GRAIN CALLS
Corn: Steady to 1 cent lower.
Soybeans: 1 cent lower to 3 cents higher amid bull spreading.
Wheat: HRW and SRW wheat 5 to 10 cents lower, spring wheat 1 to 3 cents higher.
GENERAL COMMENTS: Winter wheat futures fell overnight while corn and soybeans were mixed ahead of USDA’s monthly Supply and Demand update at 11 a.m. CT. Malaysian palm oil futures sank 4.4% to a two-month low after Indonesia eased export rules. Front-month U.S. crude oil futures are near unchanged after earlier hitting $122.75. U.S. stock index futures signal a weaker open, while the U.S. dollar index is more than 600 points higher this morning.
The Consumer Price Index surged a higher-than-expected 8.6% in May from a year ago, the fastest increase since 1981, the Bureau of Labor Statistics reported. Analysts expected a year-over-year increase of about 8.3%. Excluding volatile food and energy prices, so-called core CPI was up 6%, slightly higher than expectations for 5.9%.
USDA is expected to fine tune its old- and new-crop balance sheets, with just minor changes expected to U.S. and global ending stocks. USDA will also update its U.S. winter wheat production estimates, though it typically makes minor adjustments in June. A potential wild card is the U.S. corn yield projection. In May, USDA cut its corn yield projection by 4 bu. per acre from trendline due to planting delays. As of June 5, the planting pace had surpassed the five-year average. That could prompt USDA to raise its yield some, though there’s no precedent of that happening in June, and we doubt there will be an upward revision.
Malaysian palm oil futures ended the week with a decline of nearly 8% after top producer Indonesia further eased rules to allow more companies to export palm oil, aiming to ease bottlenecks and swelling inventories caused by an export ban and regulatory changes implemented to maintain domestic supply. The country allowed palm oil exports to resume on May 23, but confusion over procedural issues and new requirements for firms to join a government bulk cooking oil distribution program have limited shipments. Companies that have not joined the program will be allowed to ship palm oil if they pay a $200-per-MT charge on top of the export tax. Indonesia aims to export at least 1 MMT of palm oil products by July 31.
The condition of France’s soft wheat crop deteriorated for a sixth consecutive week. The country’s ag ministry rated the crop 66% good/excellent, down a point from the previous week. Crop ratings have plunged 23 percentage points since the beginning of May.
China will sell another 500,000 MT of imported soybeans from its state reserves on June 17. Beijing has been releasing the oilseed from its reserves in weekly sales in an effort to boost supplies in the domestic market. Demand for the soybean reserves has been relatively low, however.
The national average price at the pump reached $5 a gallon on Thursday, according to price-tracking site GasBuddy. The average price of regular gas is about 26 cents higher than last week and nearly $2-a-gallon higher compared with this time last year, according to AAA. Gasoline prices could reach a national average of $6.20 a gallon by August, JPMorgan Chase estimated. Drivers are buying fewer gallons on each visit to gas stations but making more frequent trips to fuel up.
CORN: USDA is expected to lower its estimate for U.S. corn ending stocks for 2021-22 by about 3 million bu. to 1.437 billion bu. and cut projected 2022-23 ending stocks about 20 million bu. to 1.340 billion bushels. July corn reached $7.74 overnight and is on track for its first weekly gain in six weeks after ending last week at $7.27.
SOYBEANS: USDA is expected to lower its projection for 2022-23 U.S. soybean ending stocks by about 3 million bu. to 307 million bushels. July soybeans overnight reached $17.75 1/2 and is poised for its fourth weekly gain in the past five weeks after ending last week at $16.97 3/4.
WHEAT: July SRW futures overnight fell as low as $10.61 but is still up from $10.40 at the end of last week. USDA is expected to show slight increases in estimates for U.S. and global 2021-22 ending stocks and a near-unchanged winter wheat crop estimate.
LIVESTOCK CALLS
CATTLE: Steady-firm
HOGS: Steady-weak
CATTLE: Live cattle futures are heading for a sharp weekly gain on cash market strength. USDA-reported live steers averaged $140.30 through Thursday morning, up more than $2.00 from last week’s average. With feedlots current, packers became more aggressive with cash bids than traders anticipated. As long as feedlots retain the upper hand in cash negotiations, the market will stay fundamentally supported. August live cattle fell 32.5 cents Thursday to $137.20 but is still up from $133.85 at the end of last week.
HOGS: Lean hog futures may face followthrough pressure from losses the previous two sessions and are on track for a sharp weekly drop amid expectations the cash market has peaked. The CME lean hog index is down 17 cents today to $107.31 (as of June 8). June hogs finished 33.5 cents below that level, while the July and August contracts ended with discounts of $2.31 and $4.21, respectively. Pork cutout values rose $4.62 Thursday to $109.09.