Ahead of the Open | June 15, 2022
GRAIN CALLS
Corn: 3to 6 cents lower.
Soybeans: 4 cents lower to 3 cents higher.
Wheat: 7 to 10 cents lower.
GENERAL COMMENTS: Nearby soybean futures fell near a two-week low overnight while corn and wheat also declined as recession concerns continued burden commodity markets. Malaysian palm oil futures fell more than 3% to a 2 1/2-month low. Front-month U.S. crude oil futures were trading slightly lower. U.S. stock index futures indicate a firmer open, while the U.S. dollar index is about 350 points lower this morning.
USDA reported the cancellation of sales of 100,000 MT of soybeans for delivery to “unknown destinations” during the 2021-22 marketing year.
The Federal Reserve is expected announce a 75 basis-point increase in its benchmark funds rate, the central bank’s largest hike in 28 years, at the conclusion of the Fed’s two-day monetary policy meeting at 1 p.m. CT today. Economists and investors have increasingly called for more aggressive Fed action to rein in soaring inflation. Fed Chair Jerome Powell’s press conference will also be key in signaling future rate hikes.
Another day of extreme heat will continue to grip the Midwest today, pushing temperatures near 100 degrees Fahrenheit. Temps are expected cool by the weekend, but a strong ridge of high pressure is expected to evolve in the U.S. Plains Thursday and through Monday, bringing another heat wave, World Weather Inc. said. Temperatures will reach over 100 Fahrenheit as far north as the Dakotas and Minnesota with 90s in southeastern Canada's Prairies.
Members of the National Oilseed Processors Association (NOPA) are expected to report record May soybean crush of 171.6 million bu., according to a Reuters survey. If realized, that would be up 1% from April and 4.9% above May 2021. However, the estimated average crush rate of 5.534 million bu. per day would represent a third monthly decline in the daily processing pace and the lowest average rate since September. Soyoil stocks are expected to fall to an eight-month low of 1.765 billion pounds.
Romania faces a logistical challenge of “epic proportions” and requires new infrastructure to help transport Ukrainian grain to global markets, President Klaus Iohannis said. Ukraine is sending grain to the Romanian Black Sea port of Constanta as it tries to avoid a storage and logistics bottleneck as winter crop harvest starts.
Ukraine has suffered $4.3 billion in damage to farmland, machinery and livestock due to Russia’s invasion, according to the Kyiv School of Economics. About half of the “already immense” destruction from the war comes from pollution caused by mines and unharvested crops.
Kazakhstan will limit exports of wheat to 550,000 MT and wheat flour to 370,000 MT until Sept. 30, the country’s ag ministry said. Kazakhstan originally imposed export limits of 1 MMT of wheat and 300,000 MT of flour from April 15 to June 1.
The United Arab Emirates (UAE) has ordered a four-month suspension in re-exports of wheat and wheat flour originating from India, state news agency WAM reported. UAE’s economy minister cited interruptions to global trade flows as the reason for its move but added India had approved exports of wheat to the country for domestic consumption.
CORN: July corn traded within Tuesday’s range overnight as traders monitored global markets and Midwest weather. Weakness in December futures indicates little concern yet over Midwest heat, with soil moisture levels still generally adequate and the crop in strong condition.
SOYBEANS: July soybeans overnight fell as low as $16.86 1/4, the contract’s lowest price since $16.81 1/4 on June 2. Deferred contracts traded firmer, with November futures climbing as high as $15.34 1/2.
WHEAT: July SRW wheat fell as low as $10.36 1/2, the contract’s lowest intraday price since June 3, while nearby HRW and HRS contracts also fell near two-week lows. Increasing harvest pressure and dollar strength should continue to burden winter wheat.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-firmer
CATTLE: Live cattle futures may gain support from strength in early-week cash trade and concern Plains heat will trim supplies. Cash cattle traded as high as $145 in the northern market and around $136 in the Southern Plains on Tuesday, up solidly from last week and a record price spread between the two regions, according to cash sources. The northern market, where supplies are tighter, was further supported by reports of death loss due to extreme heat. Choice beef cutout values fell $1.10 Tuesday to $269.44, the lowest daily average since June 3, but movement was strong at 135 loads. August live cattle rose 20 cents Tuesday to $134.075. August feeders slipped 2.5 cents to $171.30.
HOGS: Lean hog futures may see support from renewed cash market strength. The CME lean hog index is up 73 cents to $108.13 (as of June 13), $1.505 over July futures, which assumed lead month status after the June contract expired Tuesday. The firming of the CME index after a three-day fade late last week should support summer-month futures. Pork cutout values sank $2.71 Tuesday to $108.67, but movement was strong at 356 loads. China will buy 40,000 MT of frozen pork for state reserves on June 17. Beijing has been stockpiling pork via weekly purchases to boost hog margins.
