Ahead of the Open | May 19, 2022
GRAIN CALLS
Corn: 7 to 12 cents lower.
Soybeans: 4 cents lower to 7 cents higher.
Wheat: HRW and SRW 30 to 40 cents lower, spring wheat 20 to 22 cents lower.
GENERAL COMMENTS: Wheat futures fell to lows for the week overnight as the market extended Wednesday’s sharp losses. Corn was also under pressure, while soybeans traded mixed overnight. Malaysian palm oil futures dropped to the lowest levels in over five weeks after Indonesia announced it would lift a ban on exports. Front-month crude oil fell nearly $4. U.S. stock index futures signal a continuation of Wednesday’s sharp losses, while the U.S. dollar index is down more than 650 points.
U.N. Secretary-General Antonio Guterres said on Wednesday that he is in “intense contact” with Russia, Ukraine, Turkey, the U.S. and the European Union in an effort to restore Ukrainian grain export as a global food crisis worsens. “I am hopeful, but there is still a way to go,” Guterres said. “The complex security, economic and financial implications require goodwill on all sides.”
Russia’s Foreign Ministry said if it were to heed a United Nations (UN) appeal to open access to Ukraine’s Black Sea ports, the removal of sanctions against Russia would also have to be considered, the Interfax news agency reported. UN food chief David Beasley appealed on Wednesday to Russian President Vladimir Putin, saying: “If you have any heart at all, please open these ports.” The UN World Food Program feeds some 125 million people and buys 50% of its grain from Ukraine.
Scouts on the second day of the Wheat Quality Council HRW tour found an average yield of 37 bu. per acre in western and southern areas of Kansas, down from 56.7 bu. per acre on similar routes last year and the five-year average of 47.1 bu. per acre. Drought and high temperatures stunted crops in the state’s southwest corner as well as portions of south-central Kansas.
Indonesia will lift its palm oil export ban from Monday, May 23, following improvements in the domestic cooking oil supply situation, President Joko Widodo announced. The decision to lift the ban was taken despite the price of bulk cooking oil having not yet reached the targeted 14,000 rupiah per liter price.
China has removed a three-year restriction on imports of Canadian canola, Canadian officials said. Richardson and Viterra, Canada’s two largest canola exporters that had been banned from shipping canola to China since March 2019, are listed as approved for exporting canola to China in a government document that was published on the Chinese General Administration of Customs’ website. However, any Canadian shipments of canola to China will be limited due to lower stockpiles.
Japan purchased 174,744 MT of wheat in its weekly tender, including 59,556 MT U.S., 91,465 Canadian and 23,723 MT Australian. South Korea purchased 69,000 MT of South American corn. Jordan tendered to buy 120,000 MT of optional origin milling wheat.
CORN: USDA reported net U.S. corn sales for the week ended May 12 totaling 435,300 MT for 2021-22, down 36% from the average for the previous four weeks. Net sales for 2022-23 totaled 588,500 MT, led by China at 544,000 MT. Sales were expected to range from 150,000 to 450,000 MT for 2021-22 and 500,000 to 900,000 MT for 2022-23.
SOYBEANS: Net weekly soybean sales totaled 752,700 MT for 2021-22, up 65% from the prior four-week average. China was the lead buyer at 392,600 MT, including 57,000 MT switched from “unknown destinations.” Net sales for 2022-23 totaled 149,500 MT, which included 113,500 MT for unknown destinations. Sales were expected to range from 150,000 to 500,000 MT for 2021-22 and 50,000 to 600,000 MT for 2022-23.
WHEAT: Net weekly wheat sales totaled 8,500 MT for 2021-22, a marketing-year low, down 40% from the previous week and down 82% from the prior four-week average. Net sales for 2022-23 totaled 325,600 MT for 2022-23, led by Japan, at 87,600 MT.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-firm
CATTLE: Live cattle futures may face followthrough from Wednesday’s losses, which stemmed in part from weaker cash but also broader market concerns over inflation and potential recession. Outside markets will be a near-term key to cattle futures direction, and continued weakness in U.S. stocks could pull cattle even lower. USDA-reported live steers averaged $139.38 this week through Wednesday morning, down from last week’s average of $142.44. Choice cutout values fell 1 cent Wednesday to $260.47 on strong movement of 136 loads. June live cattle fell $1.50 Wednesday to $131.50, the contract’s lowest closing price since Oct. 6, while August feeder futures dropped 97.5 cents to $165.80.
New weekly U.S. beef sales totaled 23,300 MT for 2022, down 18% from the previous week but up 35% from the average for the previous four weeks.
HOGS: Lean hog futures may see followthrough buying on ideas a sharp jump over the past four sessions marked the start of a delayed seasonal rally. Hog futures gained even as cattle and other commodities tumbled, though further upside may be limited until the CME lean hog index, which is near a one-month low, shows sustained strength. Wholesale pork strength may also underpin futures. Pork cutout values rose $1.50 Wednesday to $103.61, the highest daily average since May 9. Movement slowed to 287 loads. June lean hogs rose 95 cents Wednesday to $106.10, the highest close since May 5.
Net weekly pork sales totaled 24,100 MT for 2022, down 8% from the previous week but up 2% from the prior four-week average.
