Ahead of the Open | April 18, 2022
GRAIN CALLS
Corn: 8 to 11 cents higher.
Soybeans: 5 to 12 cents higher.
Wheat: 18 to 25 cents higher.
GENERAL COMMENTS: Nearby corn futures topped $8.00 overnight, the highest level in nearly a decade, while soybeans and wheat also gained amid ongoing concerns over U.S. weather and supply disruptions from the war in Ukraine. Malaysian palm oil futures rose 2.2% on concerns over tight supplies, while nearby U.S. crude oil futures are modestly firmer this morning. U.S. stock index futures signal a weaker open, while the U.S. dollar index is around 265 points higher after strengthening to a two-year high.
On Friday, USDA announced daily soybean sales to China of 121,000 MT for 2021-22 and 540,000 MT for 2022-23, along with 177,000 MT to “unknown destinations” for 2021-22.
China’s economy expanded 4.8% in the first quarter of 2022, above expectations of 4.4% and faster than 4.0% growth in the previous period. However, the risk of a sharp slowdown in the coming months heightened amid widespread Covid-19 lockdowns, a prolonged downturn in the property sector and uncertainty from the war in Ukraine.
China imported 2.41 MMT of corn in March, up 25% from last year, while wheat imports surged 95.1% to 870,000 MT. Through the first quarter of 2022, China’s imports were up 5.5% for corn, up 4.6% for wheat and up 37% for sorghum compared with the same period last year.
China sold 531,469 MT, or 96.4%, of wheat reserves put up for auction at an average price of 2,841 yuan ($446) per metric ton. The sales price was up from 2,709 yuan ($425) per metric ton the previous week.
Argentine grain truckers ended their strike last Friday following intervention by the government’s transport ministry that resulted in an “immediate increase of 20%” in freight rates and a promise to renegotiate those again in the first half of May.
Large speculators increased their bullish bets in the HRW wheat market to the highest level since early January, data from the Commodity Futures Trading Commission showed. The managed money net long in corn and soybean markets rose for the second week in a row.
SOYBEANS: July soybeans reached $16.81 3/4 overnight, the contract’s highest intraday price since $16.87 1/4 on March 28. Nearby futures are poised to extend last week’s gains on fresh export business.
WHEAT: July SRW wheat futures traded within last Thursday’s range overnight after gaining 46 1/4 cents last week.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weak
HOGS: Lean hog futures may extend last week’s gains behind renewed strength in cash fundamentals. The CME lean hog index is up 40 cents today to $99.19, its second daily gain in a row. June futures ended last week nearly $19 above the index. Over the previous five years, the cash index has rallied an average of $14.40 from mid-April to mid-June. While traders have a bigger-than-average cash rally built into June hogs, there may still be upside potential as slaughter numbers will run well under year-ago into summer.
Pork cutout values ended last week at $110.21, up $7.05 from a week earlier and a three-week high. June lean hogs ended last week at $118.475, up $3.90 for the week.
China imported 140,000 MT of pork last month, down 70% from the previous year. Through the first three months of this year, Chinese pork imports totaled 420,000 MT, down 64% from the same period last year. A strong increase in domestic production has sharply reduced China’s domestic pork prices and the need to import foreign supplies. China’s pork production totaled 15.6 MMT in the first three months of this year, up 14% from the same period last year and the highest quarterly output since the fourth quarter of 2018.
