Ahead of the Open | March 14, 2022
GRAIN CALLS
Corn: 7 to 10 cents lower.
Soybeans: Steady to 5 cents lower.
Wheat: 15 to 35 cents lower.
USDA reported a daily sale of 159,000 MT of corn to Mexico for the 2021-22 marketing year.
The Russia/Ukraine war will continue to be the primary focus of U.S. agriculture markets this week. The U.S. and China will hold the first high-level, in-person talks since Russia’s full invasion of Ukraine, as the Biden administration continues to try to enlist Beijing to exert influence on its neighbor to end the crisis. National Security Adviser Jake Sullivan will meet in Rome today with China’s top diplomat, Communist Party Politburo member Yang Jiechi. Ukraine said it wants to discuss a ceasefire, immediate withdrawal of troops and security guarantees with Russia today after both sides reported progress during the weekend, even as fierce Russian bombardments continued.
Ukraine President Volodymyr Zelenskyy is urging farmers to sow as many fields as possible to protect the food supply. The country should organize a full-fledged sowing campaign in all of its territory “to the extent that’s possible,” Zelenskyy said. One of Ukraine’s largest agricultural companies, UkrLandFarming, said several company managers were killed in Sumy in northern Ukraine, and in Kyiv.
Russia is gradually resuming wheat exports from its Black Sea ports while navigation in the Azov Sea remains restricted, analysts said. “Exports are ongoing from all the five Black Sea (grain export) terminals,” IKAR agriculture consultancy said in a note. Prices for Russian wheat remain extremely volatile, IKAR said, adding that for wheat with 12.5% protein content from the Black Sea ports they were at $415 per MT free on board (FOB) on March 11.
Russia’s wheat export tax for March 16-22 will be $86.30 per MT, based on an indicative price of $323.30 per MT. The wheat export tax has dropped nine straight weeks and is down from the peak rate of $98.20 per MT in mid-January but is still 207% higher than the initial rate of $28.10 at the beginning of June when Russia started using the sliding scale.
Brazilian farmers had sown 94% of their safrinha corn area through the end of last week, consultancy AgRural said, as growers rush to plant their crop within the ideal window. This marks a 20-percentage point increase for sown area from the same period last year, AgRural said.
USDA confirmed highly pathogenic avian influenza (HPAI) in a commercial layer flock in Taylor County, Iowa, according to the Iowa Department of Agriculture and Land Stewardship (IDALS), though the confirmation has not yet been listed on the Animal and Plant Health Inspection Service (APHIS) website. The agency also confirmed HPAI in a backyard mixed species flock in Franklin County, Kansas, and a non-commercial backyard flock (non-poultry) in Mclean County, Illinois.
Iraq tendered to buy 50,000 MT of optional origin wheat.
CORN: May corn futures fell as low as $7.46 1/2 overnight after ending last week at $7.62 1/2, up 8 1/4 cents for the week and the fifth straight weekly advance. Corn market direction this week will hinge on the Russia/Ukraine conflict and wheat. Further weakness in wheat may prompt liquidation from large speculators, which hold a sizable net long in corn.
The managed money net long in corn rose 19,562 contracts during the week ended March 8 to 368,784 futures and options contracts, the highest since Feb. 1, according to the Commodity Futures Trading Commission data. Corn market technicals are bullish, though May futures failed last week to take out the March 4 contract high at $7.82 3/4, which may signal further sideways trade.
SOYBEANS: May soybeans fell as low as $16.67 overnight after ending last week at $16.76, up 15 1/2 cents for the week. Overnight strength in part reflected Argentina's decision to halt export registrations of soy products, which could tighten oilseed supplies already squeezed by drought. Argentina said yesterday it has halted registration of export sales of soyoil and soymeal. One key to soy complex price direction this week will be whether China continues a buying binge it began in late January.
The managed money net long in soybean futures and options fell for the second straight week, dropping 4,007 contracts during the week ending March 8 to 171,714 contracts, according to CFTC data.
WHEAT: May SRW futures fell as low as $10.68 1/2 overnight after ending last week at $11.06 1/2, down $1.025 for the week. May HRW futures fell as low as $10.56 1/4 after losing $1.25 1/4 last week. Wheat futures may see further price volatility as traders monitor the Russia/Ukraine conflict, but last week’s sharp runup followed by a steep selloff suggests the market has put in a major top.
Large speculators shifted to a net long in SRW wheat for the first time since early December as prices rallied earlier this month. The managed money net long was 20,208 futures and options contracts as of March 8, compared to a net short of 18,053 contracts a week earlier.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-firmer
CATTLE: Live cattle futures may see followthrough buying from indications the market established a near-term low last week, while weakness in corn prices may support the feeder market. Cattle futures stabilized after dropping early last week to four-month lows on support from firmness in wholesale beef and an outlook for tight animal supplies. Choice beef values gained 77 cents Friday to $254.71, up 38 cents from the end of the previous week. USDA-reported live steers averaged about $138.28 last week, down $2.22 from the previous week's average and the second straight weekly decline.
April live cattle rose $1.40 Friday to $137.30, a gain of $1.525 for the week. April feeder futures surged $1.725 to $157.975, up 72.5 cents for the week.
