Ahead of the Open | June 1, 2022

GRAIN CALLS

Corn: Steady to 2 cents higher.

Soybeans: 8 to 11 cents higher.

Wheat: 5 to 10 cents higher.

GENERAL COMMENTS: Wheat futures rebounded overnight from sharp losses Tuesday. Corn and soybean futures also firmed. Malaysian palm oil futures reversed early losses to gain 0.9%, while front-month U.S. crude oil rose nearly $2. U.S. stock index futures signal a firmer open, while the U.S. dollar index is up more than 100 points this morning.

USDA reported daily soybean sales of 132,000 MT to China – split evenly between 2021-22 and 2022-23. These are the first daily soybean sales since May 23.

Russia’s Deputy Foreign Minister Sergei Ryabkov said Moscow will find ways to supply markets with Russian grain and fertilizers despite Western sanctions, RIA news agency reported. Meanwhile, Russia’s foreign minister will visit Turkey next week to discuss possibly allowing Ukrainian grain to be shipped from ports.

Ukraine’s 2022 wheat harvest is likely to drop to 19.2 MMT from a record 33 MMT in 2021, Ukrainian grain traders’ union UGA said today, though lower exports are seen pushing stocks to record levels. Ukrainian officials and analysts say that hostilities in many regions could make the harvest impossible, though the union did not officially specify a reason for the decrease. UGA said this year’s corn production could also decline to 26.1 MMT from 37.6 MMT in 2021. The union expects Ukraine to be able to export 10 MMT of wheat and 15 MMT of corn.

Traders expect USDA to report soybean crush totaled 180.5 million bu. in April, which would be down 6.4% from March but up 6.3% from last year, and the second highest tally for the month behind 2020. Corn-for-ethanol use is expected to total 427.4 million bu., which would be down 6.0% from March but up 4.9% versus April 2021.

Indonesia cancelled a plan to send its citizens to work in palm oil plantations in neighboring Malaysia, which has faced a labor shortage, its envoy to Kuala Lumpur said. Malaysia, the world’s second-largest palm oil producer, was set to welcome the first major batch of migrant workers from Indonesia since reopening borders in a boost for the industry that is facing a shortage of more than 100,000 workers. The labor crunch has cut Malaysian palm oil production, which relies on foreign labor, to multi-year lows amid a broader edible oil shortage due to the Russia/Ukraine war and export restrictions in Indonesia.

Egypt tendered for an unspecified amount of optional origin milling wheat; results of the tender will be known later this morning.

CORN: New-crop December futures fell overnight to the lowest price in over three weeks after USDA late Tuesday reported slightly higher-than-expected corn planting, though the contract mildly firmed at the end of the session. USDA said 86% of the U.S. corn crop was planted as of Sunday, up from 72% a week earlier and just one percentage point behind the five-year average. Progress slightly exceeded analysts’ expectations, which averaged 85%.

SOYBEANS: USDA reported 66% of the U.S. soybean crop planted as of Sunday, up from 50% a week earlier and one percentage point behind the five-year average. Plantings fell slightly short of the average analyst estimate of about 67%. July soybeans rose overnight to reach $16.94 1/4, after the lead contract plunged 49 cents Monday to $16.83 1/4.

WHEAT: Concerns over late spring wheat planting and poor winter wheat conditions may underpin prices. USDA reported 73% of the U.S. spring wheat crop was planted, up from 49% a week earlier but below the five-year average of 92%. Planting progress topped analysts’ expectations, which averaged 67%. Winter wheat crop ratings improved slightly, with 29% rated “good” to “excellent,” up from 28% last week.

When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 1.9 points to 256.9, though that was still 72.5 points below the five-year average for the end of May. The SRW crop slipped 0.4 point to 358.5, though the CCI rating was still 2.2 points above average.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firm

CATTLE: Live cattle may face followthrough pressure from Tuesday’s sharp losses, but strength in wholesale beef may encourage corrective buying. Choice beef cutout values rose $2.12 Tuesday to $267.54, the highest daily average in over five weeks. Movement was strong at 144 loads. In cash markets, light trade was seen around $135 in the Southern Plains Tuesday afternoon, down around $2 from last week’s trade in the region. The northern market was quiet, though initial trade in the Southern Plains suggests prices will be weaker. However, we anticipate the northern market will continue to pull up the average cash price for the week. August live cattle fell $2.025 Tuesday to $130.375 and August feeders fell $1.20 to $165.125.

HOGS: Lean hogs tumbled sharply Tuesday but may generate some corrective buying due to continued strength in cash fundamentals. The CME lean hog index is up 22 cents to $105.15, the highest since August. Pork cutout values rose $1.55 Tuesday to $107.71 on strong movement of 342 loads. Initial wholesale activity following the holiday weekend suggests Memorial Day meat clearance was strong, though it’s difficult to base too much off one day of trade. July lean hogs plunged $3.725 Tuesday to $108.00, while August futures fell $4.025 to $106.425.