Ahead of the Open | May 2, 2022
GRAIN CALLS
Corn: 6 to 10 cents lower.
Soybeans: 9 to 15 cents lower.
Wheat: Winter wheat 8 to 12 cents lower, spring wheat steady to 2 cents lower.
GENERAL COMMENTS: Winter wheat futures fell to the lowest levels in over three weeks overnight on expectations rain in the U.S. Plains will boost drought-stressed crops. Corn and soybean futures also fell. Nearby U.S. crude oil futures fell nearly $4. U.S. stock index futures signal a lower open, while the U.S. dollar index is more than 500 points.
Eastern Kansas and eastern Nebraska to the eastern Corn Belt and central and southern Wisconsin will see three more rounds of rain during the next 10 days and planting will be sluggish in much of the region, World Weather Inc. said today.
Rains reached some HRW areas over the weekend, with the most significant amounts in Nebraska, where central parts of the state received 0.60 to 1.43 inches. The southwest part of the HRW belt received limited rains. More moisture relief is expected in Nebraska, northeastern Colorado, northern and eastern Kansas and central Oklahoma with frequent rainfall during the next ten days.
Russian attacks on Ukraine’s grain infrastructure look like attempts to reduce the competition for Russia’s export markets, Germany’s agriculture minister said. “We are repeatedly receiving reports about targeted Russian attacks on grain silos, fertilizer stores, farming areas and infrastructure,” the minister said, noting growing suspicion Russian President Vladimir Putin is seeking “in the long term to remove Ukraine as a competitor.”
Strategie Grains increased its forecast for this year’s sunflower crop in the European Union amid an expected rise in planted area as farmers use an EU authorization to use fallow land to compensate for potential shortages in Black Sea supplies. The consultancy expects the EU 2022 sunflower seed crop to reach 10.7 MMT, up from the 10.2 MMT forecast last month and now 2.9% above last year’s output.
USDA this afternoon is expected to report the March soybean crush was record-large for the month at 193.3 million bu., according to a Bloomberg survey. That would be up 2.7% from last year. Corn-for-ethanol use is expected to total 457.2 million bu., up 8.8% from March 2021.
Large speculators in late April reduced bullish bets in the corn market for the first time in four weeks. The managed money net long in corn fell 18,455 futures and options contracts to 360,655 contracts during the week ended April 26, according to data from the Commodity Futures of Trading Commission. The managed money net long fell slightly in soybeans and winter wheat.
CORN: July corn gapped lower at the beginning of overnight trading and fell as low as $8.00 1/4 after ending unchanged at $8.13 1/2 last week. An extended drop under $8.00 may have bears targeting last week’s low at $7.81. Along with Midwest weather, export news will be closely watched in the wake of China’s sharply scaled-up corn purchases last month.
USDA’s weekly crop progress update after today’s close likely will show limited planting progress. USDA reported 7% of the U.S. corn crop was planted as of April 24, up from 4% a week earlier but under the 15% five-year average for the date.
SOYBEANS: July soybeans fell as low as $16.64 1/4 overnight after ending unchanged Friday at $16.84 3/4, down 3 1/4 cents for the week. Initial support is seen starting at the 20-day moving average around $16.66. A week ago, USDA reported the U.S. soybean crop was 3% planted as of April 24, up from 1% a week earlier but down from the 5% five-year average for the date.
WHEAT: July SRW wheat overnight fell under the 50-day moving average and as low as $10.34 1/4, the contract’s lowest intraday price since April 8, after losing 21 3/4 cents last week. July HRW fell under $11.00 for the first time since April 8 and dropped as low as $10.90. Along with Plains rainfall, slumping technicals, soft export demand and weak seasonals may also burden winter wheat futures.
Last week, USDA reported 27% of the winter wheat crop in “good” or “excellent,” the lowest for this time of year since 1989.
LIVESTOCK CALLS
CATTLE: Steady-lower
HOGS: Steady-lower
CATTLE: Live cattle futures may face pressure as slumping technicals and demand concerns outweighed unexpected cash market strength last week. A poor close last week could spur followthrough selling early this week, though corrective buying could emerge if wholesale beef trade shows strength and/or expectations for steady to firmer cash cattle trade develop. Choice cutout values fell $1.82 Friday to $260.78, down $7.13 for the week and the lowest daily average since March 22. Movement continued to be relatively strong at 127 loads. Cash cattle averaged $143.31 last week through Friday morning, up 29 cents from the previous week's average.
June live cattle dropped $1.25 Friday to $132.65, a seven-week low close and a weekly loss of $5.775. May feeder futures fell $1.60 to $156.35, down $7.525 for the week.
HOGS: Lean hog futures may see further selling pressure from a sharp deterioration in technicals over the past two weeks. June lean hog futures tumbled $4.60 Friday to $106.375, a three-month closing low and a $12.40 plunge for the week. Front-month May hogs closed at $100.90, an 87-cent discount to today’s CME lean hog index (as of April 28). The premium in June hogs is down to $4.605. The discount structure in May hogs and limited premium in summer-month contracts should limit seller interest, though futures have broken down technically and money flow is into the short side of the market. Pork cutout values ended last week at $104.58, down sharply from $111.28 at the end of the previous week.
