TFM Midday Update 06-15-2022

CORN

Jul corn up 7 @ 7.76
Corn futures are higher this morning as equity markets move higher ahead of the Federal Reserve’s rate hike decision, in which many believe could be as high as a 75-basis point increase
Macro-economic factors are holding a lot of sway in the ag contracts lately which makes it difficult to assess the underlying fundamentals
Heat and dryness are forecast over the Midwest for the next two weeks with temperatures roughly 3 to 4 degrees above normal
Basis has strengthened with cash sales having slowed, and the DTN National Corn Basis Index has rallied to 10.7 cents over the board, the highest level since September 2021

Jul soybeans down 5 @ 16.94
Soybeans and soybean meal are higher, while soybean oil is following crude oil lower
After yesterday’s selling, soybean oil closed below its 50-day moving average for the first time since December 31, 2021
The July soybean board crush is trading at 70 cents per bushel, just off contract lows and the lowest level on a front month basis since June 2021
The Brazilian real has been weak vs the US Dollar Index, encouraging farmer selling in Brazil
Private exporters reported the cancellation of sales of 100,000 mt of soybeans for delivery to unknown destinations for the 21/22 marketing year

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Jul wheat up 5 @ 10.55, Jul KC down 2 @ 11.41, & Jul MNPLS down 4 @ 12.05
Wheat opened lower but has gained modestly after President Biden said that the US is working on a plan to get wheat through other countries by rail and that temporary silos will be built on the borders of Ukraine
Hot, dry weather the next two weeks in the Southern Plains should allow harvest progress to accelerate with most of Oklahoma cutting, while test cutting is beginning in Kansas
Traders continue to wonder how much premium in current prices is due to inflation and what prices might look like if inflation is gotten under control
Wheat and crude oil should be good indicators for when inflation concerns have peaked, given the rising interest rate environment

Jun LC up 2.275 @ 137.475 & Aug FC up 2.125 @ 173.425
Cattle are higher following strong cash trade with bids at 138 in the South and talk of regional North trade ranging from 145 to 149
Heat has been a supporting factor which caused a 10k head loss in Kansas which represented 8% of yesterday’s kill of 122k head
The declining cutout is sparking fears of decreased demand as higher prices impact consumers
Choice cuts down 1.10 and select down 0.63
Cattle slaughter projected at 125K
CME Feeder Cattle Index for 6/14: down 0.11 @ 160.18

Jul hogs up 2.125 @ 108.75 & Jul pork cutout up 1.450@ 112.975
Hogs are higher thanks to a big jump in cash as the packers aggressively purchased hogs yesterday, but the cutout moved in the other direction and lost 2.71, erasing yesterday’s gain
July has taken over as the lead month, carrying a discount to the index
Slaughter pace has been lagging with a large revision lower from the original stated number on Monday, and packers will likely not be very aggressive today
National Direct Afternoon report has cash up 6.09
Hog slaughter projected at 472K
CME Lean Hog Index for 6/15: up 0.73 @ 108.13

Amanda Brill