Ahead of the Open | March 1, 2022

GRAIN CALLS

Corn: 20 to 32 cents higher.

Soybeans: 43 to 62 cents higher.

Wheat: 32 to 49 cents higher.

GENERAL COMMENTS: Winter wheat futures surged near 14-year highs overnight, leading corn and soybeans higher amid concerns Russia’s war with Ukraine will lead to protracted disruptions to global grain trade. Nymex crude oil futures jumped more than $5 to surpass $100 a barrel for the first time since August 2014. U.S. stock index futures point to a lower open this morning and the U.S. dollar index strengthened more than 300 points.

USDA reported a daily soybean sale of 264,000 MT for delivery to China during the 2022-23 marketing year. Since Jan. 28, USDA has reported a combined 4.934 MMT of soybean sales to China or unknown destinations, a more than seven-fold increase compared to the sales the previous month.

Delegations from Russia and Ukraine agreed to continue negotiations after a meeting on the border with Belarus ended yesterday with few signs of progress. Russian forces are getting in position to encircle the Ukrainian capital Kyiv, U.S. officials warned. Kharkiv, Ukraine’s second-largest city came under intense missile fire yesterday.

Palm oil has become the costliest among the four major edible oils for the first time as buyers rush to secure replacements for sunflower oil shipments from the top exporting Black Sea region that were disrupted by Russia’s invasion of Ukraine. Palm oil’s record premium over rival oils could squeeze price-sensitive Asian and African consumers already reeling from spiraling fuel and food costs, and force them to curtail consumption and shift to rival soyoil, dealers said. Crude palm oil (CPO) is being offered at about $1,925 a MT, including cost, insurance and freight (CIF), in India for March shipments, compared with $1,865 for crude soybean oil. The Black Sea accounts for 60% of world sunflower oil output and 76% of exports. Ports in Ukraine will remain closed until the invasion ends.

Crop Consultant Dr. Michael Cordonnier made no changes to his South American crop estimates, as weather the past couple weeks has improved enough to stabilize crops. In Brazil, Cordonnier estimates production at 124 MMT for soybeans and 112 MMT for corn. Cordonnier estimates Argentina’s crops at 39 MMT for soybeans and 49 MMT for corn. His Paraguay soybean crop stands at 5 MMT. 

Global agricultural commodities trader Bunge Ltd said continued conflict in Ukraine and stinging sanctions on Russia could have an “adverse effect” on its operations in the region. Bunge and rival agribusinesses Archer-Daniels-Midland and Cargill suspended operations in Ukraine last week after Russia invaded. But none have stopped their business in Russia so far. The conflict is threatening to further tighten global grain and edible oils supplies, likely exacerbating soaring food inflation.

USDA is expected to report January soybean crush totaling 193.7 million bu., which would be down 4.5 million bu. (2.3%) from December’s record and 2.8 million bu. (1.4%) below last year. Corn-for-ethanol use is expected to decline 13.8 million bu. (2.8%) from December to 472 million bu., though that would be up 14% from last year.

Taiwan tendered to buy 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South America. Japan is seeking 83,136 MT of U.S. wheat in its weekly tender. Tunisia tendered to buy 75,000 MT of optional origin durum wheat.

CORN: May corn futures gapped higher overnight rose as high as $7.24 1/2, topping the previous contract high of $7.16 1/4 reached Feb. 24. Corn will continue to follow wheat and speculative money flow. Based on continuation charts, bulls will be targeting the July high at $7.50 1/2 and the May high at $7.75.

SOYBEANS: May soybeans rose overnight as high as $16.95 3/4, surpassing the intraday highs of the previous two sessions but short of the contract high of $17.59 1/4 reached Feb. 24. Concerns the Russia/Ukraine war will disrupt vegetable oil trade will keep prices elevated.

WHEAT: May SRW futures rose to a contract high at $9.84 overnight while nearby March touched $9.77, the highest for a nearby contract since April 2008. Volatile trading will likely continue as the market closely follows the Russia/Ukraine sitaution. The two countries combined account for nearly 30% of global wheat exports.

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-mixed

CATTLE: Cattle futures may extend yesterday’s declines as sharply higher corn prices pressure the feeder market and amid concerns global turmoil may hurt demand for beef. While cash cattle strengthened for the fourth consecutive week, wholesale markets have extended a protracted slump, raising concern over demand. Choice beef cutout values fell 76 cents yesterday to an 11-month low at $257.51. Movement was light at 85 loads. Last week’s average live steer price was $143.22, up 86 cents from a week earlier. Cash sources expect the cash market to continue to strengthen into spring, meaning futures are undervalued, though that may not matter as long as outside markets remain such a major price determinant.

April live cattle fell 50 cents yesterday to $141.425, the contract’s lowest close since $140.10 on Jan. 25. April feeder cattle tumbled $2.75 to $162.00, the lowest close since Nov. 12.

HOGS: Lean hog futures may face technical pressure from a chart breakdown the past two weeks but declines may be limited by firm cash. The CME lean hog index is up 69 cents today to $99.09, near a six-month high. Pork cutout values fell yesterday $1.05 to $112.27, led by a drop of nearly $12 in primal hams. Movement totaled 274 loads. April hogs finished Monday $4.41 below the cash index. April lean hog futures fell 17.5 cents yesterday to $103.50, the contract’s lowest settlement since $102.325 on Feb. 14.