Ahead of the Open | April 1, 2022
GRAIN CALLS
Corn: 3 cents lower to 3 cents higher; bear spreading
Soybeans: 2 to 5 cents lower
Wheat: 15 to 25 cents higher, led by spring wheat
USDA reported daily corn sales of 136,000 MT to unknown destinations for 2021-22.
Talks between Russia and Ukraine are set to continue today. Russia agreed to hand back control of the highly contaminated Chernobyl nuclear plant to Ukraine. But NATO said Russian troops are repositioning — not withdrawing — in Ukraine. Russian leader Vladimir Putin said the time is not right for a ceasefire, according to Italy, which means a war of attrition. Russian forces are now likely to concentrate on eastern regions of Ukraine. Observers say the move could presage an attempt to split the county in two and to give Russia a route to Crimea, which it seized in 2014, and a path through Ukraine to the Black Sea. Many believe Ukraine and Russia could be locked in fighting for months if not years.
The Russian government lifted the ban on grain exports to Eurasian Economic Union (EAEU) countries, Kyrgyz National News Agency (KABAR) reported. It said this include wheat and olive seeds, rye, barley, corn and burdock corn. Those products can be exported to EAEU countries with a permit issued by Russia’s ag ministry.
Russia’s tax on wheat exports for April 6-12 surged to $96.10 per metric ton, up from the current rate of $87.00, based on an indicative price of $373.30.
U.S. non-farm payrolls increased 431,000 in March, down from upwardly revised figures of 750,000 in February and 504,000 in January. The unemployment rate dropped 0.2 point to 4.6%. Average hourly earnings rose 13 cents (0.4%) in March and jumped 5.6% over the past 12 months. The bond market is pricing in a series of 50-basis-point interest rates amid a strong jobs market and surging inflation.
China’s factory activity slumped at the fastest pace in more than two years in March due to Covid restrictions and economic fallout from the war in Ukraine. The Caixin/Markit Manufacturing purchasing managers index (PMI), which measures activity by smaller, privately owned factories, fell to 48.1 in March from 50.4 in the previous month – the steepest rate of contraction since February 2020. On Thursday, China’s official PMI showed contraction in larger, state-owned factories for the first time since October 2021.
CORN: After a failed downside breakout earlier this week, May corn futures remain within the month-long sideways trading range. Tuesday’s low at $7.13 1/2 is critical near-term support. Tough resistance starts around the $7.70 area.
SOYBEANS: May soybeans extended yesterday’s sharp losses in overnight trade, dropping as low as $16.04 1/2. Psychological support is at $16.00. Key near-term support is at the Feb. 25 low at $15.79.
WHEAT: May SRW wheat futures are trading well above Tuesday’s low at $9.72, but the contract has been unable to close above old support at $10.31 3/4 that’s needed to signal a failed downside breakout.
LIVESTOCK CALLS
CATTLE: Lower
HOGS: Lower
CATTLE: Live cattle futures are expected to face followthrough selling after losses and a low-range closes on Thursday. Money flow will be key to today’s price action after funds dumped long positions yesterday. Feedlots in the Southern Plains moved some additional cattle around $138 on Thursday, steady with both earlier trade and last week. Feedlots in the northern dressed market continued to hold out for hopes of firmer bids. If cattle futures actively extend Thursday’s losses it could result in feedlots deciding to sell at steady or lower prices or carrying some showlist supplies into next week. Wholesale beef prices continued to firm, with Choice gaining $1.35 and Select up $4.88 on Thursday. But movement stayed light at 96 loads, signaling continued selective buying from retailers.
HOGS: Lean hog futures had a bearish response to Wednesday’s bullish Hogs & Pigs Report as funds liquidated long positions after a strong start. Followthrough selling is expected this morning after Thursday’s sharp losses and low-range closes that featured key reversals in summer-month contracts. Sharp losses today would signal short-term market tops are in place and point to an extended price pullback. But if buyers show up under the market, it would negate Thursday’s bearish technical indicators. The CME lean hog index today (as of March 30) is down 53 cents to $103.13. April hogs finished $1.38 below that level on Thursday, which should help limit seller interest in the lead contract. The pork cutout value firmed $4.00 yesterday and movement improved to 358.50 loads.
