Ahead of the Open | March 25, 2022

GRAIN CALLS

Corn: 1 cent lower to 2 cents higher.

Soybeans: 2 to 5 cents lower.

Wheat: 5 to 10 cents higher.

GENERAL COMMENTS: Soybean futures faced mild pressure overnight but are still poised for a weekly gain. Wheat futures rallied late to end the overnight session firmer. Corn finished narrowly mixed. Malaysian palm oil futures ended higher and posted a 7.0% gain for the week on tight supplies. Nymex crude oil futures are around $3 lower. U.S. stock index futures signal a firmer open, while the U.S. dollar index is down around 100 points this morning.

USDA reported a daily sale of 132,000 MT of soybeans for delivery to China during the 2021-22 marketing year. Today’s announcement follows two daily soybean sales announcements earlier this week totaling 558,000 for delivery to “unknown destinations” for 2021-22.

Fertilizer exports from Russia have tumbled sharply and prices are skyrocketing, the Wall Street Journal reported, and the impact is reaching farmers from South America to Asia. Fertilizer prices were already high before the war, and the commodity is about three to four times costlier now than in 2020. That has far-reaching consequences for farmer incomes, agricultural yields and food prices.

President Joe Biden said the world will experience “real” food shortages because of Russia’s invasion of Ukraine, and production increases were a subject of discussions at a Group of Seven meeting Thursday. “It’s going to be real,” Biden said in Brussels. “The price of the sanctions is not just imposed upon Russia. It’s imposed upon an awful lot of countries as well, including European countries and our country as well.”

European oilseed crushers and vegoil refiners and bottlers are replacing sunflower oil with the rapeseed variety to make up for the loss of Ukrainian oil-crop exports, industry group FEDIOL said. Processors are also using palm, soybean and rapeseed as replacements in frying oil.

The amount of U.S. winter wheat considered in drought conditions decreased to 70% for the week ended March 22, according to the U.S. Drought Monitor noted on Thursday. USDA rated winter wheat drought as 21% “moderate,” 31% “severe,” 16% “extreme” and 2% “exceptional."

Farmers in Mato Grosso, Goias, Sao Paulo, Minas Gerais and the Matopiba region of Brazil probably planted more safrinha corn than initially projected, according to Paulo Molinari, an analyst with the ag consultancy Safras & Mercado. Additionally, favorable weather conditions would likely increase Brazil’s corn yields. As a result, the consultancy next week may increase its projection of the safrinha corn crop to more than 83 MMT. The firm is estimating a record 115.7 MMT for Brazil’s total corn crop. Brazil’s corn exports could increase to 34.5 MMT, up 66% from 2020-21.

Canada, the world’s top canola grower and exporter, is crushing the smallest amount of the oilseed in more than four years, in another sign that vegetable oil prices may keep rising. In February, the processing of canola in Canada dropped 21% from a year ago to 629,153 MT, according to Statistics Canada data. That’s the smallest monthly crush since 2017.

Shipments along the Mississippi, Illinois, Ohio and Arkansas rivers increased 22% in the week ended March 19 from the previous week, according to USDA’s weekly grain transportation report. Barge shipments of corn rose 19% from the previous week; soybean shipments jumped 23%.

CORN: May corn traded both sides of unchanged overnight after falling 9 1/2 yesterday cents to $7.48 1/4. The lead contract is up from $7.41 3/4 at the end of last week but around the middle of the range that’s held for nearly three weeks. Trader focus is shifting toward USDA’s March 31 Prospective Plantings Report, which is expected to U.S. corn plantings at 92 million acres, based on a Bloomberg survey of analysts. The acreage projection would be down 1.4 million acres from last year.

SOYBEANS: May soybeans fell as low as $16.84 3/4 overnight after dropping 18 cents yesterday to $17.00 3/4. The contract is still up from $16.68 at the end of last week. U.S. soybean plantings in 2022 are expected to increase 1.7 million acres to 88.9 million acres, based on the Bloomberg survey.

WHEAT: May SRW wheat fell as low as $10.64 3/4 before rebounding to a gain of around 9 cents at the close of overnight trade. The lead contract is up from $10.63 3/4 at the end of last week. Russia/Ukraine disruptions may keep a floor under the market but appear to be priced in for now.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firm

CATTLE: Live cattle futures face conflicting forces to end the week, with cash trade coming in weaker than expected but wholesale beef extending a three-week upturn. Traders await USDA’s monthly Cattle on Feed Report after today’s close. The report is expected to show record March 1 inventories and a year-over-year increase of about 6.1% in February placements, based on a Reuters survey. Marketings are expected to rise about 4.0% from February 2021. Choice beef cutout values gained 81 cents yesterday to $262.41, the highest in over a month. Movement totaled 129 loads. Live steers averaged $138.81 through yesterday morning, down 29 cents from last week's average.

June live cattle rose 97.5 cents yesterday to $136.95, down from $137.075 at the end of last week. May feeder cattle rose 70 cents to $166.50, a three-week closing high.

HOGS: Lean hog futures may gain support from wholesale pork strength and a rebound in the CME lean hog index, which is up 29 cents to $101.50, ending a two-day skid but still $1.275 under April futures. Pork carcass cutout values rose $1.62 yesterday to a three-week high of $108.01, led by a gain of over $11 in hams. Movement totaled 257 loads, the lowest daily figure so far this week. Traders are looking ahead to USDA’s Hogs & Pigs Report on March 30. June futures fell 90 cents yesterday to $122.075, up from $116.075 at the end of last week.

The U.S. is shipping pork at a record clip to Mexico as hog diseases are shrinking the Mexican hog herd. Outbreaks of porcine epidemic diarrhea virus (PEDV) and porcine reproductive and respiratory syndrome (PRRS) have been killing pigs in Mexico. Some Mexican farmers are also shrinking herds because of high feed costs.