Ahead of the Open | May 6, 2022
GRAIN CALLS
Corn: 6 to 9 cents lower.
Soybeans: 11 to 16 cents lower.
Wheat: Winter wheat steady to 4 cents higher; spring wheat 6 to 8 cents higher.
GENERAL COMMENTS: Corn futures fell near two-week lows overnight amid expectations for improved U.S. planting progress, while soybeans also declined. Wheat futures rebounded from earlier losses to extend recent gains. Malaysian palm oil futures dropped more than 5% on expectations for higher inventories, while nearby U.S. crude oil is up around $1. U.S. stock index futures signal a lower open, while the U.S. dollar index is lower after easing from a 20-year high.
U.S. non-farm payrolls grew a stronger than expected 428,000 during April as the labor market remained tight despite concerns over an economic slowdown. Payrolls were expected to increase 400,000. The unemployment rate was unchanged at 3.6%.
Canadian stocks for nearly every field crop fell sharply at the end of March compared to the same period in 2021, according to Statistics Canada. Total wheat stocks were 10.1 MMT at the end of March, down nearly 39% from the same date a year earlier, while canola stocks totaled 3.9 MMT, down 49%. Shrinking supplies reflect drought-slashed crops in 2021.
The UN Food and Agriculture Organization (FAO) global food price index eased 0.8% in April from March’s all-time high. Prices for dairy, meat and sugar increased in April but were offset by declines in vegoils and cereal grains. Compared to year-ago, the global food price index was up 30%.
An FAO official says nearly 25 MMT of grain is trapped in Ukraine, unable to leave the country due to infrastructure problems and blocked ports in the Black Sea. He also said there’s “anecdotal evidence” Russia is stealing grain from Ukraine by truck.
FAO cut its 2022 global wheat production forecast by 2 MMT from last month to 782 MMT, though that would still be up 5.4 MMT (0.7%) from last year. The cut was driven mostly by drought concerns in the U.S. and an expected 20% reduction in harvested area and lower yields in Ukraine.
SovEcon raised its 2021-22 Russian wheat export forecast by 200,000 MT to 34.1 MMT. The Russia-based consultancy expects the country to export 41 MMT of wheat in the 2022-23 marketing year.
Malaysia's palm oil inventories at the end of April likely rose to their highest since January, up 5.2% from the previous month to 1.55 MMT, according to a Reuters poll. Production is expected to rise 4.9% to a five-month high of 1.48 MMT, while exports likely fell 5.6% to 1.2 MMT. The Malaysian Palm Oil Board is scheduled to release official data on May 10.
Taiwan tendered to buy 40,000 MT of U.S. milling wheat. South Korea purchased 137,000 MT of South American corn and another 65,000 MT from optional origins.
CORN: July corn futures overnight fell as low as $7.86, the lowest intraday price since $7.81 on April 25, and down from $8.13 1/2 at the end of last week.
SOYBEANS: July soybeans fell as low as $16.27 1/4 and are down from $16.84 3/4 at the end of last week.
WHEAT: July SRW wheat fell as low as $10.87 3/4 before climbing to gains near the close of overnight trade. The most-active contract is up from $10.55 3/4 at the end of last week and poised for its first weekly gain in three.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firmer
CATTLE: Live cattle may face further pressure as slumping wholesale beef prices stir concerns over demand, but declines may be limited by active packer buying this week at firmer prices. Weakness in corn may support feeder cattle. USDA-reported live steers averaged $143.63 through Thursday morning, up about 30 cents from last week. Packers purchased a lot of cattle for a third week in a row, though it’s believed a fair share were once again bought “with time” for delivery in upcoming weeks. Choice cutout values plunged $4.56 Thursday to $255.18, near an eight-week low, but movement was again strong at 159 loads.
June live cattle fell $1.05 Thursday to $133.775, the contract’s lowest settlement since a seven-week closing low April 29.
HOGS: Lean hog futures may extend recent gains behind beliefs the market established a near-term bottom and cash benchmarks will soon stabilize. The CME lean hog index is down another 8 cents today (as of May 4), marking the seventh consecutive daily decline. Strong corrective gains the past two in deferred lean hog futures suggest traders anticipate the cash index will put in a bottom soon and begin an extended climb to a normal seasonal summer high. A jump in wholesale pork prices may also support futures. Pork cutout values rose $2.44 Thursday to $106.27 behind a gain of nearly $12 in bellies. Movement remained relatively slow at 265 loads.
June lean hog futures rose $1.975 Thursday to $107.075, the contract’s highest closing price since April 28.
