Ahead of the Open | May 20, 2022

GRAIN CALLS

Corn: 7 to 10 cents lower.

Soybeans: 1 to 4 cents lower.

Wheat: 10 to 16 cents lower.

GENERAL COMMENTS: Wheat futures extended recent losses, hitting lows for the week overnight. Corn futures were under pressure amid expectations for improved planting progress, while soybeans were mixed. Malaysian palm oil futures rose slightly but still posted a third consecutive weekly loss. Front-month crude oil gained slightly. U.S. stock index futures signal a stronger open, while the U.S. dollar index is up about 250 points.

Malaysia maintained its June export tax for crude palm oil at 8% and raised its reference price, the Malaysian Palm Oil Board said. The world’s second-largest palm exporter calculated a reference price of 6,816.05 ringgit ($1,552.63) per MT for June, up from the May reference price of 6,759.22 ringgit per MT. The maximum tax rate is set at 8% when prices exceed 3,450 ringgit per MT.

Argentina could raise its limit for corn exports for the 2021-22 harvest to 35 MMT from 30 MMT currently, Reuters reported. The country limited exports for the current marketing year to 25 MMT in December from a 41.6-MMT cap the prior season in an effort to lower inflation, and then lifted it to 30 MMT earlier this month.

Russia’s wheat export tax fell for third straight week, dropping to $110.50 per MT for May 25-31, based on an indicative price of $357.90 per metric ton. The tax is down $1.40 from the previous week.

France’s wheat crop ratings deteriorated sharply for a second straight week amid drought stress, dropping nine points to 73% “good” to “excellent,” according to the country’s ag ministry. The crop is now rated lower than last year’s at this stage.

China will auction another 500,000 MT of imported soybeans from state-owned reserves on May 27. China has been releasing soybean reserves on a weekly basis recently to boost supplies on the domestic market.

CORN: July corn futures overnight fell as low as $7.74 1/2, down from $7.81 1/4 at the end of last week and on pace for a third straight weekly decline. Prices are under pressure from weakness in wheat and prospects USDA will report another jump in U.S. planting progress on Monday.

SOYBEANS: July soybeans overnight reached $17.02 3/4, the contract’s highest intraday price since $17.04 3/4 on April 29 and up from $16.46 1/2 at the end of last week. Deferred contracts were under pressure but should remain underpinned by strong export and crushing demand.

WHEAT: July SRW wheat overnight fell as low as $11.82, a low for the week but still up modestly from $11.77 1/2 at the end of last week. Heavy profit-taking in recent days erased most of an early-week rally and prices may remain under pressure today, with prospects for moisture relief in the U.S. Plains also weighing on the market.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-firm

CATTLE: Live cattle futures may face further pressure from a second consecutive weekly drop in cash prices but selling may be limited ahead of USDA’s Cattle on Feed Report. Live steers averaged $140.21 through Thursday morning, down from last week’s average of $142.44. Choice cutout values rose $1.23 Thursday to $261.70, up from $258.95 at the end of last week, but movement was light at 86 loads. With Memorial Day features completed and Father’s Day a month away, retailers now appear unlikely to aggressively buy beef and may not lower prices enough to attract strong consumer demand during summer. June live cattle ended unchanged Thursday at $131.50, down from $132.075 at the end of last week.

USDA’s Cattle on Feed Report this afternoon is expected to show the May 1 feedlot inventory up 1.3% from year-ago, which would mark the fifth consecutive month of year-over-year gains in feedlot supplies. But the most-awaited number is April placements after the March figure surpassed expectations. On average, analysts expect April placements to have declined 4.6% from year-ago. Marketings are expected to be down 2%.

HOGS: Lean hog future are poised for a sharp weekly advance on beliefs the market has established a near-term bottom and begun a delayed seasonal rally. The CME lean hog index is up 29 cents today to $100.37 (as of May 18), its second straight day of gains. But with June hogs about $5 above the index and July and August futures holding premiums of $6 to $7, it’s unlikely traders will aggressively build those premiums until the cash index shows stronger and sustained gains. Pork cutout values fell 15 cents Thursday to $103.46 but are still up from $101.17 at the end of last week. Movement was light at 220 loads. June lean hogs fell 80 cents Thursday to $105.30, still up from $100.75 at the end of last week.