Ahead of the Open | April 5, 2022
GRAIN CALLS
Corn: 9 to 12 cents higher.
Soybeans: 13 to 18 cents higher.
Wheat: 35 to 45 cents higher in HRW and SRW, 18 to 24 cents higher in spring wheat.
GENERAL COMMENTS: Winter wheat futures gapped higher at the open of overnight trade and surged following lower-than-expected USDA crop condition ratings Monday afternoon. Corn and soybeans were also solidly higher overnight. Malaysian palm oil futures rallied amid concerns over global vegetable oil supplies and Nymex crude oil extended gains on prospects for more sanctions on Russia. U.S. stock index futures indicate a mixed open, while the U.S. dollar index is little changed this morning.
The U.S. and Europe are planning new sanctions to punish Moscow over civilian killings in Ukraine. The EU’s next wave of punitive measures against Russia is likely to target the import and export of products like jet fuel, steel products and luxury goods, two sources with knowledge of the discussions told CNBC.
The Ukrainian Grain Association, which represents producers and exporters, is asking the nation’s government to scrap licensing restrictions on wheat exports to restore shipments. Ukraine has extra stockpiles of wheat due to a robust harvest last year. Maintaining shipments has been complex as Russia’s invasion blocked the country’s seaports. Ukraine’s government will likely consider removing the need for licenses from shippers to sell wheat abroad later this month after it has clarity on how the country’s spring planting is progressing.
Closing of Ukrainian ports will have a major impact on the country’s sunflower oil production and supplies worldwide, Ievgen Osypov, chief executive officer of Kernel Holding, said on Bloomberg TV. Local infrastructure is still currently in good condition but Ukraine’s planting area could fall 20% from last year, with yields also likely to decline. The country can only ship about 5% of its pre-war volumes, and it will take time to build a new logistics chain through the western border. Kernel is the world’s leading sunflower oil producer and exporter.
Leaders from Argentina’s major transportation union are urging a national strike April 11 to demand an increase in grain freight rates amid a shortage of fuel supplies and high prices. The national transport federation is demanding the government increase the tariffs on grain producers to reflect the higher costs for fuel.
U.S. infections of highly pathogenic avian influenza (HPAI) include 72 commercial flocks and 46 backyard flocks totaling 22,851,071 birds, USDA’s Animal and Plant Health Inspection Service (APHIS) said. New cases in commercial poultry operations were confirmed in North Dakota (86,000 commercial turkey meat birds in Dickey County).
Japan is seeking 137,516 MT of milling wheat from the U.S., Canada and Australia in its weekly tender. The Philippines tendered to buy at least 50,000 MT of feed wheat.
CORN: May corn reached $7.61 overnight after gaining 15 1/2 cents yesterday to $7.50 1/2, while December corn posted a contract high for the fourth consecutive session, hitting $7.08 1/2. Initial resistance in May futures is seen at last week’s high of $7.70.
WHEAT: USDA’s first crop condition ratings of the season indicated drought damage to the U.S. winter wheat crop was worse than previously thought. When USDA’s initial crop condition ratings of the spring are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop plunged 51.9 points from last fall to 272.6, while the SRW crop dropped 19.1 points to 342.2. The HRW CCI rating at the beginning of April is 57.3 points below the five-year average and the lowest since 2011. The SRW CCI rating is 14.4 points below the five-year average to start spring.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-weaker
CATTLE: Live cattle futures may extend yesterday’s declines on softening technicals and expectations for weaker cash trade. Some cash cattle traded at roughly steady $138 in the Southern Plains and $222 in the northern dressed market Monday, with sources uncertain whether those transactions reflected cleanup sales from last week or feedlots settling for steady prices out of concern the market would slip later in the week.
June live cattle fell 92.5 cents to $134.925 on Monday, while May feeder cattle plunged $3.65 to $162.475.
HOGS: Lean hog futures may extend yesterday’s declines on technical weakness and eroding cash fundamentals. The CME lean hog index is down 22 cents today, the third straight daily decline and a $1.25 drop over that span. April hog futures finished Monday $2.96 below today’s cash quote (as of April 1), which should limit selling in the lead contract. But given recent sharp losses and slipping technicals, deferred contracts are likely to face followthrough selling early today. Pork cutout values rose $2.75 yesterday to an average of $106.35. Movement was relatively strong at about 304 loads.
June lean hogs tumbled $4.30 yesterday to $116.15, the lowest closing price since March 18.
