Market Snapshot | May 19, 2022
Corn futures are weaker at midmorning, though price action has been on both sides of unchanged.
- Nearby corn rebounded from overnight weakness and briefly rose for the first day in three amid spillover support from strong gains in soybeans and soymeal. But buyer interest is limited by weakness in wheat.
- USDA’s weekly export sales numbers were mixed but conveyed a bullish longer-term demand picture, with new-crop sales commitments running 45% above the five-year average, partly due to China purchases.
- Net U.S. corn sales for the week ended May 12 totaled 435,300 MT for 2021-22, down 36% from the average for the previous four weeks. Net sales for 2022-23 totaled 588,500 MT, led by China at 544,000 MT. Sales were expected to range from 150,000 to 450,000 MT for 2021-22 and 500,000 to 900,000 MT for 2022-23.
- The National Weather Service 90-day forecast calls for elevated odds of above-normal temps across virtually the entire country for June through August. Below-normal precip is also expected across much of the western Corn Belt, with exception including Minnesota.
- U.N. Secretary-General Antonio Guterres said on Wednesday he is in “intense contact” with Russia, Ukraine, Turkey, the U.S. and the European Union in an effort to restore Ukrainian grain export as a global food crisis worsens.
- July corn futures dropped slightly under the 40-day moving average at $7.75 1/4 near the end of overnight trading before recovering. Initial resistance comes in around the 20-day moving average at $7.94 1/4.
Soy complex futures are mixed, with nearby soybeans up more than 30 cents and nearby soymeal up around $12, while nearby soyoil is down around 40 points.
- Nearby soybean futures surged near three-week highs behind a resurgent soymeal market and stronger-than-expected weekly export data.
- Net U.S. weekly soybean sales totaled 752,700 MT for 2021-22, up 65% from the prior four-week average. China was the lead buyer at 392,600 MT, including 57,000 MT switched from “unknown destinations.” Net sales for 2022-23 totaled 149,500 MT, which included 113,500 MT for unknown destinations. Sales were expected to range from 150,000 to 500,000 MT for 2021-22 and 50,000 to 600,000 MT for 2022-23. Export commitments are running 4% behind year-ago versus 5% behind last week.
- Indonesia will lift its palm oil export ban May 23 following improvements in the domestic cooking oil supply situation, which is pressuring soyoil.
- July soybeans reached $16.97, the contract’s highest intraday price since $17.04 3/4 on April 29. A push above that late-April high may have bulls targeting $17.34, the high for the full month, and the contract high at $17.41. Initial support is seen at the 20-day moving average around $16.50.
Wheat futures are lower, led by declines of around 20 cents in nearby SRW and HRW contracts.
- Winter wheat futures extended Wednesday’s selloff on continue profit-taking from sharp early-week gains and prospects for moisture relief in the U.S. Plains.
- Precipitation expected in the HRW Belt over the coming week “will be enough for some increase in topsoil moisture in most areas,” World Weather Inc. said today. Rain in Kansas and Nebraska will be beneficial with the HRW crop in the reproductive and filling stage.
- Widespread drought remains a concern for U.S. wheat. As of May 17, 66% of the U.S. winter wheat crop area was in drought, down two percentage points from the previous week, according to the U.S. Drought Monitor. USDA classified the drought as 18% “moderate,” 22% “severe,” 21% “extreme” and 5% “exceptional.”
- USDA reported net weekly wheat sales totaling 8,500 MT for 2021-22, a marketing-year low, down 40% from the previous week and down 82% from the prior four-week average. Net sales for 2022-23 totaled 325,600 MT for 2022-23, led by Japan, at 87,600 MT. Sales were expected to range from negative-50,000 to 150,000 MT for 2021-22 and 50,000 to 250,000 MT for 2022-23.
- Scouts on the second day of the Wheat Quality Council HRW tour found an average yield of 37 bu. per acre in western and southern areas of Kansas, down from 56.7 bu. per acre on similar routes last year and the five-year average of 47.1 bu. per acre. Drought and high temperatures stunted crops in the state’s southwest corner as well as portions of south-central Kansas.
- July SRW wheat fell as low as $11.93 1/2, the contract’s lowest intraday price since May 13 and filling a daily chart gap created by Monday’s sharply higher open. But the contract has rebounded well off the intra-day lows at midmorning.
Live cattle are mostly firmer at midmorning while feeder cattle are lower.
- Live cattle futures are hovering around the middle of today’s range in light trading ahead of USDA’s Cattle on Feed Report on Friday. Weakness in cash cattle and concerns over beef demand continue to limit buying.
- Feeder cattle are under mild pressure from strength in corn futures.
- Cash cattle are heading for a second straight weekly decline with packers seemingly disinclined to bid aggressively amid sufficient supplies. USDA-reported live steers averaged $139.38 this week through Wednesday morning, down from last week’s average of $142.44.
- Choice cutout values fell 1 cent Wednesday to $260.47 on strong movement of 136 loads.
- Net weekly U.S. beef sales totaled 23,300 MT for 2022, down 18% from the previous week but up 35% from the average for the previous four weeks.
- USDA’s Cattle on Feed Report Friday is expected to show a fifth consecutive monthly increase in U.S. feedlot inventories. The U.S. feedlot inventory as of May 1 was up 1.3% from a year earlier, based on a Reuters survey of analysts. April placements are expected to have declined 4.6%.
- June live cattle dropped to a low for the week at $131.275 before rebounding. Technicals remain weak after June futures closed at a seven-month low Wednesday. The May low at $131.025 marks key support.
Hog futures are moderately to sharply lower in most contracts.
- Hog futures fell for the first session in five in a corrective pullback from sharp gains the past four sessions. Despite today’s weakness, a strong close to the week would solidify ideas the market has started a delayed seasonal rally.
- Further futures advances may be limited until the cash market shows sustained strength. The CME lean hog index rose 18 cents to $100.08 (as of May 17), up from a five-week low.
- Pork cutout values rose $1.50 Wednesday to $103.61, the highest daily average since May 9. Movement slowed to 287 loads.
- Net weekly U.S. pork sales totaled 24,100 MT for 2022, down 8% from the previous week but up 2% from the prior four-week average.
- June lean hog futures faded after rising to $106.475, the contract’s highest intraday price since $106.725 on May 6. The lead contract is still on track for its first weekly advance in four after ending last week at $100.75, and a close above the 20-day moving average around $106.00 could further embolden bulls.