Ahead of the Open | July 1, 2022

GRAIN CALLS

Corn: 2 to 12 cents higher.

Soybeans: New-crop 17 to 19 cents lower, old-crop 1 to 12 cents lower.

Wheat: 2 to 8 cents lower.

GENERAL COMMENTS: December corn futures fell near a four-month low overnight night before rebounding in a corrective bounce following sharp USDA-driven losses yesterday. Wheat also rose while soybeans fell. Malaysian palm oil futures fell 4.2% on recession fears and a higher supply outlook, while front-month crude oil futures rose over $2. U.S. stock futures signal a weaker open, while the U.S. dollar index is up over 600 point this morning.

Grain and livestock markets will trade normal hours today ahead of the holiday weekend. Markets and government offices are closed Monday, July 4, for Independence Day. Therefore, there will be no Pro Farmer market reports on Monday. Grain and livestock markets will resume trade at 8:30 a.m. CT on Tuesday, July 5.

A few waves of rain will move through the U.S. Midwest during the next 10 days to two weeks, but the precipitation is not likely to be uniform across the region, World Weather Inc. said today. Still, “there should be sufficient moisture to support crops in the bulk of the Corn and Soybean Belt, although some pockets of dryness are expected,” the forecaster said. A high-pressure ridge in the central and southern U.S. Plains and over the Delta will restrict rainfall in those areas and keep temperatures warmer-biased.

The Federal Reserve Bank of Atlanta’s closely watched GDPNow tracker estimated output contracted 1% during the second quarter. It would mark the second straight quarterly contraction. Two straight quarters of contraction wouldn’t itself indicate a recession has occurred, though it is a rule of thumb some analysts use. Recessions are determined by a panel at the National Bureau of Economic Research, a nonprofit academic group.

Traders expect USDA to report a record 181.8 million bu. of soybeans were crushed in May, according to a Bloomberg survey. That would be the largest crush ever for the month and up 4.8% from last year. Corn-for-ethanol use is expected to total 449.1 million bu., which would be up 0.2% from May 2021.

An Argentine trucker strike ended Thursday after some unions upset with diesel shortages and prices reached a deal to lift the one-week protest around the major port of Rosario, which is expected to help the flow of grains for export. Some protests, however, could continue since some smaller trucker groups were not involved in the deal. Autoconvocados Unidos, one of the trucker unions participating in the strike called the lifting of the strike an act of good will.

The European Commission cut its EU soft wheat production forecast by 5.4 MMT from last month to 125.0 MMT. Production is now forecast to decline from 130.1 MMT last year. The commission cited reduced yields for several countries including France, Poland, Romania and Spain. Despite the sharp cut to production, the commission kept its projection of EU 2022-23 soft wheat exports at 38 MMT, which would be a record for the bloc.

China will put up for auction another 500,000 MT of state-owned soybean reserves on July 8. Beijing has been regularly selling reserve soybeans since March in an effort to boost domestic market supplies.

Euro zone consumer prices rose a record 8.6% on year in June after climbing 8.1% in May, according to a first estimate by Eurostat. Energy prices surged 41.9%, and prices for food, alcohol and tobacco jumped 8.9%.

South Korea bought a total of 126,000 MT of optional origin corn from two separate tenders. 

CORN: December corn futures overnight fell as low as $6.12, the lowest intraday price since March 4, before climbing to gains. The most-active contract is still heading for a sharp weekly loss after ending last week at $6.74. In its Acreage Report, USDA boosted estimated 2022 U.S. corn plantings to 89.921 million ac., up from 89.49 million ac. in a March forecast and above the average analyst projection of about 89.861 million ac.

SOYBEANS: November soybeans overnight fell as low as $14.29 1/2, after dropping 20 1/4 cents to $14.58. The most-active contract is still up from $14.24 1/4 at the end of last week. USDA lowered estimated U.S. soybean plantings 2.12 million ac. from a March forecast to 88.325 million ac., sharply under trade expectations. But USDA plans to re-survey three states in the northern Midwest due to delayed seeding.

WHEAT: September SRW wheat overnight fell as low as $8.70 3/4, the lowest intraday price since Feb. 28, after sinking 46 cents Thursday to $8.84. The most-active contract is on track for its third consecutive weekly decline after ending last week at $9.36 1/2.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-weaker

CATTLE: Live cattle futures are heading for a second straight weekly decline despite cash prices that have risen to the highest in seven years. USDA-reported live steers averaged $145.85 this week through Thursday morning, $1.30 above last week's average. But futures are trading well under cash levels amid a lack of buying interest, indicating traders expect cash will be under pressure during the third quarter. Wholesale beef is also under pressure. Choice beef cutout values fell 88 cents Thursday to $264.00, the lowest since May 26, on movement of 102 loads. August live cattle rose 40 cents Thursday to $132.575, while August feeder cattle rose $2.45 to $176.225.

HOGS: Lean hog futures are on track for a second consecutive weekly loss amid signs the cash market has peaked. The CME lean hog index is expected down 40 cents today to $110.86 (as of June 29), the second consecutive drop and what could be the start of a down cycle in the cash hog market as slaughter supplies build through the second half of the year. But with futures trading at discounts to the cash index, price pressure should be limited. Pork cutout values fell $1.31 Thursday to $107.25 on light movement of 222 loads. August lean hog futures fell $1.475 Thursday to $102.10, down from $106.775 at the end of last week and the contract’s lowest closing price since $98.975 on May 12.

China’s ag ministry said its sow herd fell more than 8% in May compared with a year ago, more than the almost 5% decline previously estimated. But total size of the breeding herd at 41.92 million head did not change, according to data on the ministry website.