Ahead of the Open | June 27, 2022

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GRAIN CALLS

Corn: 6 to 14 cents lower.

Soybeans: 6 to 10 cents higher.

Wheat: 1 to 6 cents higher.

GENERAL COMMENTS: Corn futures fell overnight after rainfall reached parts of the Midwest over the weekend and forecasts indicated a break from June heat. Soybeans and wheat rose following last week's sharp declines. Malaysian palm oil futures rose 5.5%, following a drop of nearly 15% last week on support from strength in other vegoils. Front-month crude oil futures are up slightly. U.S. stock futures signal a firmer open, while the U.S. dollar index is down slightly this morning.

Rainfall over the weekend was a little greater than expected in Illinois, northeastern Iowa and in a few areas of far northwestern Iowa and northeastern Nebraska while lighter than expected in southern Minnesota, World Weather Inc. said. Today's U.S. outlook “promotes a relatively good mix of showers and sunshine… both this week and next week, but resulting rainfall is mostly light in both weeks and there is potential for some missed rainfall,” the forecaster said. Temperatures in the U.S. Midwest this week will be near to above normal and readings next week will be a little warmer, keeping evaporation rates high and “warranting a close watch on the distribution of rain.”

Russia defaulted on its foreign-currency sovereign debt for the first time in a century, following significant Western sanctions that shut down payment routes to overseas creditors. For months, the country found paths around the penalties imposed after the Kremlin’s invasion of Ukraine. But on Sunday, the grace period on about $100 million of interest payments due May 27 expired, a deadline considered an event of default if missed. Focus shifts to what investors do.

Group of Seven (G7) leaders said Sunday they would stop buying gold from Moscow and discussed a new U.S. proposal to undercut its oil revenues, even as Russian forces rained missiles on Kyiv for the first time in weeks. The group will commit to providing indefinite support to Ukraine for its defense against Russia’s invasion, according to the text of a draft statement from their summit in Bavaria. Members of the alliance are concerned about the war dragging on and some, including Germany and France, have hinted they may be more open to the idea of a negotiated cease-fire.

European Union prices for rapeseed and sunflower seed are expected to fall in 2022-23 from high levels this season, curbed by bigger projected harvests and continuing imports from Ukraine, Strategie Grains said. For rapeseed, the average price in Hamburg could reach about $665 per MT in 2022-23, down nearly 20% from 2021-22, Strategie Grains said in a report. It raised its forecast for this year's EU rapeseed harvest to 18.3 MMT from 18.2 million a month ago and nearly 8% above last year's crop.

Saudi Arabia purchased 495,000 MT of wheat, with the seller having the option of sourcing from the EU, Black Sea region, North America, South America or Australia. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat. Jordan tendered to buy 120,000 MT of optional origin milling wheat. Taiwan tendered to buy 40,000 MT of U.S. milling wheat and up to 65,000 MT of corn that can be sourced from the U.S., Brazil, Argentina or South Africa. Egypt contracted to buy 180,000 MT of wheat from India.

 

CORN: December corn fell as low as $6.51 1/4 overnight before trimming losses. The new-crop contract ended last week at $6.74, down 61 cents for the week. Midwest weather and weekly USDA crop ratings later today will be key to price direction early this week before focus shifts to USDA’s Acreage and quarterly Grain Stocks reports June 30.

SOYBEANS: November soybeans rose as high as $14.32 1/2 overnight after ending last week at $14.24 1/4, down $1.13 for the week. July soybeans ended last week at $16.10 3/4, down 91 1/4 cents for the week. Last week’s sharp losses will likely lead to some corrective buying today, with concern over Midwest dryness underpinning the market.

WHEAT: September SRW wheat rose as high as $9.52 1/4 overnight after ending last week at $9.36 1/2, down $1.10 1/4 for the week and the contract's lowest closing price since Feb. 28. Price upside likely will be limited in winter wheat due to accelerating harvest pressure and weak technicals. USDA said the winter wheat harvest was 25% complete as of June 19, up from 10% a week earlier.

 

LIVESTOCK CALLS

CATTLE: Higher

HOGS: Steady-firmer

CATTLE: Live cattle futures are expected to gain support from last Friday’s Cattle on Feed Report, which showed lower than expected May feedlot placements. USDA reported the June 1 feedlot inventory up 1.2% from year-ago (a1.4% rise was expected) with May placements down 2.1% (0.4% drop expected) and marketings up 2.4% (3.0% increase expected). The numbers should support live cattle futures early today given the drop in prices ahead of the report and futures’ big discount to the cash market. Cash cattle firmed late last week behind strength in northern markets. USDA-reported live steers averaged $144.50 through last Thursday morning, up from the previous week's average of $143.67. 

August live cattle fell 50 cents Friday to $133.375, down $3.20 for the week. August feeder cattle fell $2.15 to $172.70, down 25 cents for the week.

HOGS: Lean hog futures may gain support from firm cash fundamentals. Hogs ended last week on a firm note, with the CME lean hog index near a 10-month high. The next index quote is expected to rise 21 cents to $110.90. July lean hog futures finished last Friday nearly in line with today’s CME lean hog index quote (as of June 23). August hogs finished more than $4 below the cash index. That price structure signals traders sense the cash index is close to peaking. Pork cutout values ended last week at $112.20, down from $114.20 at the end of the previous week. August hogs ended Friday at $106.775, down $1.10 for the week.

 

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