Ahead of the Open | May 25, 2022
GRAIN CALLS
Corn: 14 to 16 cents lower.
Soybeans: 16 to 22 cents lower.
Wheat: 28 to 35 cents lower.
GENERAL COMMENTS: Wheat futures fell near two-week lows following reports Russia was ready to provide humanitarian corridors for food shipments from Ukraine. Corn futures dropped to a six-week low on improved U.S. planting progress, while soybeans also tumbled. Malaysian palm oil futures fell 1.4%, while front-month U.S. crude oil futures rose over $1. U.S. stock index futures indicate a lower open, while the U.S. dollar index is nearly 500 points higher this morning.
Russia is ready to provide a humanitarian corridor for vessels carrying food to leave Ukraine in return for the lifting of some sanctions, Interfax news agency reported, citing Russian Deputy Foreign Minister Andrei Rudenko. Reaching an agreement requires “a comprehensive approach, including the lifting of sanctions that have been imposed on Russian exports and financial transactions,” Rudenko said.
India has no immediate plans to lift a ban on wheat exports but will continue with deals which are done directly with other governments, Commerce Minister Piyush Goyal told Reuters. The world’s second biggest producer of wheat banned private overseas sales of the grain on May 14 after a heat wave curtailed output and domestic prices hit a record high. Bangladesh is close to a deal to secure wheat shipments of up to 1 MMT from India.
India’s palm oil imports could drop by nearly a fifth as cheaper soyoil takes more market share, following Indonesia’s curbs on palm oil exports and New Delhi allowing duty-free imports of soyoil, dealers said. Palm oil imports by the world’s biggest vegetable oil importer in its marketing year ending on Oct. 31 will fall 19% to 6.7 MMT, the lowest since 2010-11, dealers estimated.
Plunging demand for soyoil in China is expected to cut consumption of soybeans. A two-month lockdown in Shanghai and Covid restrictions in several other major cities have cut soyoil consumption, as restaurants account for about half of the country’s soyoil use per year. Demand for all edible oils in 2021-22 is forecast to drop 8.5% from a year ago to 39 MMT, according to state-run National Grain & Oils Information Center.
China’s customs authority finalized an agreement to allow imports of Brazilian corn, the Ministry of Commerce said Tuesday, lining up an alternative to U.S. corn to replace imports from Ukraine. Similar agreements covering imports of soy protein and soymeal from Brazil are expected to be concluded during talks next month, an official involved in the negotiations told Reuters.
CORN: July corn futures overnight fell as low as $7.56, the contract’s lowest intraday price since April 11, while December futures fell to a two-week low at $7.08 1/4. Prices are under pressure from slumping wheat and a sharp pick-up in corn planting the past two weeks.
SOYBEANS: July soybeans overnight fell as low as $16.67, the lowest in a week, while November futures fell as low as $14.99 1/2.
WHEAT: July SRW wheat overnight fell as low as $11.14 1/2, the contract’s lowest intraday price since $11.02 3/4 on May 12. July HRW and spring wheat contracts also dropped near two-week lows.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firm
CATTLE: Live cattle may face pressure from further weakness in cash prices, though declines may be mitigated by strength in wholesale beef. Weakness in the corn market may boost feeder futures. Choice cutout values fell 63 cents Tuesday to $263.65 but movement was strong at 165 loads. Wholesale beef trade signals retailers are being selective buyers, which is likely to continue into summer unless Memorial Day beef clearance is strong. Early-week cash trade indicated prices will continue to weaken this week. Live steers last week averaged $140.25, down $2.19 from the previous week’s average. August live cattle fell 22.5 cents Tuesday to $132.75, while August feeder futures gained $2.525 to $168.15.
HOGS: Lean hog futures should gain support from continued strength in cash fundamentals. The CME lean hog index is up another 95 cents today to $103.03 (as of May 23), the fifth consecutive daily gain and the highest reading since March 30. Summer-month hog futures, which hold big premiums to the index, faced selling pressure Tuesday. While those contracts are still around $6 above the cash index, firming cash prices should limit followthrough seller interest. Pork cutout values extended a recent upturn, rising $1.19 Tuesday to $108.24, the highest daily average since April 22. July lean hogs fell $1.80 at $109.05.
