Ahead of the Open | May 26, 2022
GRAIN CALLS
Corn: 8 to 11 cents lower.
Soybeans: 1 to 3 cents lower.
Wheat: HRW and SRW 12 to 18 cents lower, spring wheat 1 to 3 cents lower.
GENERAL COMMENTS: Winter wheat futures fell for a third consecutive day amid prospects for grain shipments out of the Black Sea region. Corn was lower and near seven-week lows on crop-favorable Midwest weather, while soybeans are also lower. Malaysian palm oil futures rose 2.4% to a three-week closing high amid tight supplies. Front-month U.S. crude oil futures rose slightly less than $1. U.S. stock index futures indicate a firmer open, while the U.S. dollar index is little changed this morning.
Traders continue to monitor the Russia/Ukraine war following reports earlier this week that Russia is ready to provide a humanitarian corridor for vessels carrying food to leave Ukraine in return for the lifting of some sanctions. The Kremlin rejected U.S. and European Union claims that Russia had blocked grain exports from Ukraine and accused the West of creating such a situation by imposing sanctions. Turkey is in negotiations with Russia and Ukraine to open a corridor via the Bosphorus for grain exports from Ukraine, a senior Turkish official told Reuters.
China and Brazil agreed to corn export protocols earlier this week, but Brazilian corn exports to China require an agreement about approved GMO varieties before effectively beginning, Brazilian corn growers association Abramilho said. The Chinese are keen to sign a “biotechnology equivalence” agreement for GMO corn to allow trade with Brazil, according to Abramilho’s executive director. The “second step” is the approval of biotechnologies, the director said.
U.S. weather looks “favorably mixed,” with alternating periods of rain and sunshine in most major crop areas, World Weather Inc. said today. A high-pressure ridge expected in the eastern U.S. next week “is unlikely to persist for very long and the short-term bout of sunshine and warm weather will be excellent for field progress and crop development,” the forecaster said.
China will auction another 500,000 MT of imported soybeans from state-owned reserves on June 1, the National Grain Trade Center said. Beijing has been holding the weekly auctions as a way of increasing domestic supplies.
CORN: USDA reported net weekly U.S. corn sales of 151,600 MT for 2021-22, down 63% from the previous week, down 73% from the average for the previous four weeks and a marketing-year low. For 2022-23, net sales totaled 58,300 MT, with buyers including “unknown destinations,” at 36,800 MT. Expectations ranged from 150,000 to 500,000 MT for 2021-22 and 200,000 to 800,000 MT for 2022-23.
SOYBEANS: Net weekly soybean sales totaled 276,800 MT for 2021-22, down 63% from the previous week and down 48% from the prior four-week average. For 2022-23, net sales totaled 443,000 MT, led by unknown destinations, at 284,000 MT. Expectations ranged from 200,000 to 800,000 MT for 2021-22 and sales of 100,000 to 600,000 MT for 2022-23.
WHEAT: USDA reported net weekly wheat sales reductions of 2,300 MT for 2021-22, a marketing-year low. For 2022-23, net sales totaled 246,300 MT. Expectations ranged from negative-50,000 to 100,000 MT for 2021-22 and 100,000 to 400,000 MT for 2022-23. July SRW wheat overnight fell as low as $11.15, 1/2 cent above Wednesday’s low.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-firmer
CATTLE: Live cattle futures may face pressure from signs of a peak in the wholesale beef market and the likelihood of a third straight weekly decline in cash prices. USDA-reported live steers averaged $137.81 through Wednesday morning, down from last week’s $140.25 average. Choice beef cutout values fell 72 cents Wednesday to $262.93 but remain near a four-week high. Movement totaled 102 loads. Some industry sources believe the wholesale market has topped, with Choice values down over $30 from an April peak and down from over $309 a year ago. If prices have topped, the summer low may drop under $240, the sources believe. June live cattle fell 42.5 cents to $132.30, while August feeders fell 20 cents to $167.95.
Net weekly U.S. beef sales totaled 20,000 MT for 2022, down 14% from the previous week but up 3% from the prior four-week average.
HOGS: Lean hog futures may gain support from strengthening in cash fundamentals. The CME lean hog index is up another 84 cents to $103.87 (as of May 24), the sixth straight daily gain and the highest since late August. Summer-month lean hog futures faced pressure on Wednesday as traders waited on the cash index to catch up, but with recent daily gains averaging more than 66 cents, premiums in summer hog futures likely won’t generate much concern. Pork cutout values fell $1.17 Wednesday to $107.07, led by a drop of nearly $8 in bellies. Movement was light at 244 loads. July lean hogs fell $1.10 Wednesday to $107.95, down from $109.00 at the end of last week.
Net weekly pork sales totaled 36,700 MT for 2022, up 52% from the previous week and up 39% from the prior four-week average.
