Ahead of the Open | May 31, 2022
GRAIN CALLS
Corn: 5 to 7 cents lower.
Soybeans: 2 to 6 cents higher.
Wheat: HRW and SRW 25 to 30 cents lower, spring wheat 20 to 22 cents lower.
GENERAL COMMENTS: Wheat futures fell sharply overnight and corn also declined following reports Russia may allow grain shipments from Ukraine. Soybean futures climbed to contract highs, while Malaysian palm oil futures rose 1.3% after dropping the previous two days. Front-month U.S. crude oil futures rose above $119 a barrel, near three-month highs, after the European Union agreed to ban most Russian oil. U.S. stock index futures signal a weaker open, while the U.S. dollar index is up more than 400 points this morning.
Russian President Vladimir Putin said his country was ready to facilitate the unhindered export of grain from Ukrainian ports in coordination with Turkey, according to a Kremlin readout of talks with Turkish President Tayyip Erdogan. “During the discussion of the situation in Ukraine, emphasis was placed on ensuring safe navigation in the Black and Azov seas and eliminating the mine threat in their waters,” the Kremlin said of Putin’s call with Erdogan. “Vladimir Putin noted the readiness of the Russian side to facilitate the unhindered sea transit of goods in coordination with Turkish partners. This also applies to the export of grain from Ukrainian ports.” Putin, according to the Kremlin, added that if sanctions were lifted, then Russia could “export significant volumes of fertilizers and agricultural products.”
European Union leaders agreed in principle Monday to cut 90% of oil imports from Russia by the end of this year. Diplomats said the agreement would clear the way for other elements of a sixth package of EU sanctions on Russia to take effect, including cutting Russia’s biggest bank, Sberbank, from the SWIFT messaging system. EU sanctions against seaborne imports of Russian oil will be imposed with a phase-in period of six months for crude oil and eight months for refined products, a European Commission spokesperson said. That timeline would kick in once the sanctions are formally adopted.
India has banned private wheat exports but will sell to countries on a government-to-government basis. “More than half a dozen countries have approached India for more than 1.5 MMT of wheat and we will see how to go about these requests,” said a government official told Reuters. The bulk of the request has come from Bangladesh, a regular buyer of Indian wheat, the source said.
China’s finance ministry allocated another 10 billion yuan ($1.5 billion) to grain farmers to ensure food security, which Beijing has identified as its top priority. The move is part of a broader program by Beijing to stabilize its economy through subsidies and issuance of special bonds.
Strategie Grains raised its forecast for this year’s European Union sunflower seed crop due to an increase in planted area. It projects EU sunseed output at a record 10.9 MMT, up 200,000 MT from last month and 500,000 MT above last year’s all-time high production. Strategie Grains held its 2022 EU production forecast at 18.2 MMT, which would be around a 7% increase from last year.
Pakistan purchased around 500,000 MT of optional origin milling wheat. Jordan purchased 60,000 MT of wheat from unspecified an origin. Algeria tendered to buy an unspecified amount of optional origin milling wheat.
CORN: July corn futures traded within last Friday’s range overnight after dropping 1 1/2 cents last week, the fourth straight weekly decline. USDA’s next weekly crop progress update after today’s close likely will show corn planting moving into the final stage. The crop was 72% planted as of May 22, up from 49% a week earlier but still behind the 79% average of the previous five years.
SOYBEANS: July soybeans overnight reached $17.49 1/4, a fresh contract high that topped the previous high of $17.41 posted in February. The lead contract gained 27 cents last week. USDA is expected to report a big increase in seeding progress. The soybean crop was 50% planted as of May 22, up from 30% a week earlier but behind the 55% five-year average.
WHEAT: July SRW wheat overnight fell as low as $11.23 after losing 11 1/4 cents last week, the contract’s second consecutive weekly decline. USDA’s crop progress report later today likely will show spring wheat planting remains behind schedule. As of May 22, the spring wheat crop was 49% planted, well behind the five-year average of 83%.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firmer
CATTLE: Live cattle futures may face pressure from recent weakness in the cash market and concerns high beef prices are curbing consumer demand with the summer grilling season underway. Traders will gauge weekend beef clearance by how actively retailers buy product in the wholesale market this week. Even if retailers actively buy beef, the cash market may face more pressure as slaughter numbers are building seasonally and packers have June contract supplies available this week. USDA-reported live steers averaged $138.93 last week through Friday morning, down from the previous week's $140.25 average and the third straight weekly decline. Choice beef cutout values ended last week at $265.42, up $3.25 from the previous week and the highest daily average since April 25. Movement totaled 106 loads.
August live cattle ended last week at $132.40, up 85 cents for the week. August feeders ended at $166.325, a gain of $2.40 for the week.
HOGS: Lean hog futures may extend last week’s gains behind strong cash fundamentals and momentum from a delayed seasonal rally. The CME lean hog index reached $104.93, the highest since late August. However, with June futures around $5.50 above the index, near-term buying may be limited unless traders are convinced the cash market will continue to post strong gains. Pork cutout values fell $1.97 Friday to $106.16, down 95 cents from a week earlier. Movement totaled 283 loads. July lean hogs fell 10 cents Friday to $111.725, a four-week high and a gain of $2.725 for the week.
