Ahead of the Open | June 14, 2022

GRAIN CALLS

Corn: 1 to 3 cents lower.

Soybeans: 4 to 10 cents higher.

Wheat: 7 to 12 cents lower.

GENERAL COMMENTS: Soybean futures rebounded overnight from Monday’s sharp declines but held within narrow ranges, while corn and wheat fell. Malaysian palm oil futures rose for the first day in five but remained near a two-month low. Front-month U.S. crude oil futures are up more than $1 and near a three-month high. U.S. stock index futures signal a firmer open, while the U.S. dollar index is modestly lower this morning.

USDA reported daily corn sales of 148,000 MT to Mexico, including 103,000 MT for 2021-22 and 45,000 MT for 2022-23.

Ukraine asked European partners for temporary grain storage to help with its upcoming harvest, Bloomberg reported. Ukraine’s Deputy Agriculture Minister Markian Dmytrasevych said Russian attacks and occupation in southern and eastern areas of the country reduced grain storage capacity by 15 MMT.

Crop Consultant Dr. Michael Cordonnier raised his Brazilian corn crop estimate by 3 MMT to 110 MMT, noting that while yields on early harvested safrinha corn in Brazil are poor, Conab again increased its planted acreage figure last week. He also raised his Brazilian soybean crop estimate by 1 MMT to 123 MMT, noting better-than-expected yields in Rio Grande do Sul and northeastern states. In Argentina, Cordonnier raised his soybean estimate by 1 MMT to 42 MMT, citing favorable yields in northern areas. He left his Argentine corn crop peg at 49 MMT.

Details from Indonesia on the country’s new regulations on palm oil exports were in line with previous announcements, including lowering the maximum levy rate for crude palm oil to $200 a MT from $375, effective until July 31. The levy rate will be raised in August, according to the finance ministry regulations. Indonesian exporters pay a levy and an export tax on shipments. Overall, the combined ceiling for both levy and tax would be reduced to $488 per MT from $575 per MT.

Japan is seeking 186,441 MT of milling wheat in its weekly tender. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat.

CORN:July corn futures fell as low as $7.60 overnight and December dropped to $7.12 3/4 but both contracts traded within Monday’s range. Late Monday, USDA reported a slight, unexpected drop in U.S. corn crop conditions, with the “good” to “excellent” rating falling a point to 72%. Analysts on average expected the rating to stay at 73%. The crop was 97% planted, matching the five-year average.

When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 2.8 points to 379.7, though that was still 5.8 points above the five-year average.

SOYBEANS: July soybeans posted a mild corrective bounce overnight after earlier falling as low as $17.02 1/2 before finding support just above Monday’s low at $17.02. Strong demand continues to support prices, though farmers have caught up on delayed planting and USDA condition ratings indicate the crop is off to a strong start. USDA’s initial soybean ratings of the season showed 70% of the crop as “good” to “excellent,” meeting trade expectations.

The soybean crop started the growing season with a 370.9 CCI rating, 12.9 points above last year at this time and 3.2 points above the five-year average.

WHEAT: July SRW wheat overnight fell as low as $10.52 3/4 before rebounding and continues to trade around the middle of the range so far this month, with Ukraine disruptions supporting prices but harvest pressure increasing. USDA reported spring wheat planting 94% complete as of Sunday, up from 82% last week, while the winter wheat harvest was 10% complete, 2 percentage points behind the five-year average. The first spring wheat CCI rating was 2.8 points below average for the date.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-firm

CATTLE:Live cattle futures may extend Monday’s sharp losses on followthrough technical pressure and expectations for weaker cash trade this week. Concern a potential recession will crimp beef demand is also weighing on the market. Choice beef cutout values fell 78 cents Monday to $270.54 on light movement of 93 loads. The combination of sharp futures declines and wholesale beef weakness has traders anticipating lower cash trade after prices last week averaged $140.14, up over $2.00 from the previous week. August live cattle fell $2.325 Monday to $133.875. August feeders dropped $3.15 to $171.325.

HOGS: Lean hog futures may extend Monday’s gains behind bullish technicals and cash firmness. The CME lean hog index is 21 cents higher at $107.40 (as of June 10), ending a three-day slide. June hogs ended Monday 60 cents above the latest index, while the July and August contracts finished with discounts of 72.5 cents and $3, respectively. Pork cutout values rose $2.22 Monday to $111.38 on strong movement of nearly 307 loads. July lean hogs on Monday rose $1.20 to $106.675 and posted a bullish “outside day” higher on the daily chart after rebounding from a four-week low, which may encourage followthrough buying.