Ahead of the Open | May 11, 2022

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GRAIN CALLS

Corn: 4 to 7 cents higher.

Soybeans: 1 to 6 cents higher.

Wheat: 3 to 9 cents higher.

GENERAL COMMENTS: Grain and soybean futures extended Tuesday’s gains in overnight trade as the market waited for USDA’s month Supply and Demand update Thursday. Malaysian palm oil futures rose 2.3% on a firm export outlook. Front-month U.S. crude oil futures rose around $3 as the European Union worked toward an embargo of Russian oil. U.S. stock index futures signal a weaker open, while the U.S. dollar index is modestly firmer.

U.S. consumer price growth slowed sharply in April as gasoline prices eased off record highs, suggesting that inflation has probably peaked, though it is likely to stay hot for a while. The consumer price index rose 0.3% last month, the smallest gain since last August, the Labor Department said today. In the 12 months through April, the CPI increased 8.3%, the first deceleration in the annual CPI since last August but the seventh straight month of increases in excess of 6%.

Ukraine warned of global food crisis if Russia doesn’t lift port blockade. Citing the key role that the port of Odesa plays in global agricultural trade, Ukraine President Volodymyr Zelenskyy said in a video address shortages of grain exports would get worse if attacks continued and Western powers did not put an end to the Russian blockade of Ukrainian ports. “Without our agricultural exports, dozens of countries in different parts of the world are already on the brink of food shortages. And over time, the situation can become downright terrible,” he said. 

France’s ag ministry cut its 2021-22 French wheat export forecast outside the EU by 250,000 MT from last month to 9.25 MMT. It also lowered the export forecast within the bloc by 100,000 MT to 8 MMT.

Jordan purchased 60,000 MT of optional origin milling wheat. Japan tendered to buy 70,000 MT of feed wheat and 40,000 MT of feed barley.

 

CORN: Corn futures traded in narrow ranges overnight after the most-active July contract gained 3 1/4 cents Tuesday to $7.75 1/4. Initial support is seen at this week’s low of $7.69, reached Monday. Concerns delayed planting my harm yield potential should underpin new-crop futures.

SOYBEANS: July soybeans overnight poked above Tuesday’s high after rising 7 cents to $15.92 1/4 but couldn’t find sustained buying at that level. November futures led overnight night gains, rising as high as $14.68 1/4 after climbing 8 cents yesterday. Continued weakness in soymeal, which is near a four-month low, could limit buying in soybeans.

WHEAT: July SRW wheat rose as high as $11.16 overnight after holding above support around the 20-day moving average at $10.89 1/2. Concerns over poor crop conditions in the U.S. Plains and delayed planting in the Northern Plains should underpin prices.

 

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-weaker

CATTLE: Live cattle futures will face pressure as slumping wholesale beef prices fuel demand concern. Choice beef cutout values fell $3.05 Tuesday to $255.24, near an eight-month low, but movement was strong at 202 loads, illustrating how packers are slashing prices to keep product moving. Cash cattle trade started around $140 in the Southern Plains Tuesday, roughly steady with last week’s price, and while there wasn’t much trade in the northern market, initial prices were also steady. If the recent pattern holds, cash prices will creep higher through the week as there’s more trade in the northern market, where supplies are tighter.

June live cattle fell $1.15 Tuesday to $132.40, the contract’s lowest closing price since Nov. 1. August feeder futures fell $2.375 to $172.85.

HOGS: Lean hog futures may face continued pressure from weak technicals and concerns over pork demand. Pork cutout values fell $4.20 Tuesday, led by a $15.53 plunge in belly prices, as packers cut prices to move product. If wholesale prices continue to slide, the CME lean hog index will struggle to post normal seasonal gains into summer. June hogs finished Tuesday just 48.5 cents above the cash index, which is unchanged today (as of May 9), signaling traders want to see the cash market strengthen before they step in as active buyers. 

June lean hogs rose 27.5 cents Tuesday to $101.575, the contract’s first gain in three sessions, while July hogs fell to $102.975, near a four-month closing low.

 

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