Ahead of the Open | April 20, 2022
GRAIN CALLS
Corn: 2 cents lower to 2 cents higher
Soybeans: 3 to 13 cents higher.
Wheat: SRW 1 cent lower to 2 cents higher, HRW and spring wheat 5 to 10 cents higher.
GENERAL COMMENTS: Nearby soybean futures reached a four-week high overnight as crude oil strengthened, while corn and wheat futures were mixed. Malaysian palm oil futures dropped 2.5% after slower exports signaled demand rationing. U.S. crude oil are up nearly $1. U.S. stock index futures indicate a firmer open, while the U.S. dollar index is down nearly 500 points.
Wet conditions will continue to limit U.S. planting progress. The Midwest will receive frequent precipitation over the next week along with temperatures that will often be cool, keeping fieldwork to a minimum in most areas, World Weather Inc. said. “Most of the precipitation should not be heavy enough to cause lasting delays to fieldwork if warmer and drier weather were to follow,” the forecaster said. The April 27-May 3 period “will be drier overall and planting should increase.”
An absence of on-the-ground staff in Russia is a “huge void” for USDA’s crop forecasting, said Patrick Packnett, deputy administrator for global market analysis at USDA’s Foreign Agricultural Service. U.S. citizens and government workers fled Russia in the wake of the country’s invasion of Ukraine. USDA still has in-country sources in Ukraine even though the agency hasn’t published an update from its attaché since February, Packnett said. With a lack of intelligence on the ground, the government is relying on other data such as satellite images to track the “very fluid” situation. USDA will issue its first official 2022-23 outlooks for Russia and Ukraine crop production and exports in its May 12 WASDE Report.
China’s soybean production is expected to increase nearly 26% this year amid major efforts to boost domestic output. Land planted to soybeans is forecast to rise 16.7%, according to the country’s ag ministry, and production is expected to jump 4.2 MMT to 20.6 MMT. That would, however, be less than one-fifth of China’s total consumption.
Palm oil demand is expected to jump in coming months, driven by a widening discount to rival vegetable oils, Reuters reported. Higher demand for palm oil could lift Indonesian and Malaysian exports and bring down inventories boosting palm oil prices that have already soared 38% so far in 2022 as the war in Ukraine has disrupted supplies of sunflower oil.
Jordan made no purchase in its tender to buy 120,000 MT of optional origin milling wheat.
CORN: July corn extended yesterday’s losses overnight, falling as low as $7.93 3/4 before rebounding back to around $8.00. A continuation of yesterday’s weak close, which followed a contract high, may stir ideas the market may be establishing a near-term top. Slow U.S. planting progress should underpin new-crop prices.
SOYBEANS: July soybeans overnight hit $17.08 1/2, the contract’s highest intraday price since $17.13 on March 23. A push above the March high may have bulls aiming for the contract high at $17.41, posted Feb. 24.
WHEAT: July SRW wheat overnight fell as low as $10.94 1/2, the lowest intraday price since April 13, before finding support just above the 10-day moving average around $10.90. Supply disruptions from the Russia/Ukraine war and poor crop conditions in the HRW belt likely will continue to support prices.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
CATTLE: Live cattle may extend yesterday’s gains on signs of continued cash market strength. Some light cash trade in the $140 to $141 range was reported in the Southern Plains on Tuesday, up $1 to $2 from that region’s prices last week. That pushed asking prices on remaining supplies in that region up to $142. Packers in the northern market haven’t established bids yet. Some packers may be reluctant to aggressively pursue cattle ahead of USDA’s Cattle on Feed Report Friday. Feeder futures will continue to respond to moves in the corn market.
Wholesale beef prices continued to soften, with Choice beef cutout values fell $1.15 yesterday to $269.93, the lowest daily average since April 4. Movement totaled 102 loads. June live cattle rose 77.5 cents yesterday to $136.575. May feeder futures rose $1.625 to $160.775.
HOGS: Lean hog futures may face followthrough pressure from yesterday’s lower close, which followed an early climb to near three-week highs. Signs of slower retail demand may also add pressure, as pork cutout values fell $2.37 yesterday to $107.12, led by an $11-plus drop in bellies. Movement totaled about 296 loads. Packers have struggled to generate retailer demand when cutout values exceed $110. Futures weakness maybe limited by continued strength in the CME lean hog index, which is up 17 cents to $100.50, the fifth straight daily gain. June lean hogs fell yesterday $1.075 to $121.325 after hitting a three-week high earlier.
China’s pork production is forecast to rise 2.9% to 54.5 MMT this year as the country’s hog sector continues to expand after being sharply reduced by African swine fever. But the rise in production has oversupplied the market, which along with high feed costs, has caused negative hog production margins for hog farmers. A Chinese ag ministry official forecasts Chinese hog farmers should see a return to profitable levels by the third quarter of this year, as he expects feed prices will decline. But he also warned hog farmers against heavy sow liquidation.
