Ahead of the Open | March 3, 2022

GRAIN CALLS

Corn: Steady to 9 cents higher.

Soybeans: 13 to 18 cents higher.

Wheat: 30 to 65 cents higher in old-crop.

GENERAL COMMENTS: Winter wheat futures soared above $11 overnight, with the SRW market reaching a 14-year high, on concerns the escalating Russia/Ukraine conflict will disrupt shipments from two of the world’s top grain suppliers. Corn and soybean futures also firmed. Nymex crude oil futures topped $116 for the first time since 2008 but turned lower this morning on talk of a deal to allow Iran to boost exports. U.S. stock index futures signal a slightly firmer open this morning and the U.S. dollar index strengthened around 200 points.

China continues to buy U.S. soybeans and there are signals it and others are looking at U.S. corn. Traders note the freight market and basis trade would imply significant corn business has or is taking place. USDA reported a daily soybean sale of 132,000 MT to China equally divided between the 2021-22 and 2022-23 marketing years. USDA also reported a daily corn sale of 337,000 MT to “unknown destinations” in 2021-22. Since Jan. 28, USDA has reported a combined 5.596 MMT of soybean sales to China or unknown destinations, a more than seven-fold increase from the pace the previous month.

Russian and Ukrainian negotiators meet in Belarus today for peace talks as the war enters its second week. Ukrainian officials said 2,000 civilians have died in the Russian invasion, as Moscow bombarded residential areas. The capture of the port of Kherson, a city of some 300,000 people, marked the expanding reach of Russian forces across the south. Kherson is home to a port on both the Black Sea and Dnieper river. U.S. officials think it could take an invading Russian military four to six weeks to achieve a “tactical seizure” of Ukraine. That includes one week to surround the capital city of Kyiv, and another 30 days of violence and threats before it falls, according to CBS News.

The Biden administration may have to open the Conservation Reserve Program (CRP) to cropping this year because of grain shortages that could result from the Russian invasion of Ukraine, University of Illinois economist Scott Irwin tweeted. “I am convinced it is going to be the biggest supply shock to global grain markets in my lifetime,” Irwin said, adding that the world “desperately needs additional acres for grain production in 2022.”

India’s palm oil imports in 2021-22 are forecast at 7.6 MMT, down from 8.9 MMT in 2020-21, according to the head of the Indian Vegetable Oil Producers’ Association, as tight supplies and record prices slow use. China’s palm oil imports this year are expected to total 6.7 MMT, up from 6.6 MMT in the previous year, according to the chief representative for the Malaysian Palm Oil Council in China.

Taiwan purchased 130,000 MT of U.S. and/or Argentine corn. South Korea purchased 207,000 MT of optional origin corn but rejected offers for 65,000 MT of feed wheat. Jordan tendered to buy 120,000 MT of milling wheat after passing on a similar tender on Wednesday.

CORN: May corn futures overnight rose as high as $7.52, a contract high for the second day in a row, while March corn hit $7.66 1/4, the highest for a nearby contract since May 2021. Based on continuation charts, bulls will target the May 2021 high at $7.75. Net weekly U.S. corn sales totaled 485,100 MT for 2021-22, down 53% from the previous week and down 47% from the average for the previous four weeks. Expectations ranged from 600,000 MT to 1.2 MMT for 2021-22. Weekly 2022-23 corn sales totaled 222,800 MT.

SOYBEANS: May soybeans rose as high as $16.99 overnight after dropping 27 cents yesterday to $16.63. May soyoil posted a contract high for the third day in a row. Net weekly soybeans sales totaled 857,000 MT for 2021-22, down 31% from the previous week and down 34% from the prior four-week average. Net weekly sales totaled 1.386 MMT for 2022-23, including 1.26 MMT for China. Sales were expected to range from 600,000 MT to 1.05 MMT for 2021-22 and 600,000 MT to 1.3 MMT for 2022-23.

WHEAT: May SRW futures overnight reached $11.34, a contract high for the third day in a row. May HRW also posted a contract high for the third day in a row. Nearby SRW climbed to the highest intraday price since the market surpassed $12 in March 2008. HRW and SRW futures price limits will remain at 75 cents today.

Net weekly wheat sales totaled 300,000 MT for 2021-22, down 42% from the previous week but up 54% from the prior four-week average. Net sales totaled 69,800 MT for 2022-23. Sales were expected to range from 200,000 to 650,000 MT for 2021-22 and 50,000 to 275,000 MT for 2022-23.

LIVESTOCK CALLS

CATTLE: Steady-weak

HOGS: Steady-mixed

CATTLE: Live cattle may extend a recent slide to five-week lows on signs of a cash market top and concerns global turmoil may hurt beef demand. Cash sources reported light cash cattle trade at $140 to $141 in the Southern Plains yesterday, down $2 to $3 from last week. Some feedlots sold amid continued pressure on front-month cattle futures, though most are still holding out for steady or firmer prices. Choice grade cutout values fell 96 cents yesterday to an 11-month low at $255.72. Movement was strong at 145 loads. Net weekly U.S. beef sales totaled 23,800 MT for 2022, up 64% from the previous week and up 23% from the prior four-week average.

April live cattle fell 42.5 cents yesterday to $140.10, the contract’s lowest closing price since Jan. 25. April feeder cattle rose $3.20 at $163.00.

HOGS: Lean hog futures may extend sideways trade amid ideas the market peaked in late February. The CME lean hog index up 18 cents to $99.84, a six-month high. April futures are trading at a $6.46 premium to the index, reflecting expectations the cash index will continue to rise. Historically, it’s common for hog prices to reach an intermediate peak in mid-February, then trade mostly sideways to lower into early April. Pork cutout values rose 23 cents yesterday to $108.42, after dropping the three previous days. Movement totaled 242.6 loads. Slaughter so far this week was an estimated 1.414 million head, down 9,000 head from the same period last week and down 69,000 head from the same period in 2021. Net U.S. pork sales totaled 42,200 MT for 2022, up 59% from the previous week and up 80% from the prior four-week average.