previous week but under the five-year average of 24%. Progress fell short of expectations for about 16%. Heavy fund liquidation, with funds selling an estimated 15,500 contracts, also pressured soybean futures yesterday, sending the contract July down 36 3/4 cents to $15.85 1/4, a five-week closing low.

WHEAT: USDA reported modest improvement in winter wheat crop conditions, with the “good” to “excellent” rating rising to 29% as of Sunday from 27% and the “poor” to “very poor” rating falling to 39% from 43%. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 5.4 points to 259.2, though that’s still 69.4 points below the five-year average for this date. The SRW crop slipped 4.7 points over the past week to 346.3, which is 13.0 points below the five-year average.

July SRW wheat overnight dropped as low as $10.83 before finding support just above its 20-day moving average at $10.81 3/4 and rising to gains. The most-active contract dropped 15 3/4 cents Monday after earlier reaching a three-week high at $11.35.

 

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-weaker

CATTLE: Live cattle futures may find followthrough support from a sharp recovery from early-session losses Monday, with recent wholesale beef strength also lending a boost. Choice boxed beef prices firmed $3.85 on Monday to $258.29, up from an eight-week low, while Select dropped $1.93. Packers moved 131 loads, nearly half of which was Choice. That may suggest retailers are finishing their purchases for beef features during the upcoming grilling season.

Traders are waiting to see whether last week’s modest cash strength extends to this week. Live steers averaged $143.42 last week, up 8 cents from the previous week. June live cattle gained 80 cents Monday to $133.55 after dropping to a three-month low earlier.

HOGS: Lean hog futures may face further pressure from continuing chart breakdowns after June futures tumbled near a four-month closing low yesterday. The CME lean hog index is up 18 cents today (as of May 6) to $101.09, ending an eight-day slide. Hog futures’ selloff could extend further unless the cash index shows sustained strength that would signal a seasonal firming has begun. Pork cutout values fell 31 cents Monday to $104.39 on movement of 294 loads. June lean hogs fell $2.80 Monday to $101.30.

 

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