Ahead of the Open | May 5, 2022

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GRAIN CALLS

Corn: 3 to 6 cents higher.

Soybeans: 8 to 14 cents higher.

Wheat: 17 to 28 cents higher.

GENERAL COMMENTS: Winter wheat futures rose to the highest prices in a week on concerns over potential restricted supplies from India. Corn and soybeans also firmed. Malaysian palm oil futures fell 4.9% following a drop in exports, while nearby U.S. crude oil rose more than $1 to a two-week high. U.S. stock index futures signal a weaker open, while the U.S. dollar index surged more than 700 points.

Treasury Secretary Janet Yellen said the U.S. economy remains strong but both persistently high inflation and spillovers from the war in Ukraine present economic risks. “The outlook is very uncertain. The dangers at the global level are high,” she said. “I do worry about commodity prices, I am worried about spillovers from Russia and Ukraine that can have adverse impacts not just on the U.S. that is strongly positioned, but on Europe, on emerging markets.”

Ukraine has enough food stocks in territory it still controls to feed the population in these areas, and has enough fuel to meet farmers' daily needs, deputy agriculture minister Taras Vysotskiy said. Ukraine had stepped up grain exports by using alternative routes in April after Russia blocked ports on the Black Sea, and grain exports are expected to increase further in May.

CF Industries Holdings Inc. reported a nearly six-fold jump in quarterly earnings as the fertilizer maker ramped up U.S. shipments after Russia’s invasion of Ukraine boosted prices for crop nutrients. Net earnings were $883 million in the three months ended March 31, compared with $151 million a year earlier. Global inventories of nitrogen are “extremely tight” while demand is strong from farmers seeking to cash in on high grain prices, CF Industries said. It will take at least two to three years to replenish global grains stocks after the invasion, Chief Executive Tony Will said.

Corteva Inc. reported a 20% rise in operating earnings for the first quarter on strong demand for crop protection products such as herbicides and insecticides. A surge in prices of corn and soybean has encouraged U.S. farmers into pre-buying seeds and chemical sprays for spring season after the Russia-Ukraine conflict disrupted supplies. “We expect healthy market fundamentals to continue given record crop prices, strong farm income levels and demand for food globally,” Chief Executive Officer Chuck Magro said in a statement.

 

CORN: USDA reported net U.S. corn sales for the week ended April 28 of 782,500 MT for 2021-22, down 10% from the previous week and down 19% from the average for the previous four weeks. Lead buyers included China (465,900 MT, including decreases of 10,200 MT). For 2022-23, net sales of 737,900 MT were led by China (612,000 MT). Exports of 1.905 MMT were a marketing-year high and up 28% from the prior four-week average.

Sales were within trade expectations ranging from 500,000 MT to 1.2 MMT for 2021-22 and 700,000 MT to 1.2 MMT for 2022-23.

SOYBEANS: Net weekly soybean sales totaled 734,600 MT for 2021-22, up 53% from the previous week and up 28% from the four-week average. Lead buyers included “unknown destinations” (316,700 MT), and China (200,800 MT, including 66,000 MT switched from unknown destinations). For 2022-23, net sales of 407,000 MT for 2022-23 included China (268,000 MT) and unknown destinations (121,000 MT).

Sales were expected to range from 200,000 to 575,000 MT for 2021-22 and 400,000 to 1.05 million MT for 2022-23.

WHEAT: Net weekly wheat sales totaled 118,800 MT for 2021-22, up 53% from the prior four-week average and within trade expectations. For 2022-23, net sales totaled 42,400 MT, short of trade expectations ranging from 100,000 to 250,000 MT.

July SRW wheat overnight reached $11.06, the contract’s highest intraday price since $11.06 1/2 on April 28. July HRW wheat reached $11.54.

 

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-weaker

CATTLE: Cattle futures may face pressure from corn market strength and concerns over beef demand as traders wait for active cash trade to establish direction. Cash cattle trade started around $140 in the Southern Plains and $232 in the northern dressed market – roughly steady with last week’s prices. Many feedlots were still holding out for firmer prices, especially in the northern market where supplies are tighter. Last week’s cash price moved higher through the week as more northern trade developed. Choice cutout values rose 19 cents Wednesday to $259.74 but are still near six-week lows. Movement was strong at 131 loads. Net weekly U.S. beef sales totaled 14,600 MT for 2022, up 28% from the previous week and up 1% from the prior four-week average.

June live cattle fell 50 cents Wednesday to $134.825, while August feeder cattle fell 7.5 cents to $176.20.

HOGS: Lean hog futures may face pressure from eroding cash fundamentals. The CME lean hog index is down another 11 cents today (as of May 3), the sixth straight daily decline. After yesterday’s strong gains, May hog futures returned to a premium to the cash index and summer-month contracts expanded premiums. Futures are unlikely to extend corrective gains until the cash index halts its recent slide. Pork cutout values fell $1.73 Wednesday to $103.83, near a four-week low, on light movement of about 244 loads. Net weekly pork sales totaled 23,800 MT for 2022, down 24% from the previous week and down 13% from the prior four-week average.

June lean hog futures rose $2.90 Wednesday to $105.10, the contract’s first gain in four sessions.

 

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