Ahead of the Open | June 28, 2022

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GRAIN CALLS

Corn: 8 to 11 cents higher.

Soybeans: 13 to 17 cents higher.

Wheat: HRW and SRW 11 to 22 cents higher, spring wheat 3 to 6 cents higher.

GENERAL COMMENTS: Corn and soybean futures rose overnight following weaker than expected USDA ratings that indicated crops were under stress from recent Midwest heat and dryness. Wheat climbed in a continued corrective bounce. Malaysian palm oil futures rose 1.3%, a second straight daily gain, on concern domestic mill closures will curb supplies. Front-month crude oil futures rose over $1.70. U.S. stock futures signal a stronger open, while the U.S. dollar index is up about 300 points this morning.

The near-term Midwest weather outlook “does not include an abundance of rain, but there will be enough mixed conditions to stave off a seriously threatening environment for a while,” World Weather Inc. said today. “Alternating periods of warm and seasonable temperatures are expected during the next two weeks and periodic rainfall will be possible, although the precipitation amounts do not seem to be very impressive for some areas. Pockets of dryness are expected, but areas of favorable soil moisture will also occur in many areas.”

USDA Secretary Tom Vilsack called for Ukrainian ports in the Black Sea to be opened to ship grain out of the embattled country, to help relieve a global food crunch. Trading needs to resume from the ports in the Black Sea that have been damaged or disrupted by Russia’s invasion, Vilsack said, freeing up storage space for the coming harvest in Ukraine. He said the U.S. also needs to look for ways for it to increase its own crop production to help make up the gap in global grain supplies.

Malaysian officials called on domestic palm oil millers to resume production and buy oil palm fruits from farmers, after a plunge in prices of the edible oil prompted some companies to halt processing. The head of the state-run Malaysian Palm Oil Board said it requested mills restart production and was studying action that could be taken against them should they fail to do so. The Malaysian Palm Oil Millers Association said that at current prices, mills stood to lose at least 150,000 ringgit ($34,114) for every 100 MT of crude palm oil produced.

Hungary's 2022 grains crop prospects have been “substantially damaged” by extreme hot weather and a lack of rainfall, state news agency MTI reported Agriculture Minister Istvan Nagy saying. The heat wave has also prompted an earlier than usual start to the nation's grains harvest, he said. Hungary, one of East Europe's top grain producers, ordered a ban on all grains exports in March because of price increases caused by Russia's invasion of Ukraine. The Hungarian grain crop totaled 13.7 MMT last year, down 12% from the previous year, partly because of dry weather conditions.

 

CORN: Late Monday, USDA reported 67% of the U.S. corn crop in either “good” or “excellent” condition as of Sunday, down from 70% a week earlier and below trader expectations for a combined reading of 69%. 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 fell 6.7 points to 369.5, which was 2.8 points below the five-year average.

Traders will continue to closely follow Midwest weather the next couple days before focus shifts to USDA’s Acreage and quarterly Grain Stocks reports June 30. Overnight, December corn futures rose as high as $6.66, after dropping 21 cents Monday to $6.53, the contract’s lowest close since March 29.

SOYBEANS: USDA rated 65% of the U.S. soybean crop good-to-excellent as of Sunday, down from 68% a week earlier and contrary to expectations the number would hold unchanged. Based on the Pro Farmer CCI, the soybean crop declined 5.4 points to 360.6, which was still 0.4 point above average.

November soybeans overnight rose as high as $14.54 1/2, after gaining 8 1/2 cents Monday to $14.32 3/4.

WHEAT: The winter wheat harvest was 41% complete as of Sunday, up from 25% a week earlier and 6 percentage points ahead of the normal average. Harvest exceeded expectations for 40% completion. Also, USDA rated 59% of the spring wheat crop good-to-excellent, unchanged from the previous week. Based on the Pro Farmer CCI, the spring wheat crop slipped 3.8 points to 360.4, though that was still 17.9 points above the five-year average for the date.

September SRW wheat overnight rose as high as $9.43 after dropping 19 cents Monday to $9.17 1/2, the contract’s lowest closing price since Feb. 28

 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-weaker

 

CATTLE: Cattle futures may face a mixed open as the market waits for cash trade to develop. Bullish USDA Cattle of Feed numbers failed to generate much buying enthusiasm Monday, which may embolden sellers. Last week’s average cash cattle price firmed 88 cents to $144.55, though there remained a wide discrepancy between trade in the Southern Plains and the northern region. Traders expect roughly steady prices in the Southern Plains again this week, while the northern market is likely to remain firmer given tight market-ready supplies. Choice beef cutout values rose $3.70 to a two-week high of $268.68 on movement of 99 loads. August live cattle rose 10 cents Monday to $133.475. August feeder cattle rose $1.625 at $174.125.

HOGS: Lean hog futures may face followthrough pressure from Monday’s weak close and beliefs the cash market is reaching a peak. The CME lean hog index is 45 cents higher to $111.35 (as of June 24), the highest since August. After Monday’s declines, July futures moved to a slight discount to the cash index, while August hogs finished nearly $6.50 below the cash index, a price structure that signals traders sense a seasonal peak in the cash index is near. Pork cutout values fell $3.17 Monday to $109.03, led by a drop of nearly $15 in bellies. Movement was stronger at 311.5 loads. August lean hogs fell $1.90 Monday to $104.875.

 

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