Ahead of the Open | May 18, 2022
GRAIN CALLS
Corn: 2 to 6 cents lower.
Soybeans: Steady to 4 cents higher.
Wheat: 22 to 32 cents lower.
GENERAL COMMENTS: Wheat futures fell overnight following a report on the potential for the restoration of Ukraine grain shipments. Corn futures also fell while soybeans had a mostly firmer tone. Malaysian palm oil futures rose slightly while front-month crude oil rose around $2 and traded above $115 a barrel. U.S. stock index futures point to a lower open, while the U.S. dollar index is up slightly.
USDA reported soybean sales of 229,200 MT during the reporting period for delivery to “unknown destinations,” including 10,200 MT for 2021-22 and 219,000 MT for delivery during 2022-23.
U.N. chief Antonio Guterres is expected to disclose today he is in talks with Russia, Ukraine, Turkey, the U.S. and European Union aimed at restoring Ukraine grain shipments and reviving fertilizer exports from Russia and Belarus. Ukraine, a major agricultural producer, used to export most of its goods through seaports but since Russia’s Feb. 24 invasion it has been forced to transport by train via its western border or via its small Danube River ports.
Scouts on the first day of the Wheat Quality Council HRW tour found an average yield of 39.5 bu. per acre in northern areas of Kansas, down from 59.2 bu. per acre in this area last year and the five-year average of 46.9 bu. per acre. Scouts reported much of the wheat sampled on multiple routes from Manhattan to Colby was shorter than normal, and plant populations were sparse in the driest fields. “We don’t seem to be catching (rains) and it feels like the crop is on a knife-edge, just hanging on,” said Jeanne Falk Jones, a Kansas State University extension agronomist. Scouts will sample fields in western and southern Kansas today along routes from Colby to Wichita.
In conjunction with the Wheat Quality Council HRW tour, the Nebraska Wheat Board forecast the state’s wheat crop at 36.9 million bu., the same as USDA’s initial estimate last week and down from 41.2 million bu. last year. Colorado Wheat projected the state’s wheat crop at 40.1 million bu. on a yield of 28.6 bu. per acre, below USDA’s initial estimate of 49.6 million bu. and last year’s 69.6 million bu. crop.
Russia’s wheat crop may reach 85 MMT this year, the head of IKAR ag consultancy said, in what he called a “conservative” estimate. He said Russia has potential to export 39 MMT of wheat in 2022-23, in line with USDA’s initial projection. Black Sea consultancy SovEcon raised its Russian wheat crop forecast by 1.2 MMT to a record 88.6 MMT. Last week, Russian President Vladimir Putin said the country could produce a record wheat crop of 87 MMT.
Gasoline pump prices rose above $4 a gallon in all U.S. states for the first time ever, according to auto club AAA. Retail diesel currently averages a record $5.577 a gallon, up $2.405 from a year ago.
Taiwan purchased 55,000 MT of corn – likely to be sourced from South Africa.
CORN:July corn futures traded in a narrow range overnight after holding support at the 20-day moving average at $7.95 1/2. The lead contract fell 8 3/4 cents Tuesday to $8.00 3/4, while December corn fell 4 3/4 cents to $7.60 3/4.
SOYBEANS: July soybeans overnight reached $16.86 3/4, the contract’s highest intraday price since $16.88 3/4 on May 2. The lead contract jumped 21 1/2 cents Tuesday for its sixth consecutive gain and technicals have firmed, though the market could be vulnerable to some short-term corrective selling.
WHEAT: Nearby winter wheat futures overnight traded within Tuesday’s wide ranges, with July SRW wheat dropping as low as $12.34 after surging 30 cents Tuesday to a lifetime-high settlement at $12.77 1/2. Ongoing concerns over deteriorating U.S. crop conditions and shrinking global supplies should limit price weakness.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Mixed-firmer
CATTLE: Live cattle futures may face pressure from signs of further weakness in the cash market. Cash cattle trade started around $137 to $138 in the Southern Plains and around $227 in the northern dressed market on Tuesday. Initial trade was light to moderate and prices in both markets were lower than last week, suggesting the eventual average will decline. Despite their discounts to the cash market, live cattle futures softened a little on Tuesday amid the weaker cash tone. Choice cutout values rose 17 cents Tuesday to $260.48, the highest in two weeks. Movement was stronger at 118 loads. June live cattle fell 17.5 cents Tuesday to $133.00. August feeder futures fell 65 cents to $166.775.
HOGS: Hog futures may see followthrough technical strength from sharp gains over the past three sessions but could also be vulnerable to a pullback. Since corrections tend to come in three-day waves, today’s price action could be critical in determining whether the past three days were simply strong corrective buying or the start of a delayed seasonal rally. Summer-month hog futures have rebuilt $5 to $7-plus premiums to the cash index, which is down another 17 cents to $99.90 today (as of May 16). Futures may be supported by signs of improving demand as retailers prepare for the summer grilling season. Pork cutout values rose 56 cents Tuesday to $102.11, the highest in over a week, while movement totaled over 366 loads, the highest daily total in two months.
China imported 140,000 MT of pork in April, according to official customs data, the same amount as March but down 67.6% from last year. Through the first four months of this year, China’s pork imports plunged 65.1% from the same period last year to 560,000 MT.
