Ahead of the Open | May 13, 2022
GRAIN CALLS
Corn: Steady to 1 cent higher.
Soybeans: 5 to 10 cents higher.
Wheat: HRW ad SRW 2 to 7 cents lower, spring wheat 6 to 9 cents higher.
GENERAL COMMENTS: Corn and soybean futures climbed for a fourth straight day overnight after Thursday’s USDA reports fueled concerns over tight global supplies. Spring wheat rallied to contract highs while winter wheat eased after Thursday’s strong gains. Malaysian palm oil futures posted a modest gain while front-month crude oil rose nearly $3. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down slightly.
USDA reported a daily sale of 132,000 MT of soybeans for delivery to China during the 2021-22 marketing year. Today's report was USDA’s first soybean sales announcement to China since April 26.
The European Commission (EC) proposed helping Ukraine export its wheat and other grains by rail, road and river to get around Russia’s blockade of Black Sea ports, which is preventing those critical supplies from reaching parts of the world at risk of food insecurity. According to the Associated Press, the EC said the plan aims to establish “alternative routes and ease congestion between borders that also should facilitate getting humanitarian aid and other goods into the war-torn country.”
Retail diesel prices hit another record, reaching $5.62 per gallon, as prices at the pump surpassed $6 in some markets. The price of the fuel that powers heavy-duty trucks has increased by more than $1.50 a gallon in roughly two months, according to the U.S. Energy Information Administration.
The Bloomberg Commodity Agriculture Index is up 24.5% in 2022 while the S&P 500 is down 17.4%, Peak Trading Research said in a note. Agriculture’s relative strength has come at a time when other commodity markets have softened on supply-chain issues and a lack of demand, Peak says.
Russia’s wheat export tax for May 20-24 will be $111.90 per metric ton, based on an indicative price of $359.90 per metric ton. The tax is down $2.40 from the previous week and this marked a second straight weekly decline.
France’s wheat crop ratings dropped to 82% “good” to “excellent” as of May 9, down seven points from the previous week, according to the country’s ag ministry. France’s wheat crop is struggling with dryness, with the ag ministry warning rain was urgently needed to avoid production losses to this year’s crop.
Taiwan purchased 40,000 MT of U.S. milling wheat.
CORN: July corn futures traded within Thursday’s range overnight but are poised for a fifth weekly gain in the past six after ending last week at $7.84 3/4. December futures posted a contract high overnight at $7.58 1/2, topping the previous high by 1 1/2 cent, and is up from $7.10 3/4 at the end of last week. Futures may gain continued support from USDA’s lower-than-expected 2022 yield projection. In Thursday’s monthly Supply and Demand Report, USDA dropped its 2022-23 U.S. corn yield projection to 177 bu. per acre, down 4 bu. from trendline forecast and unchanged from 2021-22.
SOYBEANS: July soybeans overnight rose to $16.37 3/4, the highest in a week, and could break a streak of two straight weekly declines after ending last week at $16.22. Soybeans climbed yesterday as a tightening global grain supply outlook overshadowed USDA’s projection for a record U.S. soybean crop and higher supplies.
WHEAT: July SRW wheat overnight reached at two-month high at $11.98 1/2 before fading to losses, while July HRW wheat posted a contract high for a second day in a row before also fading. July spring wheat hit a contract high for a third consecutive day, reaching $13.35 3/4. Futures should find support from USDA’s lower-than-expected ending stocks forecasts.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-weak
CATTLE: Live cattle futures are heading for a weekly loss amid slipping cash prices and demand concerns. Live steers averaged $142.17 this week through Thursday morning, down $1.25 from last week’s average. Choice cutout values rose $2.12 Thursday to $257.20 on movement of 137 loads, which was down from previous days but still solid. Key questions include how long recent strength in retailer demand will continue and could higher prices curb demand.
June live cattle fell $1.925 Thursday to $131.65, the lowest closing price since early October. August feeder futures fell $3.475 to $166.525.
HOGS: Hog futures may extend a sharp slump and post a third straight weekly decline on demand concerns and weak technicals. Pork cutout values fell 89 cents Thursday to $98.60, the lowest daily average since Feb. 8, though movement was stronger at 337 loads. June futures’ rare discount to the cash index expanded Thursday, with the contract finishing $3.565 below today’s cash index quote (as of May 11). July and August hog futures are also now at discounts to the cash index. The downside is heavily overdone, but it’s likely going to take strength in the cash market to lead a price recovery. June lean hogs fell $3.375 Thursday to $97.475, the contract’s lowest closing price since Jan. 11.
