Market Snapshot | May 6, 2022

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Corn futures are solidly lower at midmorning, led by declines of about 13 cents in new-crop contracts.

  • Nearby corn futures are under continued corrective pressure following the recent rally. New-crop futures are under pressure from expectations for faster planting progress next week.
  • A “huge opportunity” for significant fieldwork will be opening next week across the U.S. Midwest and part of the mid-South as drier, warmer weather moves in, World Weather Inc. said today. Recent forecast model runs suggest the improved conditions “could last a while.”
  • In the central and lower parts of the Midwest, a ridge of high pressure is expected to prevail most of next week, sending temperatures into the 80s and some lower 90s Fahrenheit briefly during the first half of next week, World Weather said.
  • July corn fell as low as $7.76 1/2, the lowest intraday price since $7.75 1/4 on April 14. The most-active contract is on track to end a string of four consecutive higher weekly closes after ending last week at $8.13 1/2. December corn dropped to $7.18 3/4, near a two-week low.

Soy complex futures are mostly lower, with new-crop soybeans down around a dime, nearby soymeal down 60 to 90 cents and July soyoil is down around 65 points.

  • Soybeans are under technical pressure after nearby futures failed to crack resistance levels overnight.
  • Sharp declines in Malaysian palm oil overnight also weighed on soyoil futures, while prospects for improved planting conditions are weighing on new-crop contracts.
  • Malaysia's palm oil inventories at the end of April likely rose to the highest since January, 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%. The Malaysian Palm Oil Board is scheduled to release official data on May 10.
  • July soybeans overnight faded after failing to break resistance at the 50-day moving average of $16.50 3/4 and dropped as low as $16.18. The most-active contract is down from $16.84 3/4 at the end of last week. November soybeans fell to $14.66, a four-week low.

Wheat futures are higher, led by gains of around 20 cents in nearby SRW contracts.

  • Winter wheat futures extended the rally of the past two sessions after an outlook for reduced India production exacerbated concerns over tightening global supplies.
  • Supply concerns were fueled by sharply lower supplies in Canada. Canadian stocks for nearly every field crop fell at the end of March compared to year-earlier, 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. Shrinking supplies reflect drought-slashed crops in 2021.
  • An FAO official said 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.
  • Taiwan tendered to buy 40,000 MT of U.S. milling wheat.
  • July SRW wheat held support at the 20-day moving average at $10.87 3/4 overnight before climbing as high as $11.27 1/2. 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.

Live cattle futures are lower at midmorning, while feeders are mostly firmer.

  • Live cattle are under pressure from concerns over weaker beef demand, though active packer buying this week at firmer prices is limiting downside.
  • 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 as low as $135.125, the contract’s lowest intraday price since April 29, but could still close higher for the week after ending last week at $132.65.
  • Feeder cattle are supported by a drop in corn futures.

Hog futures are lower, led by June and July contracts.

  • Lean hog futures are under pressure from continued weakness in cash fundamentals.
  • The CME lean hog index is down another 8 cents today (as of May 4), marking the seventh consecutive daily decline.
  • Pork cutout values rose $2.44 Thursday to $106.27 behind a gain of nearly $12 in bellies. But movement remained relatively slow at 265 loads.
  • June lean hog futures fell as low as $104.975 and are poised for a second straight lower weekly close after ending last week at $106.375. Initial resistance is seen at the 10-day moving average at $107.80 while support comes in at this week’s low at $101.875.
 

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