Market Snapshot | June 1, 2022

Corn futures are sharply lower at midmorning, led by a drop of about 29 cents in the July contract.

• Corn futures extended overnight declines, with July contract hitting an eight-week low on spillover from a selloff in wheat and strong U.S. planting progress.
• USDA late yesterday 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%.
• Ukrainian corn production could decline to 26.1 MMT this year from 37.6 MMT in 2021, Ukrainian grain traders’ union UGA said today. The union expects Ukraine to be able to export 15 MMT of corn.
• USDA later today is expected to report corn-for-ethanol use during April at 427.4 million bu., which would be down 6.0% from March but up 4.9% versus April 2021.
• Reuters reports the Biden administration is likely to raise its 2021 ethanol blending mandate to 13.9 billion gallons, up from its December proposal of 13.32 billion gallons, based on consumption.
• July corn fell as low as $7.25 3/4, the contract’s lowest intraday price since $7.22 3/4 on April 4. December futures dropped to $6.88 1/4, also an eight-week low.

Soy complex futures are mostly lower, with nearby soybeans down around 6 cents, nearby soymeal down more than $3.00 and nearby soyoil down around 10 points.

• The soy complex is under pressure in sympathy with sharp declines in corn and wheat, but losses have been limited by fresh export business.
• 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.
• Late yesterday, 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%. Only 23% of North Dakota’s crop had been planted.
• USDA later today is expected to report U.S. soybean crushing 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.
• July soybeans fell as low as $16.76 before finding support just above Monday’s low of $16.73 3/4 and recovering some of the initial declines.

Wheat futures are sharply lower, led by declines of nearly 50 cents in nearby SRW contracts.

• Winter wheat futures extended Tuesday’s slump and dropped to four-week lows amid signs grain shipments from Ukraine may resume.
• Russia’s Deputy Foreign Minister said Moscow will find ways to supply markets with Russian grain and fertilizers despite Western sanctions, RIA news agency reported. Russia’s foreign minister will visit Turkey next week to discuss possibly allowing Ukrainian grain to be shipped from ports.
• Spring wheat planting remains behind schedule, though the winter crop showed modest improvement. 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.
• Ukraine’s 2022 wheat harvest is likely to drop to 19.2 MMT from a record 33 MMT in 2021, 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.
• The lowest free-on-board offer presented at an Egyptian state purchasing tender for wheat on Wednesday was $438.86 per MT for 55,000 MT of Russian wheat, Reuters reported. No U.S. wheat was offered.
• July SRW wheat fell as low as $10.42 1/2, the contract’s lowest intraday price since May 4.

Live cattle and feeder cattle futures are sharply higher at midmorning.

• Live cattle futures rose behind corrective buying following Monday’s slump, with buyers encouraged by strength in wholesale beef even as the cash market shows further weakness.
• Feeder cattle are gaining support from a drop to eight-week lows in corn futures.
• 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.

Hog futures are higher, led by gains of more than $2 in the July contracts.

• Nearby hog futures rose in a corrective rebound from Tuesday’s sharp declines, with strengthening cash fundamentals continuing to support prices.
• The CME lean hog index is up 22 cents to $105.15, the highest since late 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 traders will watch pork cutout movement closely this week to see if demand will be sustained.