Ahead of the Open | May 23, 2022

GRAIN CALLS

Corn: 3 to 5 cents higher.

Soybeans: 2 to 8 cents higher.

Wheat: 14 to 22 cents higher.

GENERAL COMMENTS: Wheat futures rose overnight in a corrective rebound from last week’s sharp losses. Corn and soybeans were also firmer as the market waits for USDA’s planting progress updates later today. Malaysian palm oil futures rose 2.6% as traders assessed the impact of Indonesia’s domestic sales policy on supplies. Front-month crude oil rose slightly. U.S. stock index futures signal a stronger open, while the U.S. dollar index is down around 800 points after dropping to a four-week low.

USDA reported a soybean sale of 130,000 MT for delivery to Egypt during the 2021-22 marketing year.

Indonesia allowed the resumption of palm oil exports from today after a three-week ban, but shipments were unlikely to restart until details emerge on how much of the edible oil must be held back for domestic use. Indonesia, the source of 60% of the world's palm oil, halted exports of crude palm oil and some derivative products on April 28, to bring down soaring local prices of cooking oil. Indonesia's Trade Ministry today issued rules stating that companies must obtain an export permit that would be granted only to those able to meet a so-called Domestic Market Obligation (DMO).

The Southern Plains are expected to get rains today and tomorrow, with rainfall likely across the Corn Belt Tuesday through Thursday. Rains will also be seen across the Delta and Southeast. World Weather Inc. expects a temporary ridge of high pressure to develop next week over the western Corn Belt and Plains, which will bring much warmer temps to U.S. growing regions, though some rains will develop in the Northern Plains and eastern Corn Belt. Concerns over slow field progress remain in North Dakota, northern Minnesota but strong progress is expected this week.

Russia insisted at a meeting of the Eurasian Economic Commission Friday that all Eurasian Economic Union (EAEU) members (Armenia, Belarus, Kazakhstan and Kyrgyzsta) impose quotas and duties on grain exports to third countries, national daily Kommersant reported. Russia’s ag ministry believes this is necessary in order to prevent re-exports of Russian grain through EAEU countries in circumvention of Russian restrictions. Kazakhstan reportedly is opposed to duties, as they could prevent the country’s farmers from fulfilling international obligations.

The White House is exploring the possibility of tapping into an emergency diesel reserve to ease the spike in prices, a senior White House official said. The emergency declaration under consideration would enable President Biden to release diesel from a rarely used stockpile, but the reserve is relatively small and will only serve as a temporary solution.

Large speculators boosted their bullish bets in the SRW wheat market to the highest level since March 2021. The managed money net long surged 11,039 SRW futures and options contracts during the week ended May 17 to 26,586 contracts, the largest since the week ended May 9, 2021, according to weekly Commodity Futures Trading Commission data. Wheat futures dropped sharply during the last half of last week, so funds may have shed many of those long positions.

CORN: July corn futures traded in a narrow range overnight after ending last week at $7.78 3/4, down 2 1/2 cents for the week and the contract’s lowest close since May 10. December corn fell 33 1/2 cents for the week. USDA will likely report a further strong increase in corn plantings in its weekly Crop Progress update after today’s close. As of May 15, 49% of the U.S. corn crop was planted, up from 22% a week earlier but still well behind the 67% average for the past five years.

SOYBEANS: July soybeans overnight reached $17.20, the contract’s highest intraday price since $17.34 on April 22. The lead contract ended last week at $17.05 1/4, up 58 3/4 cents for the week. Soybeans should continue to find support from bullish demand fundamentals.

WHEAT: July SRW wheat traded within Friday’s range overnight after ending last week at $11.68 3/4, down 8 3/4 cents for the week. Heavy, technically-driven fund selling sent prices tumbling late last week and any reemergence in fund selling could push prices even lower amid ideas that market may have established a major top. Moisture relief for some areas of the Plains may limit price upside.

LIVESTOCK CALLS

CATTLE: Lower

HOGS: Steady-firmer

CATTLE: Live cattle are expected to start the week under pressure after Friday’s Cattle on Feed Report. USDA estimated feedlot placements during April at 1.809 million head, down 0.9% from the same month in 2021 but well-above expectations for a drop closer to 4.6% and the second straight month placements surpassed expectations. The May 1 feedlot inventory was 11.967 million head, up a higher than expected 2.0%. April marketings fell 2.2% from year-ago, slightly under the average trade estimate. The bearish placements data may burden deferred live cattle, as those contracts lost premium ahead of the report.

Wholesale beef will be watched closely for a gauge of retailer demand with buying for Memorial Day weekend grilling wrapped up. Choice beef cutout values ended the week at $262.17, up from $258.95 at the end of the previous week. Friday’s movement was light at 90 loads. USDA-reported live steers averaged $140.26 last week through Friday morning, down from last week’s average of $142.44.

June live cattle rose 7.5 cents Friday to $131.575, down 50 cents for the week. August feeders fell $1.275 to $163.925, down $4.10 for the week.

HOGS: Lean hog futures may extend last week’s sharp gains on followthrough buying fueled by firming cash benchmarks and beliefs the market has started a delayed seasonal rally. Pork cutout values rose $3.65 Friday to $107.11, up nearly $6 from the end of last week and the highest daily average since April 22, though movement was light at about 216 loads. The CME lean hog index is also showing strength and is up 80 cents today, though summer hog futures hold $7 to $8 premiums to cash. June lean hog futures rose $3.575 Friday to $108.875, the contract’s highest closing price since April 28. July lean hogs rose $2.025 to $109.00, up $7.80 for the week.

USDA releases its month Cold Storage Report after today’s close. The data will detail frozen meat stocks at the end of April. The five-year average is a 15.5-million-lb. decline in beef stocks and a 16.4-million-lb. increase in pork stocks during the month.