Ahead of the Open | June 9, 2022

GRAIN CALLS

Corn: 2 to 6 cents lower.

Soybeans: 2 to 8 cents lower.

Wheat: HRW and SRW wheat 17 to 22 cents lower, spring wheat 9 to 12 cents lower.

GENERAL COMMENTS: Winter wheat futures fell to lows for the week overnight and corn and soybeans also dropped in a corrective setback following Wednesday’s gains as trades await USDA’s Supply and Demand Report on Friday. Malaysian palm oil futures plunged 4.0% to a three-week low on expectations for greater exports from Indonesia. Front-month U.S. crude oil futures are slightly lower. U.S. stock index futures signal a weaker open, while the U.S. dollar index is about 350 points lower this morning.

USDA reported a daily sale of 143,000 MT of soybeans for delivery to “unknown destinations,” including 500 MT for 2021-22 marketing year and 142,500 MT for 2022-23. The announcement marked the first USDA-reported soybean sale to China since June 1.

The Kremlin said no agreement had been reached with Turkey on exporting Ukrainian grain shipments across the Black Sea, though talks continued. Turkey has been pushing for an agreement between Russia and Ukraine on a plan to resume grain exports from Ukrainian ports, though prospects for a deal appear dim with both sides blaming the other for the stoppage. “The United Nations’ and Turkey’s mediation efforts are significant steps,” Italian Prime Minister Mario Draghi said in a speech at an OECD ministerial meeting in Paris. “We have to offer President [Volodymyr] Zelenskyy the assurances he needs that the ports will not be attacked,” he added.

China imported 9.7 MMT of soybeans in May, up 30% from the previous month and 0.6% above year-ago, as some cargoes delayed at ports by Covid restrictions were unloaded. Through the first five months of this year, China imported 38.0 MMT of soybeans, down 0.4% from the same period last year.

Strategie Grains cut its European Union wheat export forecasts for 2021-22 and 2022-23, citing slower demand amid high prices. The firm cut its 2021-22 EU wheat export estimate by 1.9 MMT to 28 MMT. The export outlook for 2022-23 was lowered 500,000 MT to 30.3 MMT.

France’s ag ministry reduced the country’s 2021-22 export forecast outside the EU by 150,000 MT from last month to 9.1 MMT, as high price curbed demand. It kept is wheat export forecast within the 27-country bloc at 8 MMT. The ag ministry did not provide a forecast for the upcoming 2022-23 marketing year.

Argentina’s 2022-23 wheat crop will likely come in at 18.5 MMT, down from 19 MMT previously estimated, the Rosario Grain Exchange forecast, citing reduced planting by farmers due to dry weather. The exchange cut its forecast for planted area to 6.2 million hectares, the lowest in 12 years, down from its previous forecast of 6.35 million hectares.

Malaysian palm oil futures fell sharply after top producer Indonesia began an effort to accelerate exports and key buyer China re-imposed Covid-19 lockdowns in Shanghai. Indonesia launched an export acceleration scheme effective immediately, aimed at shipping at least 1 MMT of crude palm oil and derivatives following a recent ban, according to a trade ministry regulation made public today. The world's biggest exporter is also lowering the maximum rate of export tax and levy for crude palm oil to $488 per MT from $575 per MT to encourage shipments.

Japan purchased 146,990 MT of wheat in its weekly tender, including 88,483 U.S. and 58,507 MT Canadian.

CORN: USDA reported net U.S. corn sales of 280,400 MT for 2021-22 for the week ended June 2, up 51% from the previous week and up 19% from the average for the previous four weeks. For 2022-23, net sales totaled 73,500 MT, including 58,300 MT for “unknown destinations.”

SOYBEANS: Net weekly U.S. soybean sales totaled 429,900 MT for 2021-22, nearly quadruple the previous week’s 111,600 MT tally and up 41% from the prior four-week average. Top buyers included China (128,900 MT, including decreases of 10,900 MT). For 2022-23, net sales totaled 595,300 MT, with top buyers including Pakistan (297,000 MT) and China (261,000 MT). Both old-crop and new-crop sales were on the high end of expectations, which ranged from 100,000 to 500,000 MT and 200,000 to 700,000 MT, respectively.

WHEAT: Net weekly wheat sales totaled 451,000 MT for 2022-23, which began June 1, with unknown destinations the leading buyer at 117,600 MT. Sales were at the high end of trade expectations ranging from 250,000 to 500,000 MT. Accumulated exports for the 2021-22 marketing year that ended May 31 totaled 18.7 MT, down 25% from the prior year’s total of 24.8 MMT.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-mixed

CATTLE: Live cattle futures may extend Wednesday’s rally to six-week highs on indications the cash market will halt a four-week slide. Cash cattle trade started around $136 in the Southern Plains and $141 in Nebraska Wednesday, up about $1 from last week in both locations. The firmer tone prompted most feedlots held out for even higher prices, and with marketings current, feedlot operators should hold additional negotiating leverage this week. Strength in wholesale beef may also embolden futures buyers. Choice cutout values gained 32 cents Wednesday to $271.74, the highest daily average since April 15. Movement was a relatively strong 121 loads. August cattle rallied $3.40 Wednesday to $137.525, a six-week closing high.

USDA reported net weekly U.S. beef sales of 17,700 MT for 2022, down 1% from the previous week but up 21% from the prior four-week average. 

HOGS: Lean hog futures may face carryover pressure from Wednesday’s slump, which largely erased premiums June and July futures held to the CME lean hog index, while extending the August contract’s discount. While the cash index is down 32 cents today (as of June 7), it has been trending solidly higher since mid-May. The lack of premium in summer-month hogs suggests traders sense the cash price strength is nearing an end. Pork cutout values plunged $3.36 Wednesday to $104.47, near a three-week low and driven by a drop of nearly $28 in bellies. Movement was light at 268 loads. July lean hogs fell $1.325 to $107.95, the contract’s lowest closing price since May 25.

Net weekly U.S. pork sales totaled 16,700 MT for 2022, down 48% from the previous week and down 44% from the prior four-week average.