Ahead of the Open | March 31, 2022

GRAIN CALLS

Corn: 2 to 4 cents higher

Soybeans: Steady to 2 cents higher

Wheat: Winter wheat 3 to 6 cents higher; spring wheat 5 to 8 cents higher

GENERAL COMMENTS: Price action was light and two-sided overnight, though grain and soy futures firmed into the end of the session, which spill over into the start of daytime trade. But price action is likely to be light as traders await USDA’s Prospective Plantings and Grain Stocks Reports at 11 a.m. CT. Front-month U.S. crude oil futures are down around $6 this morning and the U.S. dollar index is more than 300 points higher, which could limit buying in grain and soy markets.

March planting intentions have received much of the pre-report hype, but March 1 grain stocks could end up being the data that moves markets. Based on the average pre-report estimates from a Reuters survey, corn acres are expected to decline about 1.4 million acres to 92.0 million acres and soybean area is likely to expand by about 1.5 million acres to 88.7 million acres. But the range of estimates is wide for both. Traders also expect all wheat acres to rise to nearly 47.8 million acres, including 34.4 million acres of winter wheat, 11.8 million acres of other spring wheat and 1.7 million acres of durum. Cotton seedings are expected to increase from last year to 12.0 million acres. Traders expect March 1 stocks at 7.877 billion bu. for corn, 1.902 billion bu. for soybeans and 1.045 billion bu. for wheat, but the range of estimates is wide for all three.

The Biden administration is considering temporarily removing restrictions on summer sales of E15 gasoline as a way to lower fuel costs for U.S. consumers, three sources familiar with the matter told Reuters. EPA said it could not comment on whether it was considering the move, but said it was “considering a range of options across the administration to help mitigate impacts from Russia’s actions on American consumers.” President Joe Biden is expected to deliver remarks today that could total 180 million barrels of oil being released from the Strategic Petroleum Reserve (SPR), Bloomberg reported, as the administration attempts to lower gasoline prices for consumers.

Russia will ban exports of sunflower seeds from April 15 until the end of August and impose an export quota of 1.5 MMT on sunflower oil to avoid shortages and ease pressure on domestic prices, its ag ministry said. There will also be a 700,000-MT export quota for sunflower meal, the misnistry added.

China’s official purchasing managers index (PMI) fell to 49.5 in March 2022 from 50.2 in the prior month. This was the first contraction in factory activity since last October, reflecting the impact of widespread Covid-19 outbreaks in key cities, including Shanghai and Shenzen. Beijing will roll out policies to stabilize the economy as soon as possible, state media reported, as the downward pressure in the economy increased. The Caixin/Markit PMI will be released tonight and is also expected to show contraction in China’s smaller, privately owned factories.

Export sales for the week ended March 24:

Corn: 636,900 MT for 2021-22, down 35% from the previous week and 53% from the four-week average; 286,800 MT for 2022-2023. Traders expected old-crop sales between 600,000 MT and 1.1 MMT; new-crop sales between 0 and 300,000 MT.

Beans: 1.306 MMT for 2021-22, up sharply from the previous week and 11% from the four-week average; 54,000 MT for 2022-23. China bought 593,200 MT of U.S. old-crop soybeans during the week. Traders expected old-crop sales between 400,000 MT and 1.4 MMT; new-crop sales between 0 and 500,000 MT.

Wheat:  95,000 MT for 2021-22, down 39% from the previous week and 58% from the four-week average; 81,300 MT for 2022-23. Traders expected old-crop sales between 50,000 and 300,000 MT; new-crop sales between 150,000 and 500,000 MT.

CORN: May corn futures traded within Wednesday’s range overnight. Key near-term support is Tuesday’s low at $7.13 1/2. Near-term resistance extends from $7.70 1/2 to the contract high at $7.82 3/4.   

SOYBEANS: May soybeans traded within yesterday’s range in quiet trade overnight. Near-term support is Tuesday’s low at $16.22. Resistance is in the $17.30 to $17.35 area.   

WHEAT: May SRW wheat futures also held within Wednesday’s range overnight. Key near-term support is Tuesday’s low at $9.72. A close above $10.31 3/4 would signal a failed downside breakout on Tuesday.

LIVESTOCK CALLS

CATTLE: Choppy to lower

HOGS: Higher

CATTLE: Live cattle futures are expected to open with a slightly weaker tone, though strength in the hog market should help limit seller interest. Some feedlots in the Southern Plains moved cattle at $138 prices on Wednesday, which was steady with last week’s trade in the region. But most feedlots passed on those prices in hopes of higher bids. Cash trade hadn’t started in the northern dressed market, with most feedlots looking for at least $1 higher bids. Boxed beef prices were sharply higher Wednesday, with Choice up $2.04 and Select $2.62 higher, though movement stayed light at only 85 loads. Retailers remain selective buyers of beef. Weekly beef export sales at 23,000 MT were down 76% from the previous week and 39% from the four-week average. China (7,100 MT), Japan (5,300 MT) and South Korea (4,600 MT) were the primary buyers.

HOGS: Lean hog futures will be supported by Wednesday’s bullish Hogs & Pigs Report. The data showed herd contraction was greater than expected and producers are indicating no signs they will expand anytime soon. USDA estimated the U.S. hog herd at 72.2 million head as of March 1, down 1.7 million head (2.3%) from year-ago and 837,000 head less than the average pre-report estimate implied. The market hog inventory declined 2.4% and the breeding herd dropped 1.9%. That was the smallest March hog herd and market hog inventory since 2018. Meanwhile, the cash hog index continues to rise and is up another 10 cents to $103.66. April hogs continue to trade above that level, which may limit some of the buyer interest in the lead contract as it approaches expiration. Weekly pork export sales at 27,600 MT increased 19% from the previous week but were down 14% from the four-week average. Mexico was the lead buyer at 14,300 MT. China bought only a net 600 MT of U.S. pork for the week.