Ahead of the Open | May 9, 2022

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GRAIN CALLS

Corn: 7 to 10 cents lower.

Soybeans: 15 to 18 cents lower.

Wheat: HRW and SRW wheat 8 to 14 cents higher, spring wheat 16 to 18 cents higher.

GENERAL COMMENTS: Winter wheat futures rose to near three-week highs and spring wheat hit contract highs overnight on weather and supply concerns, while corn and soybeans fell. Malaysian palm oil futures rose slightly following last week’s 10% plunge, while nearby U.S. crude oil is down nearly $3 this morning. U.S. stock index futures indicate a weaker open, while the U.S. dollar index is down slightly after earlier posting a fresh 20-year high.

Warmer, drier weather across much of the Corn Belt, Delta and Southeast this week is expected to help farmers catch up some delayed planting. The exception will be far northern areas of the country, with frequent rain expected across the upper Midwest and Northern Plains, according to World Weather Inc. Periodic rains are forecast for some HRW and cotton areas of the Southern and Central Plains. Brazil’s safrinha corn crop in Mato Grosso and Goias is no longer expected to receive significant precipitation during the next 10 days.

China imported 8.1 MMT of soybeans last month, up 27.2% from March and 8.5% more than April 2021, as delayed shipments from Brazil arrived at Chinese ports. Through the first four months of 2022, China imported 28.4 MMT of soybeans, down 0.8% from the same period last year. China-based consultancy Mysteel expects China’s soybean imports this month to climb to about 9.4 MMT. 

Ukraine has sown about 7 million hectares of spring crops so far this year, 25% to 30% less than in the corresponding period in 2021, according to the country’s ag minister. “The sowing campaign is going on actively despite the difficulties associated primarily with logistics,” the minister said. He noted the sowing this year was not of the same quality as last year and the planted area for corn was smaller. The ag minister says the country exported nearly 1.1 MMT of grain in April.

Tyson Foods Inc. raised its full-year sales outlook after beating quarterly revenue estimates as the top U.S. meatpacker benefited from rising prices for its beef and chicken. Meatpackers have been hiking prices of their products over the past year to offset a surge in costs of animal feed, which has been accelerated by the war in Ukraine. “Although we continue to see inflationary pressures across the supply chain, we are working to drive costs down,” Chief Executive Officer Donnie King said in a statement. Tyson now expects annual sales between $52 billion and $54 billion, compared with its prior estimate for the upper end of $49 billion to $51 billion.

Large speculators reduced bullish bets in the soybean market in early May to the lowest level since late January. The manage money net long in soybean futures and options fell 20,224 contracts during the week ended May 3 to 153,253 contracts, the lowest since the week ended Jan. 25, according to data from the Commodity Futures Trading Commission. Large speculators cut their net long in the corn market to the lowest level since late March and also reduced the net long in SRW wheat.

 

CORN: July corn overnight fell as low as $7.71 1/4, the contract’s lowest intraday price $7.63 1/2 on April 13. The most active contract dropped 28 3/4 cents last week to halt four straight weeks of gains. New-crop futures will face pressure from an outlook for improved U.S. planting progress this week.

SOYBEANS: July soybeans overnight fell as low as $16.03, the contract’s lowest price since $15.99 on April 7, after falling 62 3/4 cents last week. November soybeans dropped to $14.54, the lowest in over four weeks. An improved planting progress may pressure new-crop contracts this week.

WHEAT: July SRW wheat overnight reached $11.35, the contract’s highest intraday price since $11.43 1/2 on April 19. July spring wheat notched at contract high at $12.34 3/4. Poor crop conditions in the HRW Belt of the U.S. Plains continue to support winter wheat futures, while planting delays in the Northern Plains are supporting spring wheat futures.

 

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-weaker

CATTLE: Live cattle futures may extend last week’s losses amid concerns high prices are suppressing beef demand at a time when feedlot inventories are poised to increase. Choice cutout values fell 74 cents Friday to $254.44, down $6.34 for the week and an eight-week low, on light movement of 80 loads. While the cash market remains fundamentally strong, packers are struggling to convince retailers to pay up for beef at a time when they should be gearing up for grilling-season features. USDA-reported live steers averaged $143.43 last week through Friday morning, up 9 cents from the previous week's average.

Friday’s price action left live cattle futures just above key support, which if breached could trigger chart-based selling. June live cattle fell $1.025 Friday to $132.75, down 10 cents for the week.

HOGS: Lean hog futures may extend last week’s declines on eroding cash fundamentals and concerns over pork demand. While the market should strengthen seasonally as slaughter supplies decline, bulls face headwinds until the cash index shows solid strength. Today’s CME lean hog index is down 5 cents to $100.91, the eighth consecutive decline. Pork cutout values fell $1.57 Friday to $104.70 as bellies dropped over $15, but the average was still up 12 cents for the week. Movement totaled 299 loads.

June lean hog futures fell $2.975 Friday $104.10, down $2.275 for the week.

China imported 592,000 MT of meat in April, down nearly 36% from last year. China’s preliminary trade data doesn’t break down meat imports by category, but the sharp reduction was due to significantly lower pork arrivals. Through the first four months of this year, imports at nearly 2.3 MMT also fell 36% from the same period last year.

 

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