Ahead of the Open | May 24, 2022
GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 2 to 4 cents higher.
Wheat: HRW and SRW 7 to 14 cents higher, spring wheat 18 to 22 cents higher.
GENERAL COMMENTS: Spring wheat led the wheat market higher overnight after USDA reported seeding remains well-behind normal. Corn was under pressure from a larger-than-expected jump in planting, while soybeans rose slightly. Malaysian palm oil futures firmed 3.3% to a two-week high amid uncertainties over the resumption of Indonesian exports even after a three-week ban was lifted. Front-month crude oil futures are near unchanged. U.S. stock index futures signal a stronger open, while the U.S. dollar index is modestly lower.
Planting delays are an increasing concern in the northwestern Corn Belt with the final crop insurance planting date for corn on May 25 for all but far southeastern areas of both North Dakota and South Dakota and the northern third of Minnesota. Crop Consultant Dr. Michael Cordonnier as a result cut his corn planted acreage estimate by 1 million acres to 89 million acres. He left his soybean acreage forecast at 91 million acres for now but says that could increase by 1 million to 2 million acres. Cordonnier left his yield projections at 177 bu. per acre for corn and 51.5 bu. per acre for soybeans.
APK-Inform raised its forecasts for Ukraine’s 2022-23 grain production and exports. The firm increased its grain production forecast by 6.9 MMT to 48.3 MMT, including 25.2 MMT of corn (up 6.7 MMT from its previous forecast) and 17.1 MMT of wheat (up 140,000 MT). The firm now expects Ukraine to export 46.4 MMT of grain in 2022-23, including 21.2 MMT of corn and 18.8 MMT of wheat.
Lithuania has received its first rail delivery of grain from Ukraine for onward shipment from Klaipeda port, state-owned railway company LTG said. “We expect to scale up to receiving a train per day from Ukraine, each with up to 1,500 MT of grain and other agricultural produce, for export via Klaipeda port,” said LTG spokesman Mantas Dubauskas. He did not give a timeline for the plan. The trains reach Lithuania via Poland.
CORN: U.S. corn planting progress last week surpassed expectations, with USDA reporting an estimated 72% of the crop seeded as of Sunday, up from 49% a week earlier but behind the 79% average of the previous five years. Analysts expected plantings to be closer to 68%. July corn traded withing Monday’s range overnight after starting the week with a gain of 7 1/2 cents to $7.86 1/4.
SOYBEANS: USDA reported U.S. soybeans were 50% planted as of Sunday, up from 30% a week earlier but behind the 55% five-year average. The sharp increase in corn planting the previous two weeks appears to reduce prospects farmers will shift a large number of acres to soybeans. Soybeans initially extended Monday’s losses overnight before recovering to post modest gains. On Monday, July soybeans fell 18 1/4 cents to $16.87 after earlier reaching a four-week high at $17.20.
WHEAT: USDA’s weekly crop ratings indicated recent Plains rainfall helped the winter wheat crop. USDA’s “good” to “excellent” rating for the crop as of Sunday rose to 28% from 27% while the “poor” to “very-poor” rating declined a point to 40%. Spring wheat seeding was 49% completed by Sunday, below the lowest in a range of trade estimates and well behind the five-year average of 83%.
When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 2.3 points to 255.0, though that’s still 70.7 points behind the five-year average. The HRW crop improved slightly in Kansas, Oklahoma and Texas over the past week after rains. The SRW crop improved 1.8 points to 358.9, which is now 1.7 points above average for the third week of May.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-firmer
CATTLE: Upside followthrough from live cattle futures’ rally Monday may be muted by signs of further weakening in the cash market. Cash cattle trade started unusually early with a Nebraska regional plant buying some animals around $138 out of Kansas on Monday. Most packers in the Southern Plains started bids around $135, suggesting cash prices will soften again this week after the average fell more than $3 over the past two weeks. Live steers averaged $140.25 last week, down from the previous week’s average of $142.44. Choice beef cutout values rose $2.11 Monday to $264.28, a four-week high, on strong movement of 125 loads.
USDA's Cold Storage Report late Monday showed beef stocks at the end of April were a record for the month at 531.7 million pounds. While that was down 4.1 million lbs. (0.8%) from March, the five-year average was a 15.5-million-lb. decline during the month. Frozen beef inventories increased 82.9 million lbs. (18.5%) from year-ago and stood 74.1 million lbs. (16.2%) above the five-year average.
August live cattle rose $1.425 Monday to $132.975, up from an early drop to a 6 1/2-month low and the contract’s highest closing price since May 17. August feeder cattle rose $1.70 to $165.625.
HOGS: Lean hog futures may gain support from strengthening cash fundamentals. The CME lean hog index extended its gains to four straight days with a 91-cent increase today to $102.08 (as of May 20). Summer-month hog futures now hold premiums of over $8 to the index after briefly trading at rare discounts earlier this month. Pork cutout values fell 6 cents Monday to $107.05, down from a four-week high at the end of last week. Movement was lighter than average at 271 loads. July hogs rose $1.85 at $110.85, a three-week closing high.
Pork stocks at 530.2 million lbs. rose 44.3 million lbs. (9.1%) from March, far greater than the five-year average of a 16.4-milllion-lb. increase during the month. Pork stocks rose 73.3 million lbs. (16.0%) from last year but were still 52.7 million lbs. (9.0%) under the five-year average.
